This quarterly
Earnings News Release should be read in conjunction with the Bank's
unaudited first quarter 2022 Report to Shareholders for the three
months ended January 31, 2022, prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), which is available
on our website at http://www.td.com/investor/. This analysis is
dated March 2, 2022. Unless otherwise indicated, all amounts are
expressed in Canadian dollars, and have been primarily derived from
the Bank's Annual or Interim Consolidated Financial Statements
prepared in accordance with IFRS. Certain comparative amounts have
been revised to conform to the presentation adopted in the current
period. Additional information relating to the Bank is available on
the Bank's website at http://www.td.com, as well as on SEDAR at
http://www.sedar.com and on the U.S. Securities and Exchange
Commission's (SEC) website at http://www.sec.gov (EDGAR filers
section).
Reported results conform to generally accepted accounting
principles (GAAP), in accordance with IFRS. Adjusted 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.
|
FIRST QUARTER FINANCIAL HIGHLIGHTS, compared with the first
quarter last year:
- Reported diluted earnings per share were $2.02, compared with $1.77.
- Adjusted diluted earnings per share were $2.08, compared with $1.83.
- Reported net income was $3,733
million, compared with $3,277
million.
- Adjusted net income was $3,833
million, compared with $3,380
million.
FIRST QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The first
quarter reported earnings figures included the following items of
note:
- Amortization of acquired intangibles of $67 million ($59
million after-tax or 3 cents
per share), compared with $74 million
($65 million after-tax or
4 cents per share) in the
first quarter last year.
- Acquisition and integration charges related to the Schwab
transaction of $50 million
($41 million after-tax or
2 cents per share), compared with
$38 million ($38 million after-tax or 2
cents per share) in the first quarter last year.
TORONTO, March 3, 2022 /CNW/ - TD Bank Group ("TD" or
the "Bank") today announced its financial results for the first
quarter ended January 31, 2022. Reported earnings
were $3.7 billion, up 14% compared with the first quarter last
year, and adjusted earnings were $3.8 billion, up 13%.
"TD started the year strong, delivering revenue growth across
all our business segments as customer activity gained additional
momentum," said Bharat Masrani, Group President and CEO, TD Bank
Group. "With a focus on growth, we continue to make investments in
technology and new capabilities, positioning us well to meet our
customers' and clients' evolving needs."
"I am also pleased to have announced our deal with First Horizon
earlier this week. A bold acceleration of our U.S. strategy to
acquire a premier regional bank, with a strong presence in highly
attractive markets across the U.S. Southeast – a terrific strategic
fit for TD," added Masrani.
Canadian Retail saw continued strength in client activity,
volumes and revenue
Canadian Retail net income was
$2,254 million, an increase of 11%
compared with the first quarter last year. The increase in earnings
reflects record revenue and lower provisions for credit losses
(PCL), partially offset by higher non-interest expenses. Revenue
increased 6%, reflecting strong non-interest income growth across
all lines of business and momentum in loan and deposit volumes.
Expenses increased 8%, reflecting investments to support business
growth, and volume driven expenses including higher variable
compensation. PCL decreased by $109
million from the first quarter last year, reflecting lower
impaired PCL and a higher recovery in performing PCL.
Canadian Retail started the year with good momentum, delivering
record revenue performance in the Personal and Commercial Bank,
supported by increased customer activity. In Wealth, net asset
growth and mutual fund sales balanced the impact of trading volume
normalization and delivered revenue growth for the business.
Forward-focused innovations continued to support customers in
building financial confidence, including expanding the New to
Canada bundle to include 12 months
of free international transfers via the TD Global Transfers
platform and the launch of TD Easy TradeTM, a new mobile
trading app from TD Direct Investing, with no minimum balance or
monthly fees and 50 free stock trades per client, per year.
Strong recovery continued across U.S.
Retail
U.S. Retail net income was $1,272 million (US$1,006
million), an increase of 27% (30% in U.S. dollars) compared
with the first quarter last year. The Bank's investment in The
Charles Schwab Corporation (Schwab) contributed $252 million (US$200
million) in earnings, an increase of 21% (24% in U.S.
Dollars) compared with the first quarter last year.
The U.S. Retail Bank, which excludes the Bank's investment in
Schwab, reported net income of $1,020
million (US$806 million), an increase of 29% (31% in
U.S. dollars) from the first quarter last year, primarily
reflecting higher revenue and lower PCL. Revenue increased 4% (6%
in U.S. dollars), reflecting higher deposit volumes and margins,
increased earnings on the investment portfolio and higher fee
income, partially offset by lower loan margins. PCL was
$21 million (US$17 million),
lower by $114 million (US$86 million) from the same quarter last year,
reflecting lower impaired and performing PCL. Expenses decreased 5%
(4% in U.S. dollars), reflecting store optimization costs incurred
in the prior year, which more than offset investments made in the
business in the current quarter. The U.S. Retail Bank continued to
provide ongoing support to help small business customers process
loan forgiveness through the Paycheck Protection Program (PPP),
while assisting mortgage, credit card and middle-market customers
with their credit needs.
The U.S. Retail Bank continued to invest in deepening customer
experiences, building stronger communities and supporting
colleagues. Enhancements to the TD Mobile app now provide debit
card customers with the ability to easily request a digitally
issued replacement once a card is reported lost, stolen or damaged.
The Double UpSM Credit Card, added to the TD credit card
suite last spring, became the primary driver of new Bankcard
accounts, having added 98,000 accounts by quarter end. The
Essential Banking deposit account, designed to provide better
banking access to underserved communities, has resulted in 44,000
accounts since its official launch last August, helping to meet the
needs of more customers, in more communities. TD Bank, America's
Most Convenient Bank® opened its New York City flagship store, One Vanderbilt, serving as the largest store in
TD's U.S. footprint, providing customers greater convenience and
accessibility.
Strong Wholesale Banking performance in
Q1
Wholesale Banking reported net income of $434 million this quarter, a decrease of 1%
compared to the first quarter last year, reflecting higher revenue,
lower PCL and higher non-interest expenses. PCL for the quarter was
a recovery of $5 million, compared to
a $20 million provision in the first
quarter last year, reflecting lower levels of both performing and
impaired PCL.
Wholesale Banking delivered a strong performance while investing
for future growth. During the first quarter, TD Securities
continued to demonstrate its advisory and financing capabilities in
sustainable finance by helping to structure and underwrite more
than $12.5 billion of Green, Social
and Sustainability-Linked Bonds, $24 billion of
Sustainability-Linked Loans and delivering on notable advisory
mandates.
Capital
TD's Common Equity Tier 1 Capital ratio was
15.2%1.
Conclusion
"Overall, this was a strong quarter for the
Bank and as we look ahead, we remain focused on the opportunities
to grow our business and deepen relationships with our customers,"
added Masrani. "I want to thank our 90,000 colleagues around the
world who continue to deliver on our purpose to enrich the lives of
our customers, colleagues and communities each and every day."
The foregoing contains forward-looking statements. Please refer
to the "Caution Regarding Forward-Looking Statements".
Caution
Regarding Forward-Looking Statements From time to time,
the Bank (as defined in this document) makes written and/or oral
forward-looking statements, including in this document, in other
filings with Canadian regulators or the United States (U.S.)
Securities and Exchange Commission (SEC), and in other
communications. In addition, representatives of the Bank may make
forward-looking statements orally to analysts, investors, the media
and others. All such statements are made pursuant to the "safe
harbour" provisions of, and are intended to be forward-looking
statements under, applicable Canadian and U.S. securities
legislation, including the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are
not limited to, statements made in this document, the Management's
Discussion and Analysis ("2021 MD&A") in the Bank's 2021 Annual
Report under the headings "Economic Summary and Outlook" and "The
Bank's Response to COVID-19", under the headings "Key Priorities
for 2022" and "Operating Environment and Outlook" for the Canadian
Retail, U.S. Retail, and Wholesale Banking segments, and under the
heading "Focus for 2022" for the Corporate segment, and in other
statements regarding the Bank's objectives and priorities for 2022
and beyond and strategies to achieve them, the regulatory
environment in which the Bank operates, the Bank's anticipated
financial performance, and the potential economic, financial and
other impacts of the Coronavirus Disease 2019 (COVID-19).
Forward-looking statements are typically identified by words such
as "will", "would", "should", "believe", "expect", "anticipate",
"intend", "estimate", "plan", "goal", "target", "may", and
"could".
By their very nature, these forward-looking statements require the
Bank to make assumptions and are subject to inherent risks and
uncertainties, general and specific. Especially in light of the
uncertainty related to the physical, financial, economic,
political, and regulatory environments, such risks and
uncertainties – many of which are beyond the Bank's control and the
effects of which can be difficult to predict – may cause actual
results to differ materially from the expectations expressed in the
forward-looking statements. Risk factors that could cause,
individually or in the aggregate, such differences include:
strategic, credit, market (including equity, commodity, foreign
exchange, interest rate, and credit spreads), operational
(including technology, cyber security, and infrastructure), model,
insurance, liquidity, capital adequacy, legal, regulatory
compliance and conduct, reputational, environmental and social, and
other risks. Examples of such risk factors include the economic,
financial, and other impacts of pandemics, including the COVID-19
pandemic; general business and economic conditions in the regions
in which the Bank operates; geopolitical risk; the ability of the
Bank to execute on long-term strategies and shorter-term key
strategic priorities, including the successful completion of
acquisitions and dispositions, business retention plans, and
strategic plans; technology and cyber security risk (including
cyber-attacks or data security breaches) on the Bank's information
technology, internet, network access or other voice or data
communications systems or services; model risk; fraud 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-party service providers; the impact of new and changes to, or
application of, current laws and regulations, including without
limitation tax laws, capital guidelines and liquidity regulatory
guidance and the bank recapitalization "bail-in" regime; regulatory
oversight and compliance risk; increased competition from
incumbents and new entrants (including Fintechs and big technology
competitors); shifts in consumer attitudes and disruptive
technology; exposure related to significant litigation and
regulatory matters; ability of the Bank to attract, develop, and
retain key talent; changes to the Bank's credit ratings; changes in
currency and interest rates (including the possibility of negative
interest rates); increased funding costs and market volatility due
to market illiquidity and competition for funding; Interbank
Offered Rate (IBOR) transition risk; critical accounting estimates
and changes to accounting standards, policies, and methods used by
the Bank; existing and potential international debt crises;
environmental and social risk (including climate change); 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 2021 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 "Pending Acquisition" or "Significant
and Subsequent Events and Pending Acquisitions" 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 2021
MD&A under the headings "Economic Summary and Outlook" and "The
Bank's Response to COVID-19", under the headings "Key Priorities
for 2022" and "Operating Environment and Outlook" for the Canadian
Retail, U.S. Retail, and Wholesale Banking segments, and under
the heading "Focus for 2022" for the Corporate segment, each as may
be updated in subsequently filed quarterly reports to
shareholders.
Any forward-looking statements contained in this document represent
the views of management only as of the date hereof and are
presented for the purpose of assisting the Bank's shareholders and
analysts in understanding the Bank's financial position, objectives
and priorities and anticipated financial performance as at and for
the periods ended on the dates presented, and may not be
appropriate for other purposes. The Bank does not undertake to
update any forward-looking statements, whether written or oral,
that may be made from time to time by or on its behalf, except as
required under applicable securities legislation.
|
This document was reviewed by the Bank's Audit Committee and
was approved by the Bank's Board of Directors, on the Audit
Committee's recommendation, prior to its release.
___________________________
|
1 This measure has been included in
this document in accordance with OSFI's Capital Adequacy
Requirements guideline.
|
TABLE 1: FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
|
|
|
January
31
|
|
|
October 31
|
|
|
January 31
|
|
|
|
2022
|
|
|
2021
|
|
|
2021
|
|
Results of
operations
|
|
|
|
|
|
|
|
|
|
Total revenue –
reported
|
$
|
11,281
|
|
$
|
10,941
|
|
$
|
10,812
|
|
Total revenue –
adjusted1
|
|
11,281
|
|
|
10,941
|
|
|
10,812
|
|
Provision for
(recovery of) credit losses
|
|
72
|
|
|
(123)
|
|
|
313
|
|
Insurance claims and
related expenses
|
|
756
|
|
|
650
|
|
|
780
|
|
Non-interest expenses
– reported
|
|
5,967
|
|
|
5,947
|
|
|
5,784
|
|
Non-interest expenses
– adjusted1
|
|
5,897
|
|
|
5,898
|
|
|
5,744
|
|
Net income –
reported
|
|
3,733
|
|
|
3,781
|
|
|
3,277
|
|
Net income –
adjusted1
|
|
3,833
|
|
|
3,866
|
|
|
3,380
|
|
Financial
position (billions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Total loans net of
allowance for loan losses
|
$
|
743.6
|
|
$
|
722.6
|
|
$
|
706.0
|
|
Total
assets
|
|
1,778.6
|
|
|
1,728.7
|
|
|
1,735.6
|
|
Total
deposits
|
|
1,159.5
|
|
|
1,125.1
|
|
|
1,139.2
|
|
Total
equity
|
|
102.0
|
|
|
99.8
|
|
|
95.4
|
|
Total risk-weighted
assets2
|
|
470.9
|
|
|
460.3
|
|
|
467.2
|
|
Financial
ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity (ROE) – reported3
|
|
15.3
|
%
|
|
15.7
|
%
|
|
14.3
|
%
|
Return on common
equity – adjusted1
|
|
15.7
|
|
|
16.1
|
|
|
14.7
|
|
Return on tangible
common equity (ROTCE)1
|
|
20.6
|
|
|
21.3
|
|
|
19.9
|
|
Return on tangible
common equity – adjusted1
|
|
20.8
|
|
|
21.4
|
|
|
20.1
|
|
Efficiency ratio –
reported3
|
|
52.9
|
|
|
54.4
|
|
|
53.5
|
|
Efficiency ratio –
adjusted1,3
|
|
52.3
|
|
|
53.9
|
|
|
53.1
|
|
Provision for
(recovery of) credit losses as a % of net
|
|
|
|
|
|
|
|
|
|
average loans and
acceptances
|
|
0.04
|
|
|
(0.07)
|
|
|
0.17
|
|
Common share
information – reported (Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.03
|
|
$
|
2.04
|
|
$
|
1.77
|
|
Diluted
|
|
2.02
|
|
|
2.04
|
|
|
1.77
|
|
Dividends per
share
|
|
0.89
|
|
|
0.79
|
|
|
0.79
|
|
Book value per
share3
|
|
53.00
|
|
|
51.66
|
|
|
49.44
|
|
Closing share
price4
|
|
101.81
|
|
|
89.84
|
|
|
72.46
|
|
Shares outstanding
(millions)
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
1,820.5
|
|
|
1,820.5
|
|
|
1,814.2
|
|
Average
diluted
|
|
1,824.1
|
|
|
1,823.2
|
|
|
1,815.8
|
|
End of
period
|
|
1,816.5
|
|
|
1,822.0
|
|
|
1,816.0
|
|
Market capitalization
(billions of Canadian dollars)
|
$
|
184.9
|
|
$
|
163.7
|
|
$
|
131.6
|
|
Dividend
yield3
|
|
3.7
|
%
|
|
3.7
|
%
|
|
4.5
|
%
|
Dividend payout
ratio3
|
|
44.0
|
|
|
38.7
|
|
|
44.6
|
|
Price-earnings
ratio3
|
|
12.8
|
|
|
11.6
|
|
|
11.0
|
|
Total shareholder
return (1 year)3
|
|
45.8
|
|
|
58.9
|
|
|
4.1
|
|
Common share
information – adjusted (Canadian
dollars)1,3
|
|
|
|
|
|
|
|
|
|
Per share
earnings
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.08
|
|
$
|
2.09
|
|
$
|
1.83
|
|
Diluted
|
|
2.08
|
|
|
2.09
|
|
|
1.83
|
|
Dividend payout
ratio
|
|
42.8
|
%
|
|
37.8
|
%
|
|
43.2
|
%
|
Price-earnings
ratio
|
|
12.5
|
|
|
11.3
|
|
|
13.1
|
|
Capital
ratios2
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital ratio
|
|
15.2
|
%
|
|
15.2
|
%
|
|
13.6
|
%
|
Tier 1 Capital
ratio
|
|
16.3
|
|
|
16.5
|
|
|
14.8
|
|
Total Capital
ratio
|
|
19.0
|
|
|
19.1
|
|
|
17.4
|
|
Leverage
ratio
|
|
4.4
|
|
|
4.8
|
|
|
4.5
|
|
TLAC ratio
|
|
28.6
|
|
|
28.3
|
|
|
23.8
|
|
TLAC Leverage
ratio
|
|
7.6
|
|
|
8.2
|
|
|
7.2
|
|
1 The
Toronto-Dominion Bank ("TD" or the "Bank") prepares its unaudited
Interim Consolidated Financial Statements in accordance with IFRS,
the current GAAP, and refers to results prepared in accordance with
IFRS as the "reported" results. The Bank also utilizes non-GAAP
financial measures such as "adjusted" results and non-GAAP ratios
to assess each of its businesses and to measure overall Bank
performance. To arrive at adjusted results, the Bank adjusts for
"items of note", from reported results. Refer to the "How We
Performed" section of this document for further explanation, a list
of the items of note, and a reconciliation of adjusted to reported
results. Non-GAAP financial measures and ratios used in this
document are not defined terms under IFRS and, therefore, may not
be comparable to similar terms used by other issuers.
|
2
These measures have been included in this document in accordance
with the Office of the Superintendent of Financial Institutions
Canada's (OSFI's) Capital Adequacy Requirements (CAR), Leverage
Requirements, and Total Loss Absorbing Capacity (TLAC) guidelines.
Refer to the "Capital Position" section in the first quarter of
2022 MD&A for further details.
|
3 For
additional information about this metric, refer to the Glossary in
the first quarter of 2022 MD&A, which is incorporated by
reference.
|
4
Toronto Stock Exchange (TSX) closing market price.
|
PENDING ACQUISITION
Acquisition of First Horizon
Corporation
On February 28, 2022, the Bank and
First Horizon Corporation ("First Horizon") announced a definitive
agreement for the Bank to acquire First Horizon in an all-cash
transaction valued at US$13.4
billion, or US$25.00 for each
common share of First Horizon. In connection with this transaction,
the Bank has invested US$494 million
in non-voting First Horizon preferred stock (convertible in certain
circumstances into up to 4.9% of First Horizon's common stock). The
transaction is expected to close in the first quarter of fiscal
2023, and is subject to customary closing conditions, including
approvals from First Horizon's shareholders and U.S. and Canadian
regulatory authorities. The results of the acquired business
will be consolidated by the Bank from the closing date and reported
in the U.S. Retail segment.
If the transaction does not close prior to November 27, 2022, First Horizon shareholders
will receive, at closing, an additional US$0.65 per share on an annualized basis for the
period from November 27, 2022 through
the day immediately prior to the closing. Either party will have
the right to terminate the agreement if the transaction has not
closed by February 27, 2023 (the
"outside date"), subject to the right of either party (under
certain conditions) to extend the outside date to May 27, 2023.
Concurrent with the announcement, the automatic share purchase
plan established under the Bank's NCIB automatically terminated
pursuant to its terms. The NCIB remains in effect on the same terms
and subject to the same restrictions as previously
disclosed.
HOW WE PERFORMED
HOW THE BANK REPORTS
The Bank prepares its Interim Consolidated Financial Statements
in accordance with IFRS and refers to results prepared in
accordance with IFRS as "reported" results.
Non-GAAP and Other Financial Measures
In addition to
reported results, the Bank also presents certain financial
measures, including non-GAAP financial measures that are
historical, non-GAAP ratios, supplementary financial measures and
capital management measures, to assess its results. Non-GAAP
financial measures, such as "adjusted" results, are utilized to
assess the Bank's businesses and to measure the Bank's overall
performance. To arrive at adjusted results, the Bank adjusts for
"items of note", from reported results. Items of note are items
which management does not believe are indicative of underlying
business performance and are disclosed in Table 3. Non-GAAP ratios
include a non-GAAP financial measure as one or more of its
components. Examples of non-GAAP ratios include adjusted basic and
diluted earnings per share (EPS), adjusted dividend payout ratio,
adjusted efficiency ratio, and adjusted effective income tax rate.
The Bank believes that non-GAAP financial measures and non-GAAP
ratios provide the reader with a better understanding of how
management views the Bank's performance. Non-GAAP financial
measures and non-GAAP ratios used in this document are not defined
terms under IFRS and, therefore, may not be comparable to similar
terms used by other issuers. Supplementary financial measures
depict the Bank's financial performance and position, and capital
management measures depict the Bank's capital position, and both
are explained in this document where they first appear.
U.S. Strategic Cards
The Bank's U.S. strategic cards
portfolio is comprised of agreements with certain U.S. retailers
pursuant to which TD is the U.S. issuer of private label and
co-branded consumer credit cards to their U.S. customers. Under the
terms of the individual agreements, the Bank and the retailers
share in the profits generated by the relevant portfolios after
credit losses. Under IFRS, TD is required to present the gross
amount of revenue and PCL related to these portfolios in the Bank's
Interim Consolidated Statement of Income. At the segment level, the
retailer program partners' share of revenues and credit losses is
presented in the Corporate segment, with an offsetting amount
(representing the partners' net share) recorded in Non-interest
expenses, resulting in no impact to Corporate's reported Net income
(loss). The Net income (loss) included in the U.S. Retail segment
includes only the portion of revenue and credit losses attributable
to TD under the agreements.
Investment in The Charles Schwab Corporation
On
October 6, 2020, the Bank acquired an
approximately 13.5% stake in Schwab following the completion of
Schwab's acquisition of TD Ameritrade ("Schwab transaction"). For
further details, refer to Note 7 of the first quarter of 2022
Interim Consolidated Financial Statements. The Bank accounts for
its investment in Schwab using the equity method and reports its
after-tax share of Schwab's earnings with a one-month lag. 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 and the
acquisition and integration charges related to the Schwab
transaction.
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
|
|
January
31
|
October 31
|
January 31
|
|
2022
|
2021
|
2021
|
Net interest
income
|
$
|
6,302
|
$
|
6,262
|
$
|
6,030
|
Non-interest
income
|
|
4,979
|
|
4,679
|
|
4,782
|
Total
revenue
|
|
11,281
|
|
10,941
|
|
10,812
|
Provision for
(recovery of) credit losses
|
|
72
|
|
(123)
|
|
313
|
Insurance claims and
related expenses
|
|
756
|
|
650
|
|
780
|
Non-interest
expenses
|
|
5,967
|
|
5,947
|
|
5,784
|
Income before
income taxes and share of net income from
|
|
|
|
|
|
|
investment in
Schwab
|
|
4,486
|
|
4,467
|
|
3,935
|
Provision for
(recovery of) income taxes
|
|
984
|
|
910
|
|
827
|
Share of net income
from investment in Schwab
|
|
231
|
|
224
|
|
169
|
Net income –
reported
|
|
3,733
|
|
3,781
|
|
3,277
|
Preferred dividends
and distributions on other equity instruments
|
|
43
|
|
63
|
|
65
|
Net income
available to common shareholders
|
$
|
3,690
|
$
|
3,718
|
$
|
3,212
|
The following table provides a reconciliation between the Bank's
adjusted and reported results.
TABLE 3: NON-GAAP
FINANCIAL MEASURES – Reconciliation of Adjusted to Reported Net
Income
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
|
January
31
|
October 31
|
January 31
|
|
2022
|
2021
|
2021
|
Operating results
– adjusted
|
|
|
|
|
|
|
Net interest
income
|
$
|
6,302
|
$
|
6,262
|
$
|
6,030
|
Non-interest
income
|
|
4,979
|
|
4,679
|
|
4,782
|
Total
revenue
|
|
11,281
|
|
10,941
|
|
10,812
|
Provision for
(recovery of) credit losses
|
|
72
|
|
(123)
|
|
313
|
Insurance claims and
related expenses
|
|
756
|
|
650
|
|
780
|
Non-interest
expenses1
|
|
5,897
|
|
5,898
|
|
5,744
|
Income before income
taxes and share of net income from investment in Schwab
|
|
4,556
|
|
4,516
|
|
3,975
|
Provision for
(recovery of) income taxes
|
|
1,001
|
|
921
|
|
836
|
Share of net income
from investment in Schwab2
|
|
278
|
|
271
|
|
241
|
Net income –
adjusted
|
|
3,833
|
|
3,866
|
|
3,380
|
Preferred dividends
and distributions on other equity instruments
|
|
43
|
|
63
|
|
65
|
Net income
available to common shareholders – adjusted
|
|
3,790
|
|
3,803
|
|
3,315
|
Pre-tax
adjustments for items of note
|
|
|
|
|
|
|
Amortization of
acquired intangibles3
|
|
(67)
|
|
(74)
|
|
(74)
|
Acquisition and
integration charges related to the Schwab
transaction4
|
|
(50)
|
|
(22)
|
|
(38)
|
Less: Impact of
income taxes
|
|
|
|
|
|
|
Amortization of
acquired intangibles
|
|
(8)
|
|
(9)
|
|
(9)
|
Acquisition and
integration charges related to the Schwab
transaction4
|
|
(9)
|
|
(2)
|
|
–
|
Total adjustments
for items of note
|
|
(100)
|
|
(85)
|
|
(103)
|
Net income
available to common shareholders – reported
|
$
|
3,690
|
$
|
3,718
|
$
|
3,212
|
1
Adjusted non-interest expenses exclude the following items of note
related to the Bank's own asset acquisitions and business
combinations reported in the Corporate segment:
|
|
i. Amortization of
acquired intangibles – Q1 2022: $33 million, Q4 2021: $40 million,
Q1 2021: $39 million.
|
|
ii. The Bank's own
integration and acquisition costs related to the Schwab transaction
– Q1 2022: $37 million, Q4 2021: $9 million, Q1 2021: $1
million.
|
|
|
2
Adjusted share of net income from investment in Schwab excludes the
following items of note on an after-tax basis. The earnings impact
of both items is reported in the Corporate segment:
|
|
i. Amortization of
Schwab-related acquired intangibles – Q1 2022: $34 million, Q4
2021: $34 million; Q1 2021: $35 million; and
|
|
ii. The Bank's share
of acquisition and integration charges associated with Schwab's
acquisition of TD Ameritrade – Q1 2022: $13 million, Q4 2021: $13
million, Q1 2021: $37 million.
|
|
|
3
Amortization of acquired intangibles relates to intangibles
acquired as a result of asset acquisitions and business
combinations, including the after-tax amounts for amortization of
acquired intangibles relating to the Share of net income from
investment in Schwab, reported in the Corporate segment. Refer to
footnotes 1 and 2 for amounts.
|
|
|
4
Acquisition and integration charges related to the Schwab
transaction include the Bank's own integration and acquisition
costs, as well as the Bank's share of acquisition and integration
charges associated with Schwab's acquisition of TD Ameritrade on an
after-tax basis, both reported in the Corporate segment. Refer to
footnotes 1 and 2 for amounts.
|
TABLE 4:
RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER
SHARE1
|
|
(Canadian
dollars)
|
|
For the three
months ended
|
|
January
31
|
October 31
|
January 31
|
|
2022
|
2021
|
2021
|
Basic earnings per
share – reported
|
$
|
2.03
|
$
|
2.04
|
$
|
1.77
|
Adjustments for items
of note
|
|
0.05
|
|
0.05
|
|
0.06
|
Basic earnings per
share – adjusted
|
$
|
2.08
|
$
|
2.09
|
$
|
1.83
|
|
|
|
|
|
|
|
Diluted earnings
per share – reported
|
$
|
2.02
|
$
|
2.04
|
$
|
1.77
|
Adjustments for items
of note
|
|
0.05
|
|
0.05
|
|
0.06
|
Diluted earnings
per share – adjusted
|
$
|
2.08
|
$
|
2.09
|
$
|
1.83
|
1
EPS is computed by dividing net income available to common
shareholders by the weighted-average number of shares outstanding
during the period. Numbers may not add due to rounding.
|
Return on Common Equity
The consolidated Bank ROE is
calculated as reported net income available to common shareholders
as a percentage of average common equity. The consolidated Bank
adjusted ROE is calculated as adjusted net income available to
common shareholders as a percentage of average common equity.
Adjusted ROE is a non-GAAP financial ratio and can be utilized in
assessing the Bank's use of equity.
ROE for the business segments is calculated as the segment net
income attributable to common shareholders as a percentage of
average allocated capital. The Bank's methodology for allocating
capital to its business segments is largely aligned with the common
equity capital requirements under Basel III. Capital allocated to
the business segments increased to 10.5% Common Equity Tier 1
(CET1) Capital in the first quarter of 2022, compared with 9% in
fiscal 2021.
TABLE 5: RETURN ON
COMMON EQUITY
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
2022
|
|
2021
|
|
2021
|
|
Average common
equity
|
$
|
95,829
|
|
$
|
93,936
|
|
$
|
89,211
|
|
Net income
available to common shareholders – reported
|
|
3,690
|
|
|
3,718
|
|
|
3,212
|
|
Items of note, net of
income taxes
|
|
100
|
|
|
85
|
|
|
103
|
|
Net income
available to common shareholders – adjusted
|
$
|
3,790
|
|
$
|
3,803
|
|
$
|
3,315
|
|
Return on common
equity – reported
|
|
15.3
|
%
|
|
15.7
|
%
|
|
14.3
|
%
|
Return on common
equity – adjusted
|
|
15.7
|
|
|
16.1
|
|
|
14.7
|
|
Return on Tangible Common Equity
Tangible common
equity (TCE) is calculated as common shareholders' equity less
goodwill, imputed goodwill and intangibles on the investments in
Schwab and other acquired intangible assets, net of related
deferred tax liabilities. ROTCE is calculated as reported net
income available to common shareholders after adjusting for the
after–tax amortization of acquired intangibles, which are treated
as an item of note, as a percentage of average TCE. Adjusted ROTCE
is calculated using reported net income available to common
shareholders, adjusted for all items of note, as a percentage of
average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in
assessing the Bank's use of equity. TCE is a non-GAAP financial
measure, and ROTCE and adjusted ROTCE are non-GAAP ratios.
TABLE 6: RETURN ON
TANGIBLE COMMON EQUITY
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
|
2022
|
|
2021
|
|
2021
|
|
Average common
equity
|
$
|
95,829
|
|
$
|
93,936
|
|
$
|
89,211
|
|
Average
goodwill
|
|
16,519
|
|
|
16,408
|
|
|
16,743
|
|
Average imputed
goodwill and intangibles on investments in Schwab
|
|
6,585
|
|
|
6,570
|
|
|
6,903
|
|
Average other
acquired intangibles1
|
|
526
|
|
|
565
|
|
|
407
|
|
Average related
deferred tax liabilities
|
|
(172)
|
|
|
(173)
|
|
|
(173)
|
|
Average tangible
common equity
|
|
72,371
|
|
|
70,566
|
|
|
65,331
|
|
Net income
available to common shareholders – reported
|
|
3,690
|
|
|
3,718
|
|
|
3,212
|
|
Amortization of
acquired intangibles, net of income taxes
|
|
59
|
|
|
65
|
|
|
65
|
|
Net income
available to common shareholders adjusted for
|
|
|
|
|
|
|
|
|
|
|
amortization of
acquired intangibles, net of income taxes
|
|
3,749
|
|
|
3,783
|
|
|
3,277
|
|
Other items of note,
net of income taxes
|
|
41
|
|
|
20
|
|
|
38
|
|
Net income
available to common shareholders – adjusted
|
$
|
3,790
|
|
$
|
3,803
|
|
$
|
3,315
|
|
Return on tangible
common equity
|
|
20.6
|
%
|
|
21.3
|
%
|
|
19.9
|
%
|
Return on tangible
common equity – adjusted
|
|
20.8
|
|
|
21.4
|
|
|
20.1
|
|
1
Excludes intangibles relating to software and asset servicing
rights.
|
HOW OUR BUSINESSES PERFORMED
For management reporting purposes, the Bank reports its results
under three key business segments: Canadian Retail, which includes
the results of the personal and commercial banking, wealth, and
insurance businesses; U.S. Retail, which includes the results of
the personal and business banking operations, wealth management
services, and the Bank's investment in Schwab; and Wholesale
Banking. The Bank's other activities are grouped into the Corporate
segment.
Results of each business segment reflect revenue, expenses,
assets, and liabilities generated by the businesses in that
segment. Where applicable, the Bank measures and evaluates the
performance of each segment based on adjusted results and ROE, and
for those segments, the Bank indicates that the measure is
adjusted. For further details, refer to the "How We Performed"
section of this document, the "Business Focus" section in the
Bank's 2021 MD&A, and Note 29 of the Bank's Consolidated
Financial Statements for the year ended October 31, 2021.
PCL related to performing (Stage 1 and Stage 2) and impaired
(Stage 3) financial assets, loan commitments, and financial
guarantees is recorded within the respective segment.
Net interest income within Wholesale Banking is calculated on a
taxable equivalent basis (TEB), which means that the value of
non-taxable or tax-exempt income, including certain dividends, is
adjusted to its equivalent before-tax value. Using TEB allows the
Bank to measure income from all securities and loans consistently
and makes for a more meaningful comparison of net interest income
with similar institutions. The TEB increase to net interest income
and provision for income taxes reflected in Wholesale Banking's
results are reversed in the Corporate segment. The TEB adjustment
for the quarter was $38 million, compared with
$36 million in the prior quarter and $42 million in the
first quarter last year.
Share of net income from investment in Schwab is reported in the
U.S. Retail segment. Amounts for amortization of acquired
intangibles and the acquisition and integration charges related to
the Schwab transaction are recorded in the Corporate segment.
TABLE 7: CANADIAN
RETAIL
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
For the three
months ended
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
2022
|
|
2021
|
|
2021
|
|
Net interest
income
|
$
|
3,085
|
|
$
|
3,062
|
|
$
|
2,978
|
|
Non-interest
income
|
|
3,633
|
|
|
3,458
|
|
|
3,367
|
|
Total
revenue
|
|
6,718
|
|
|
6,520
|
|
|
6,345
|
|
Provision for
(recovery of) credit losses – impaired
|
|
150
|
|
|
140
|
|
|
167
|
|
Provision for
(recovery of) credit losses – performing
|
|
(117)
|
|
|
(87)
|
|
|
(25)
|
|
Total provision for
(recovery of) credit losses
|
|
33
|
|
|
53
|
|
|
142
|
|
Insurance claims and
related expenses
|
|
756
|
|
|
650
|
|
|
780
|
|
Non-interest
expenses
|
|
2,869
|
|
|
2,912
|
|
|
2,654
|
|
Provision for
(recovery of) income taxes
|
|
806
|
|
|
768
|
|
|
732
|
|
Net
income
|
$
|
2,254
|
|
$
|
2,137
|
|
$
|
2,037
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity1
|
|
44.8
|
%
|
|
47.7
|
%
|
|
46.0
|
%
|
Net interest margin
(including on securitized assets)2
|
|
2.53
|
|
|
2.57
|
|
|
2.65
|
|
Efficiency
ratio
|
|
42.7
|
|
|
44.7
|
|
|
41.8
|
|
Assets under
administration (billions of Canadian
dollars)3
|
$
|
557
|
|
$
|
557
|
|
$
|
484
|
|
Assets under
management (billions of Canadian dollars)3
|
|
429
|
|
|
427
|
|
|
380
|
|
Number of Canadian
retail branches
|
|
1,062
|
|
|
1,061
|
|
|
1,087
|
|
Average number of
full-time equivalent staff
|
|
42,952
|
|
|
42,205
|
|
|
40,714
|
|
1
Capital allocated to the business segment was increased to 10.5%
CET1 Capital effective the first quarter of fiscal 2022 compared
with 9% in the prior year.
|
2
Net interest margin is calculated by dividing net interest income
by average interest-earning assets. Average interest-earning assets
used in the calculation of net interest margin is a non-GAAP
financial measure. Refer to "Non-GAAP and Other Financial Measures"
in the "How We Performed" section of this document and the Glossary
in the first quarter of 2022 MD&A, which is incorporated by
reference, for additional information about these
metrics.
|
3
For additional information about this metric, refer to the Glossary
in the first quarter of 2022 MD&A, which is incorporated by
reference.
|
Quarterly comparison – Q1 2022 vs. Q1 2021
Canadian Retail net income for the quarter was $2,254 million, an increase of $217 million,
or 11%, compared with the first quarter last year, reflecting
higher revenue and lower PCL, partially offset by higher
non-interest expenses. The annualized ROE for the quarter was
44.8%, compared with 46.0% in the first quarter last year.
Canadian Retail revenue is derived from the personal and
business banking, wealth, and insurance businesses. Revenue for the
quarter was $6,718 million, an
increase of $373 million, or 6%, compared with the first
quarter last year.
Net interest income was $3,085 million, an increase of
$107 million, or 4%, compared with the first quarter last
year, reflecting volume growth, partially offset by lower margins.
Average loan volumes increased $40 billion, or 9%, reflecting
8% growth in personal loans and 14% growth in business loans.
Average deposit volumes increased $40 billion, or 9%,
reflecting 7% growth in personal deposits, 13% growth in business
deposits, and 9% growth in wealth deposits. Net interest margin was
2.53%, a decrease of 12 bps, reflecting changes to balance sheet
mix, lower margins on loans, and lower mortgage prepayment
revenue.
Non-interest income was $3,633 million, an increase of
$266 million, or 8%, reflecting higher fee-based revenue in
the banking and wealth businesses, and higher insurance volumes,
partially offset by a decrease in the fair value of investments
supporting claims liabilities which resulted in a similar decrease
in insurance claims, and lower transaction revenue in the wealth
business.
Assets under administration (AUA) were $557 billion as at January
31, 2022, an increase of $73
billion, or 15%, and assets under management (AUM) were
$429 billion as at January 31,
2022, an increase of $49
billion, or 13%, compared with the first quarter last year,
both reflecting market appreciation and net asset growth.
PCL was $33 million, a decrease of
$109 million, compared with the first
quarter last year. PCL – impaired for the quarter was $150 million, a decrease of $17 million, or
10%. PCL – performing was a recovery of
$117 million, compared with a recovery of $25 million in the prior year, reflecting
improved credit conditions, including a more favourable economic
outlook. Total PCL as an annualized percentage of credit volume was
0.03%, a decrease of 9 bps compared with the first quarter
last year.
Insurance claims and related expenses for the quarter were
$756 million, a decrease of
$24 million, or 3%, compared with the
first quarter last year reflecting a decrease in the fair value of
investments supporting claims liabilities which resulted in a
similar decrease in non-interest income, partially offset by more
severe weather-related events.
Non-interest expenses for the quarter were $2,869 million, an increase of $215 million, or 8%, compared with the first
quarter last year, reflecting higher spend supporting business
growth, including technology and marketing costs, higher
employee-related expenses and variable compensation.
The efficiency ratio for the quarter was 42.7%, compared with
41.8% in the first quarter last year.
Quarterly comparison – Q1 2022 vs. Q4 2021
Canadian Retail net income for the quarter was $2,254 million, an increase of $117 million, or 5%, compared with the prior
quarter, reflecting higher revenue and lower non-interest expenses,
partially offset by higher insurance claims. The annualized
ROE for the quarter was 44.8%, compared with 47.7%, in the prior
quarter.
Revenue increased $198 million, or 3%, compared with the
prior quarter. Net interest income increased $23 million, or 1%. Average loan volumes
increased $11 billion, or 2%,
reflecting 2% growth in personal loans and 3% growth in
business loans. Average deposit volumes increased $8 billion,
or 2%, reflecting 1% growth in personal deposits, 2% growth in
business deposits, and a 3% increase in wealth deposits. Net
interest margin was 2.53%, a decrease of 4 bps, primarily
reflecting lower margins on loans.
Non-interest income increased $175 million, or 5%,
reflecting prior quarter premium rebates for customers in the
insurance business, higher transaction and fee-based revenue in the
wealth business, and higher fee-based revenue in the banking
businesses.
AUA and AUM, were relatively flat compared with the prior
quarter.
PCL was $33 million, a decrease of
$20 million, compared with the prior
quarter. PCL – impaired increased $10
million, or 7%. PCL – performing was a recovery of
$117 million compared with a
recovery of $87 million in the prior
quarter. The performing release this quarter reflects a more
favourable economic outlook. Total PCL as an annualized percentage
of credit volume was 0.03%, a decrease of 1 basis point.
Insurance claims and related expenses for the quarter increased
$106 million, or 16%, compared with
the prior quarter, reflecting higher current year claims, less
favourable prior years' claims development and more severe
weather-related events.
Non-interest expenses decreased $43
million, or 1%, compared with the prior quarter reflecting
lower technology and marketing costs.
The efficiency ratio was 42.7%, compared with 44.7%, in the
prior quarter.
TABLE 8: U.S.
RETAIL
|
|
|
|
|
|
|
|
|
|
(millions of dollars,
except as noted)
|
For the three
months ended
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
Canadian
Dollars
|
|
2022
|
|
|
2021
|
|
|
2021
|
|
Net interest
income
|
$
|
2,115
|
|
$
|
2,103
|
|
$
|
2,031
|
|
Non-interest
income
|
|
671
|
|
|
677
|
|
|
653
|
|
Total
revenue
|
|
2,786
|
|
|
2,780
|
|
|
2,684
|
|
Provision for
(recovery of) credit losses – impaired
|
|
125
|
|
|
68
|
|
|
190
|
|
Provision for
(recovery of) credit losses – performing
|
|
(104)
|
|
|
(144)
|
|
|
(55)
|
|
Total provision for
(recovery of) credit losses
|
|
21
|
|
|
(76)
|
|
|
135
|
|
Non-interest
expenses
|
|
1,597
|
|
|
1,617
|
|
|
1,688
|
|
Provision for
(recovery of) income taxes
|
|
148
|
|
|
111
|
|
|
70
|
|
U.S. Retail Bank
net income
|
|
1,020
|
|
|
1,128
|
|
|
791
|
|
Share of net income
from investment in Schwab1,2
|
|
252
|
|
|
246
|
|
|
209
|
|
Net
income
|
$
|
1,272
|
|
$
|
1,374
|
|
$
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Dollars
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,671
|
|
$
|
1,673
|
|
$
|
1,579
|
|
Non-interest
income
|
|
530
|
|
|
539
|
|
|
507
|
|
Total
revenue
|
|
2,201
|
|
|
2,212
|
|
|
2,086
|
|
Provision for
(recovery of) credit losses – impaired
|
|
99
|
|
|
53
|
|
|
147
|
|
Provision for
(recovery of) credit losses – performing
|
|
(82)
|
|
|
(115)
|
|
|
(44)
|
|
Total provision for
(recovery of) credit losses
|
|
17
|
|
|
(62)
|
|
|
103
|
|
Non-interest
expenses
|
|
1,261
|
|
|
1,288
|
|
|
1,313
|
|
Provision for
(recovery of) income taxes
|
|
117
|
|
|
89
|
|
|
55
|
|
U.S. Retail Bank
net income
|
|
806
|
|
|
897
|
|
|
615
|
|
Share of net income
from investment in Schwab1,2
|
|
200
|
|
|
195
|
|
|
161
|
|
Net
income
|
$
|
1,006
|
|
$
|
1,092
|
|
$
|
776
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
Return on common
equity3
|
|
12.6
|
%
|
|
14.5
|
%
|
|
9.8
|
%
|
Net interest
margin4
|
|
2.21
|
|
|
2.21
|
|
|
2.24
|
|
Efficiency
ratio
|
|
57.3
|
|
|
58.2
|
|
|
62.9
|
|
Assets under
administration (billions of U.S. dollars)
|
$
|
32
|
|
$
|
30
|
|
$
|
26
|
|
Assets under
management (billions of U.S. dollars)
|
|
40
|
|
|
41
|
|
|
43
|
|
Number of U.S. retail
stores
|
|
1,152
|
|
|
1,148
|
|
|
1,223
|
|
Average number of
full-time equivalent staff
|
|
24,922
|
|
|
24,771
|
|
|
26,333
|
|
1
The Bank's share of Schwab's earnings is reported with a one-month
lag. Refer to Note 7 of the Bank's first quarter 2022 Interim
Consolidated Financial Statements for further details.
|
2
The after-tax amounts for amortization of acquired intangibles and
the Bank's share of acquisition and integration charges associated
with Schwab's acquisition are recorded in the Corporate
segment.
|
3
Capital allocated to the business segment was increased to 10.5%
CET1 Capital effective the first quarter of fiscal 2022 compared
with 9% in the prior year.
|
4
Net interest margin is calculated by dividing U.S. Retail segment's
net interest income by average interest-earning assets excluding
the impact related to sweep deposits arrangements and the impact of
intercompany deposits and cash collateral, which management
believes better reflects segment performance. In addition, the
value of tax-exempt interest income is adjusted to its equivalent
before-tax value. Net interest income and average interest-earning
assets used in the calculation are non-GAAP financial measures. 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.
|
Quarterly comparison – Q1 2022 vs. Q1 2021
U.S. Retail net income for the quarter was $1,272 million (US$1,006
million), an increase of $272
million (US$230 million), or
27% (30% in U.S. dollars) compared with the first quarter last
year. The annualized ROE for the quarter was 12.6%, compared with
9.8%, in the first quarter last year.
U.S. Retail net income includes contributions from the U.S.
Retail Bank and the Bank's investment in Schwab. Net income for the
quarter from the U.S. Retail Bank and the Bank's investment in
Schwab was $1,020 million
(US$806 million) and $252 million (US$200
million), respectively.
The contribution from Schwab of US$200
million increased US$39
million, or 24%, compared with the contribution in the first
quarter last year, primarily reflecting higher net interest
revenue.
U.S. Retail Bank net income of US$806
million increased US$191
million, or 31%, primarily reflecting higher revenue, lower
PCL, and lower non-interest expenses.
U.S. Retail Bank revenue is derived from the personal and
business banking and wealth management businesses. Revenue for the
quarter was US$2,201 million, an
increase of US$115 million, or 6%,
compared with the first quarter last year. Net interest income of
US$1,671 million, was up US$92 million, largely driven by the benefit of
higher business and personal deposit volumes and margins combined
with increased earnings on the investment portfolio, partially
offset by lower loan margins and decreased sweep deposit balances.
Net interest margin of 2.21%, was down 3 bps, as the impact of
negative balance sheet mix was partially offset by deposit margin
expansion and increased earnings on the investment portfolio.
Non-interest income increased US$23
million, or 5%, compared with the first quarter last year,
primarily reflecting fee income growth from increased customer
activity, partially offset by lower gains on the sale of mortgage
loans.
Average loan volumes decreased US$10
billion, or 6%, compared with the first quarter last year.
Personal loans were flat while business loans decreased 11%, as PPP
loan forgiveness accounted for about 56% of the decline in business
loans with paydowns of commercial loans driving the remaining
decline. Average deposit volumes increased US$20 billion, or 5%, reflecting a 15% increase
in personal deposits and a 12% increase in business deposits,
partially offset by a 6% decrease in sweep deposits.
AUA were US$32 billion as at
January 31, 2022, an increase of
US$6 billion, or 23%, compared with
the first quarter last year, reflecting net asset growth. AUM were
US$40 billion as at January 31, 2022, a decrease of US$3 billion, or 7%, compared with the first
quarter last year, reflecting net asset outflows, partially offset
by market appreciation.
PCL for the quarter was US$17
million, a decrease of US$86
million compared with the first quarter last year. PCL –
impaired was US$99 million, a
decrease of US$48 million, or 33%,
largely related to improved credit conditions. PCL – performing was
a recovery of US$82 million, compared
with a recovery of US$44 million in the prior year, reflecting
improved credit conditions, including a more favourable economic
outlook. 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 0.04%, a decrease of 21 bps, compared with the
first quarter last year.
Non-interest expenses for the quarter were US$1,261 million, a decrease of US$52 million, or 4%, compared with the first
quarter last year, primarily reflecting prior year store
optimization costs of US$76 million
and productivity savings in the current year, partially offset by
higher employee related expenses and investments in the
business.
The efficiency ratio for the quarter was 57.3%, compared with
62.9%, in the first quarter last year.
Quarterly comparison – Q1 2022 vs. Q4 2021
U.S. Retail net income of $1,272
million (US$1,006 million)
decreased $102 million (US$86 million), or 7% (8% in U.S.
dollars). The annualized ROE for the quarter was 12.6%,
compared with 14.5% in the prior quarter.
The contribution from Schwab of US$200
million increased US$5
million, or 3%, primarily reflecting higher net interest
revenue, partially offset by higher operating expenses.
U.S. Retail Bank net income of US$806
million decreased US$91
million, or 10%, compared with the prior quarter, primarily
reflecting higher PCL.
Revenue for the quarter decreased US$11
million, relatively flat, compared with the prior quarter.
Net interest income of US$1,671
million, and net interest margin of 2.21%, were relatively
flat as the impact of lower accelerated fee amortization from PPP
forgiveness was offset by deposit margin expansion and increased
earnings on the investment portfolio. Non-interest income decreased
US$9 million, or 2%, primarily reflecting a lower valuation on
certain investments, partially offset by higher fee income growth
from increased customer activity.
Average loan volumes decreased US$1
billion, or 1%, compared with the prior quarter. Personal
loans increased 2%, primarily reflecting growth in residential
mortgage and credit card balances. Business loans decreased 3%, the
majority related to PPP loan forgiveness. Average deposit volumes
increased US$9 billion, or 2%,
compared with the prior quarter reflecting a 3% increase in
personal deposits, a 2% increase in business deposits, and a 2%
increase in sweep deposits.
AUA were US$32 billion as at
January 31, 2022, an increase of
US$2 billion, or 7%, compared with
the prior quarter, reflecting net asset growth. AUM were
US$40 billion as at January 31, 2022, a decrease of
US$1 billion, or 2%, reflecting net
asset outflows, partially offset by market appreciation.
PCL was US$17 million compared
with a recovery of US$62 million in
the prior quarter. PCL – impaired increased US$46 million, or 87%. While still significantly
below historical levels, the increase reflects early signs of
normalization of credit performance, including seasonal trends in
the credit card and auto portfolios. PCL – performing was a
recovery of US$82 million, compared with a recovery of
US$115 million in the prior quarter.
The current quarter performing release reflects a more favourable
economic outlook. 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 0.04%, higher by 19 bps.
Non-interest expenses for the quarter were US$1,261 million, a decrease of US$27 million, or 2%, primarily reflecting timing
of project expenses and higher incentive compensation costs in the
prior quarter.
The efficiency ratio for the quarter was 57.3%, compared with
58.2% in the prior quarter.
TABLE 9: WHOLESALE
BANKING
|
|
|
|
|
|
|
|
|
|
(millions of Canadian
dollars, except as noted)
|
|
For the three
months ended
|
|
|
January
31
|
|
October 31
|
|
January 31
|
|
|
2022
|
|
2021
|
|
2021
|
|
Net interest income
(TEB)
|
$
|
709
|
|
$
|
689
|
|
$
|
661
|
|
Non-interest
income
|
|
637
|
|
|
461
|
|
|
649
|
|
Total
revenue
|
|
1,346
|
|
|
1,150
|
|
|
1,310
|
|
Provision for
(recovery of) credit losses – impaired
|
|
(4)
|
|
|
(14)
|
|
|
10
|
|
Provision for
(recovery of) credit losses – performing
|
|
(1)
|
|
|
(63)
|
|
|
10
|
|
Total provision for
(recovery of) credit losses
|
|
(5)
|
|
|
(77)
|
|
|
20
|
|
Non-interest
expenses
|
|
764
|
|
|
658
|
|
|
711
|
|
Provision for
(recovery of) income taxes (TEB)
|
|
153
|
|
|
149
|
|
|
142
|
|
Net
income
|
$
|
434
|
|
$
|
420
|
|
$
|
437
|
|
|
|
|
|
|
|
|
|
|
|
Selected volumes
and ratios
|
|
|
|
|
|
|
|
|
|
Trading-related
revenue (TEB)1
|
$
|
726
|
|
$
|
510
|
|
$
|
744
|
|
Average gross lending
portfolio (billions of Canadian dollars)2
|
|
59.2
|
|
|
58.1
|
|
|
58.7
|
|
Return on common
equity3
|
|
16.2
|
%
|
|
18.6
|
%
|
|
21.3
|
%
|
Efficiency
ratio
|
|
56.8
|
|
|
57.2
|
|
|
54.3
|
|
Average number of
full-time equivalent staff
|
|
4,932
|
|
|
4,910
|
|
|
4,678
|
|
1 Includes net interest
income TEB of $525 million (October 2021 – $514 million, January
2021 – $504 million), and trading income (loss) of $201 million
(October 2021 – $(4) million, January 2021 – $240 million).
Trading-related revenue (TEB) is a non-GAAP financial measure.
Refer to "Non-GAAP and Other Financial Measures" in the "How We
Performed" section of this document and the Glossary in the first
quarter of 2022 MD&A, which is incorporated by reference, for
additional information about this metric.
|
2
Includes gross loans and bankers' acceptances relating to Wholesale
Banking, excluding letters of credit, cash collateral, credit
default swaps, and allowance for credit losses.
|
3
Capital allocated to the business segment was increased to 10.5%
CET1 Capital effective the first quarter of fiscal 2022 compared
with 9% in the prior year.
|
Quarterly comparison – Q1 2022 vs. Q1 2021
Wholesale Banking net income for the quarter was $434 million, a decrease of $3 million, or 1%, compared with the first
quarter last year, reflecting higher revenue and lower PCL, offset
by higher non-interest expenses.
Wholesale Banking revenue is derived primarily from capital
markets and corporate and investment banking services provided to
corporate, government, and institutional clients. Wholesale Banking
generates revenue from corporate lending, advisory, underwriting,
sales, trading and research, client securitization, trade finance,
cash management, prime services, and trade execution services.
Revenue for the quarter was $1,346
million, an increase of $36
million, or 3%, compared with the first quarter last year,
primarily reflecting higher loan fees and prime services
revenue.
PCL for the quarter was a recovery of $5
million, lower by $25 million
compared with the first quarter last year. PCL – impaired was a
recovery of $4 million, lower by
$14 million. PCL – performing was a
recovery of $1 million, lower by
$11 million.
Non-interest expenses were $764
million, an increase of $53
million, or 7%, compared with the first quarter last year,
primarily reflecting higher employee-related costs from continued
investment in Wholesale Banking's U.S. dollar strategy, including
the investments in TD Securities Automated Trading.
Quarterly comparison – Q1 2022 vs. Q4 2021
Wholesale Banking net income for the quarter was $434 million, an increase of $14 million, or 3%, compared with the prior
quarter, reflecting higher revenue, partially offset by higher
non-interest expenses and a lower PCL recovery.
Revenue for the quarter increased $196
million, or 17%, primarily reflecting higher trading-related
revenue, partially offset by lower advisory fees.
PCL for the quarter was a recovery of $5
million, compared with a recovery of $77 million in the prior quarter. PCL – impaired
was a recovery of $4 million. PCL –
performing was a recovery of $1 million, compared with a
recovery of $63 million in the prior
quarter.
Non-interest expenses for the quarter increased $106 million, or 16%, primarily reflecting higher
variable compensation.
TABLE 10:
CORPORATE
|
|
|
|
|
|
|
(millions of Canadian
dollars)
|
For the three
months ended
|
|
January
31
|
October 31
|
January 31
|
|
2022
|
2021
|
2021
|
Net income (loss)
– reported
|
$
|
(227)
|
$
|
(150)
|
$
|
(197)
|
Adjustments for
items of note
|
|
|
|
|
|
|
Amortization of
acquired intangibles before income taxes
|
|
67
|
|
74
|
|
74
|
Acquisition and
integration charges related to the Schwab transaction
|
|
50
|
|
22
|
|
38
|
Less: impact of
income taxes
|
|
17
|
|
11
|
|
9
|
Net income (loss)
– adjusted1
|
$
|
(127)
|
$
|
(65)
|
$
|
(94)
|
|
|
|
|
|
|
|
Decomposition of
items included in net income (loss) – adjusted
|
|
|
|
|
|
|
Net corporate
expenses2
|
$
|
(168)
|
$
|
(202)
|
$
|
(182)
|
Other
|
|
41
|
|
137
|
|
88
|
Net income (loss)
– adjusted1
|
$
|
(127)
|
$
|
(65)
|
$
|
(94)
|
|
|
|
|
|
|
|
Selected
volumes
|
|
|
|
|
|
|
Average number of
full-time equivalent staff
|
|
18,017
|
|
17,772
|
|
17,720
|
1
For additional information about the Bank's use of non-GAAP
financial measures, refer to "Non-GAAP and Other Financial
Measures" in the "How We Performed" section of this
document.
|
2
For additional information about this metric, refer to the Glossary
in the first quarter of 2022 MD&A, which is incorporated by
reference.
|
Quarterly comparison – Q1 2022 vs. Q1 2021
Corporate segment's reported net loss for the quarter was
$227 million, 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. Net corporate expenses decreased $14 million compared to the same quarter last
year. The adjusted net loss for the quarter was $127 million, compared with an adjusted net loss
of $94 million in the first quarter
last year.
Quarterly comparison – Q1 2022 vs. Q4 2021
Corporate segment's reported net loss for the quarter was
$227 million, compared with a
reported net loss of $150 million in
the prior quarter. The quarter-over-quarter 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. Net corporate expenses decreased $34 million compared to the prior quarter. The
adjusted net loss for the quarter was $127
million, compared with an adjusted net loss of $65 million in the prior quarter.
SHAREHOLDER AND INVESTOR INFORMATION
Shareholder Services
If you:
|
And your inquiry
relates to:
|
Please
contact:
|
Are a registered
shareholder (your name appears on your TD share
certificate)
|
Missing dividends, lost
share certificates, estate questions, address changes to the share
register, dividend bank account changes, the dividend reinvestment
plan, eliminating duplicate mailings of shareholder materials or
stopping (or resuming) receiving annual and quarterly
reports
|
Transfer
Agent: TSX Trust
Company P.O. Box 700, Station
B Montréal, Québec H3B
3K3 1-800-387-0825 (Canada and
U.S. only) or
416-682-3860 Facsimile:
1-888-249-6189 shareholderinquiries@tmx.com or
www.tsxtrust.com
|
Hold your TD shares
through the Direct Registration
System in the United
States
|
Missing dividends, lost
share certificates, estate questions, address changes to the share
register, eliminating duplicate mailings of shareholder materials
or stopping (or resuming) receiving annual and quarterly
reports
|
Co-Transfer Agent and
Registrar: Computershare Trust
Company, N.A. P.O. Box
505000 Louisville, KY 40233,
or
Computershare Trust Company,
N.A. 462 South 4th Street,
Suite 1600 Louisville, KY
40202 1-866-233-4836 TDD for hearing impaired:
1-800-231-5469 Shareholders
outside of U.S.: 201-680-6578 TDD shareholders outside of U.S.: 201-680-6610
www.computershare.com/investor
|
Beneficially own TD
shares that are held in the name of an intermediary, such as a
bank, a trust company, a securities broker or other
nominee
|
Your TD shares,
including questions regarding the dividend reinvestment plan and
mailings of shareholder materials
|
Your
intermediary
|
For all other shareholder inquiries, please contact TD
Shareholder Relations at 416-944-6367 or 1-866-756-8936 or email
tdshinfo@td.com. Please note that by leaving us an e-mail or
voicemail message, you are providing your consent for us to forward
your inquiry to the appropriate party for response.
Normal Course Issuer Bid
On January 7, 2022, the Bank
announced that the Toronto Stock Exchange and OSFI had approved the
Bank's Normal Course Issuer Bid (NCIB) to repurchase for
cancellation up to 50 million of the Bank's common shares. Pursuant
to the Notice of Intention filed with the TSX, the NCIB ends on
January 10, 2023, such earlier date
as the Bank may determine, or such earlier date as the Bank may
complete its purchases. A copy of the Notice may be obtained
without charge by contacting TD Shareholder Relations by phone at
416-944-6367 or 1-866-756-8936 or by e-mail at tdshinfo@td.com.
Access to Quarterly Results Materials
Interested investors, the media and others may view the first
quarter earnings news release, results slides, supplementary
financial information, and the Report to Shareholders on the TD
Investor Relations website at www.td.com/investor/.
Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on March 3, 2022. The call will be audio webcast
live through TD's website at 1:30 p.m. ET. The call will
feature presentations by TD executives on the Bank's financial
results for first quarter and discussions of related disclosures,
followed by a question-and-answer period with analysts. The
presentation material referenced during the call will be available
on the TD website at www.td.com/investor on March 3, 2022 in advance of the call. A
listen-only telephone line is available at 416–641–6150 or
1-866-696-5894 (toll free) and the passcode is 2727354#.
The audio webcast and presentations will be archived at
www.td.com/investor. Replay of the teleconference will be available
from 5:00 p.m. ET on March 3, 2022, until
11:59 p.m. ET on March 18, 2022 by calling 905-694-9451 or
1-800-408-3053 (toll free). The passcode is 7300743#.
Annual Meeting
Thursday, April
14, 2022
Toronto, Ontario
About TD Bank Group
The Toronto-Dominion Bank and its
subsidiaries are collectively known as TD Bank Group ("TD" or the
"Bank"). TD is the fifth largest bank in North America by assets and serves more than
26 million customers in three key businesses operating in a number
of locations in financial centers around the globe: Canadian
Retail, including TD Canada Trust, TD Auto Finance Canada, TD
Wealth (Canada), TD Direct
Investing, and TD Insurance; U.S. Retail, including TD Bank,
America's Most Convenient Bank®, TD Auto Finance U.S.,
TD Wealth (U.S.), and an investment in The Charles Schwab
Corporation; and Wholesale Banking, including TD Securities. TD
also ranks among the world's leading online financial services
firms, with more than 15 million active online and mobile
customers. TD had CDN$1.8 trillion in
assets on January 31, 2022. The
Toronto-Dominion Bank trades under the symbol "TD" on the
Toronto and New York Stock
Exchanges.
SOURCE TD Bank Group