|This is a summary of the original news release. To read the complete contents of the news release, including financial charts, click here.|
This quarterly earnings release should be read in conjunction with our unaudited first Quarter 2011 Report to Shareholders for the three months ended January 31, 2011, which is available on our website at http://www.td.com/investor/. This analysis is dated March 3, 2011. 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 Canadian generally accepted accounting principles (GAAP). Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period. Additional information relating to the Bank is available on the Bank’s website 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’s) website at http://www.sec.gov/ (EDGAR filers section).
First Quarter Financial Highlights, compared with the first quarter a year ago:
- Reported diluted earnings per share were $1.69, compared with $1.44.
- Adjusted diluted earnings per share were $1.74, compared with $1.60.
- Reported net income was $1,541 million, compared with $1,297 million.
- Adjusted net income was $1,588 million, compared with $1,430 million.
Adjusted measures are non-GAAP. Refer to the “How the Bank Reports” section of the Management’s Discussion and Analysis for an explanation of reported and adjusted results.
First Quarter Adjustments (Items of Note)
The first quarter reported earnings figures included the following items of note:
- Amortization of intangibles of $112 million after tax (13 cents per share), compared with $112 million after tax (13 cents per share) in the first quarter last year.
- A gain of $81 million after tax (9 cents per share), due to the change in fair value of derivatives hedging the reclassified available-for-sale debt securities portfolio, compared with a gain of $4 million after tax in the first quarter last year.
- Integration and restructuring charges of $13 million after tax (1 cent per share), relating to the U.S. Personal and Commercial Banking acquisitions, compared with $46 million after tax (5 cents per share) in the first quarter last year.
- A loss of $3 million after tax, due to the change in fair value of credit default swaps hedging the corporate loan book, net of provision for credit losses (PCL), compared with a loss of $7 million after tax (1 cent per share) in the first quarter last year.
TD Bank Group (TD or the Bank) today announced its financial results for the first quarter ended January 31, 2011. Overall results for the quarter reflected record retail earnings in Canada and the U.S. During the quarter, TD also announced an agreement to purchase Chrysler Financial, which is expected to close in the second quarter of TD’s fiscal 2011, pending regulatory approvals and satisfaction of other customary closing conditions.
“The first quarter was an excellent start to the year for TD, with record adjusted earnings and great growth across our retail businesses on both sides of the border. Total adjusted retail earnings hit another new high of $1.4 billion, up 30% from last year. Wholesale Banking also had a strong quarter,” said Ed Clark, Group President and Chief Executive Officer, TD. “We’re very pleased to announce a dividend increase of 5 cents per common share, payable in April, which speaks to the continuing confidence we have in the earnings power of our business model.”
Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking posted earnings of $905 million for the quarter, up 26% from the same period last year. Revenue grew 5% while PCL declined by 32%. TD Canada Trust (TDCT) reported strong volume growth in personal and business deposits, real estate secured lending, indirect lending and insurance. Subsequent to the end of the quarter, TDCT started to offer Sunday hours at more than 300 branches across Canada.
“Canadian Personal and Commercial Banking delivered another record quarter as we continued to benefit from our leadership position in customer service and convenience and ongoing investments in our branch network,” said Tim Hockey, Group Head, Canadian Banking and Insurance, TD. “We expect a very good year in 2011, with solid performance across all of our businesses and particular strength in insurance and business banking. However, year-over-year earnings growth will moderate starting in the second quarter, with slowing volume growth in personal banking and continuing margin pressure.”
Global Wealth net income, which excludes TD’s reported investment in TD Ameritrade, was $133 million in the quarter, up 32% from the same period last year, largely driven by fee revenue from higher client assets, strong trading volume and higher net interest margin. TD Ameritrade contributed $48 million in earnings to the segment, up 12% from the same period last year. In February, TD Ameritrade announced it reached a record US$400 billion in client assets, reflecting strong asset gathering momentum over the past two years.
“This was a strong quarter, marking eight straight quarters of improving profit for the Wealth business,” said Mike Pedersen, Group Head, Wealth Management, Direct Channels and Corporate Shared Services, TD. “Buoyant equity markets also helped our revenue growth and we continued to invest in infrastructure and products for our clients. We are positioned well for further growth throughout the year, provided the markets remain at current levels or improve further.”
U.S. Personal and Commercial Banking
U.S. Personal and Commercial Banking generated US$319 million in reported net income for the quarter, up 85% from the same period last year. On an adjusted basis, the segment earned US$332 million, up 54% from the first quarter of last year. Revenue in U.S. dollar terms grew 28% from the same period last year, primarily driven by strong loan and deposit growth and acquisitions, partially offset by lower overdraft fees.
“TD Bank, America’s Most Convenient Bank, had a record first quarter, thanks to strong loan and mortgage growth and good cross-selling momentum,” said Bharat Masrani, Group Head, U.S. Personal and Commercial Banking, TD. “While the economy is still recovering, we’re seeing increased optimism among our personal and business customers, which makes us confident about continuing volume growth in 2011. The early performance of our recent acquisitions has also been better than expected.”
Wholesale Banking reported net income of $237 million, down 36% from the same period last year. Last year’s record results reflected the unusually strong market conditions that followed the financial crisis. This year’s strong performance included solid results across all business lines and continued low PCLs.
“Our wholesale bank had a strong quarter and delivered an above-target return on capital,” said Bob Dorrance, Group Head, Wholesale Banking, TD. “Our core revenues reflected a moderated trading environment, offset by stronger capital market revenues.”
The Corporate segment, which includes the Bank’s other activities, recorded a net loss of $102 million, down $18 million, on a reported basis, and a net loss of $68 million, up $35 million, on an adjusted basis, from the same period last year.
TD’s Tier 1 capital ratio was 12.7% in the quarter, up 50 basis points from last quarter. Capital quality remained very high, with tangible common equity comprising about 80% of Tier 1 capital.
“We’re very pleased with TD’s great results for the quarter, which once again demonstrated that we have the right strategy to deliver long-term profitable growth,” Clark said. “It’s also encouraging to see more signs that the economy is recovering, even though interest rates remain low and regulatory uncertainty continues to persist. Given TD’s strong capital position, ongoing investments in our franchises and the proven strength of our retail-focused strategy, we’re looking forward to a very good year in 2011.”
The foregoing contains forward-looking statements. Please see the “Caution Regarding Forward-Looking Statements” on page 3.
Caution Regarding Forward-Looking Statements
From time to time, the Bank makes written and/or oral forward-looking statements, including in this earnings news release, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, 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 earnings news release in the “Business Outlook” section for each business segment and in other statements regarding the Bank’s objectives and priorities for 2011 and beyond and strategies to achieve them, and the Bank’s anticipated financial performance. Forward-looking statements are typically identified by words such as “will”, “should”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan”, “may”, and “could”.
By their very nature, these 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 financial, economic 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 such differences include: credit, market (including equity, commodity, foreign exchange, and interest rate), liquidity, operational, reputational, insurance, strategic, regulatory, legal, environmental, and other risks, all of which are discussed in the Management’s Discussion and Analysis (“MD&A”) in the Bank’s 2010 Annual Report. Additional risk factors include the impact of recent U.S. legislative developments, as discussed under “Significant Events in 2010” in the “How We Performed” section of the 2010 MD&A; changes to and new interpretations of capital and liquidity guidelines and reporting instructions; increased funding costs for credit due to market illiquidity and competition for funding; and the failure of third parties to comply with their obligations to the Bank or its affiliates relating to the care and control of information. We caution 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 see the “Risk Factors and Management” section of the 2010 MD&A. All such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, when making decisions with respect to the Bank and we caution 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 Bank’s 2010 Annual Report under the headings “Economic Summary and Outlook”, as updated in the First Quarter 2011 Report to Shareholders; for each business segment, “Business Outlook and Focus for 2011”, as updated in this earnings news release under the headings “Business Outlook”, and for the Corporate segment in the report under the heading “Outlook”.
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 investors 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.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (TD or the Bank). TD is the sixth largest bank in North America by branches and serves approximately 19 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Insurance; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking, including TD Bank, America’s Most Convenient Bank; and Wholesale Banking, including TD Securities. TD also ranks among the world’s leading online financial services firms, with more than 6 million online customers. TD had CDN$616 billion in assets on January 31, 2011. The Toronto-Dominion Bank trades under the symbol “TD” on the Toronto and New York Stock Exchanges.
For further information: Mushtak Najarali, Vice President, Investor Relations, 416-308-9030; Wojtek Dabrowski, Manager, Media Relations, 416-307-8149