Summary

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149	149	Similar to the Federal Reserve, the Bank of Canada has acted aggressively to support the economy, bringing interest rates down to 0.25% in March and rapidly expanding the size of its balance sheet. The Canadian central bank has explicitly committed to hold its overnight rate steady at its effective lower bound of 0.25% until at least 2023. In an environment of stable short-term interest rate differentials between the U.S. and Canada, the Bank projects the Canadian dollar will trade in the moderate range of 76-78 US cents over the next four calendar quarters.
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152		-Business Overview
	152	+= Business Overview =
153	153
154		-Canadian Retail
	154	+== Canadian Retail ==
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156	156	Canadian Retail serves over 16 million customers in the Canadian personal and commercial banking, wealth, and insurance businesses. Personal Banking provides financial products and advice through its network of 1,085 branches, 3,440 automated teller machines (ATM), telephone, digital and mobile banking. The credit cards business provides a comprehensive line-up of credit cards including proprietary, co-branded, and affinity credit card programs. Auto Finance provides flexible financing options to customers at point of sale for automotive and recreational vehicle purchases. Business Banking offers a broad range of customized products and services to help business owners meet their financing, investment, cash management, international trade, and day-to-day banking needs. Merchant Solutions provides point-of-sale payment solutions for large and small businesses. The wealth business offers wealth and asset management products and advice to retail and institutional clients in Canada through the direct investing, advice-based, and asset management businesses. The insurance business offers property and casualty insurance, as well as life and health insurance products to customers across Canada.
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171	171	PCL for the year was $2,746 million, an increase of $1,440 million, compared with last year. PCL – impaired was $1,256 million, an increase of $130 million, or 12%, reflecting higher provisions in the commercial and consumer lending portfolios. PCL – performing was $1,490 million, compared with $180 million last year, primarily related to a significant deterioration in the economic outlook, including the impact of credit migration, with the increase reflected in the consumer and commercial lending portfolios. Annualized PCL as a percentage of credit volume was 0.62%, an increase of 31 bps.
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173	173
174		-U.S. Retail
	174	+== U.S. Retail ==
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176	176	U.S. Retail comprises the Bank’s personal and business banking operations under the brand TD Bank, America’s Most Convenient Bank®, and wealth management in the U.S. Personal banking provides a full range of financial products and services to over 9 million retail customers through multiple delivery channels, including a network of 1,223 stores located along the east coast from Maine to Florida, mobile and internet banking, ATM, and telephone. Business banking serves the needs of businesses, through a diversified range of products and services to meet their financing, investment, cash management, international trade, and day-to-day banking needs. Wealth management offers a range of wealth products and services to retail and institutional clients. The results of the Bank’s equity investment in TD Ameritrade are included in U.S. Retail and reported as equity in net income of an investment in TD Ameritrade with a one-month lag. The same convention is being followed for Schwab, and the Bank will begin recording its share of Schwab’s earnings on this basis in the first quarter of fiscal 2021. Refer to “Significant Events” in the “Financial Results Overview” section of this document.
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198	198	PCL for the year was US$2,145 million, an increase of US$1,331 million, compared with last year. PCL – impaired was US$738 million, an increase of US$33 million, or 5%. PCL – performing was US$1,407 million, an increase of US$1,298 million, primarily related to a significant deterioration in the economic outlook, including the impact of credit migration, and predominantly reflected in the commercial, credit card, and auto lending portfolios. U.S. Retail PCL including only the Bank’s contractual portion of credit losses in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 1.30%, or an increase of 78 bps.
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200	200
	201	+== Wholesale Banking ==
201	201
202		-Wholesale Banking
203		-
204	204	Wholesale Banking offers a wide range of capital markets and corporate and investment banking services, including underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, and meeting the daily trading, funding, and investment needs of its clients. Operating under the TD Securities brand, its clients include corporates, governments, and institutions in key financial markets around the world. Wholesale Banking is an integrated part of TD’s strategy, providing market access to TD’s wealth and retail operations, and providing wholesale banking solutions to its partners and their customers.
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219	219	Non-interest expenses were $2,518 million, an increase of $125 million, or 5%, compared with the prior year. The increase reflects higher variable compensation, higher volume related expenses, and the impact of foreign exchange translation.
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222		-Corporate segment
	221	+== Corporate segment ==
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224	224	Corporate segment is comprised of a number of service and control groups. Certain costs relating to these functions are allocated to operating business segments. The basis of allocation and methodologies are reviewed periodically to align with management’s evaluation of the Bank’s business segments.
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230	230	Corporate segment reported net income for the year was $1,425 million, compared with a reported net loss of $766 million last year. The year-overyear increase was primarily attributable to a net gain on sale of the Bank’s investment in TD Ameritrade of $1,421 million ($2,250 million after-tax), as well as a higher contribution from other items, partially offset by higher net corporate expenses in the current year and a contribution from non-controlling interests in the prior year. Other items increased reflecting the impact of legal provisions and the negative impact of tax items in the prior year, partially offset by lower contribution from treasury and balance sheet management activities. Net corporate expenses increased primarily reflecting the impact of corporate real estate optimization costs of $163 million in the current year, partially offset by restructuring charges of $51 million in the prior year. The adjusted net loss for the year was $600 million, compared with an adjusted net loss of $507 million last year
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232	232
233		-Financial Highlights
	232	+= Financial Highlights =
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236	236	Reported income for the year was $11,895 million, an increase of $209 million, or 2%, compared with last year. The increase reflects a net gain on sale of the Bank’s investment in TD Ameritrade and charges in the prior year related to the agreement with Air Canada. On an adjusted basis, income for the year was $9,968 million, a decrease of $2,535 million, or 20%, compared with last year reflecting higher PCL, lower revenue in the personal and commercial banking businesses, and higher non-interest expenses, partially offset by higher revenue in Wholesale Banking and the wealth and insurance businesses. The reported ROE for the year was 13.6%, compared with 14.5% last year. The adjusted ROE for the year was 11.4%, compared with 15.6% last year.
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238	238	By segment, the increase in reported net income reflects an increase in the Corporate segment of $2,191 million, and an increase in Wholesale Banking of $810 million, partially offset by a decrease in U.S. Retail of $1,955 million, and a decrease in Canadian Retail of $837 million.
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	239	+
240	240	Reported diluted EPS for the year was $6.43, an increase of 3%, compared with $6.25 last year. Adjusted diluted EPS for the year was $5.36, a 20% decrease, compared with $6.69 last year.
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242	242	Reported revenue was $43,646 million, an increase of $2,581 million, or 6%, compared with last year. Adjusted revenue was $42,225 million, an increase of $1,160 million, or 3%, compared with last year.
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	244	+
244	244	Net interest income for the year was $25,611 million, an increase of $1,680 million, or 7%, compared with last year. The increase reflects higher trading-related net interest income, and volume growth in the personal and commercial banking businesses, partially offset by lower margins.
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246	246	By segment, the increase in reported net interest income reflects an increase in Wholesale Banking of $1,079 million, and an increase in the Corporate segment of $1,006 million, partially offset by a decrease in Canadian Retail of $288 million, and a decrease in U.S. Retail of $117 million. Net interest income reported in the Corporate segment includes the impact of treasury and balance sheet management activities, which are largely offset in non-interest income.
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248	248	Net interest margin decreased by 16 bps during the year to 1.80%, compared with 1.96% last year, primarily reflecting the impact of lower interest rates and higher deposit balances in the personal and commercial banking businesses.
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	251	+
250	250	Reported non-interest income for the year was $18,035 million, an increase of $901 million, or 5%, compared with last year reflecting the net gain on sale of the Bank’s investment in TD Ameritrade, higher revenue in the wealth and insurance businesses, higher trading-related revenue and fee income in Wholesale Banking, partially offset by lower fee income in the personal and commercial banking businesses.
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252	252	Reported total income and other taxes decreased by $1,675 million, or 38.0%, compared with last year, reflecting a decrease in income tax expense of $1,583 million, or 57.9%, and a decrease in other taxes of $92 million, or 5.5%. Adjusted total income and other taxes decreased by $1,021 million from last year, or 22.1%, reflecting a decrease in income tax expense of $929 million, or 31.5%.
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254		-Third Quarter 2021 Results
255	255
	257	+== Third Quarter 2021 Results ==
	258	+
256	256	August 26, 2021 – TD Bank Group (“TD” or the “Bank”) today announced its financial results for the third quarter ended July 31, 2021. Reported earnings were $3.5 billion, up 58% compared with the third quarter last year, and adjusted earnings were $3.6 billion, up 56%.
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258	258	“TD’s strong performance in the third quarter was supported by solid revenue growth in its Canadian and U.S. Retail businesses as economic activity and employment levels continued to improve on both sides of the border,” said Bharat Masrani, Group President and CEO, TD Bank Group. “TD’s strategy – anchored in its proven business model – enabled it once again to deliver for its shareholders, meet the needs of its customers and clients and contribute to the economic recovery, while continuing to invest in its people, technology, and capabilities.”
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260	260	“While businesses and consumers are resuming some of their normal activities and more people are getting vaccinated, recent developments and new variants remind it that the global pandemic is not yet over,” added Masrani. “TD will continue to adapt in this fluid environment, adjust in real-time, and prioritize the wellbeing of its people and all those the company serve.”
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262		-Canadian Retail
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	267	+**Canadian Retail**
	268	+
264	264	Canadian Retail reported net income was $2,125 million, an increase of 68% compared with the third quarter last year. Revenue increased 9%, supported by continued momentum in mortgage originations and deposits, strong commercial loan growth and mutual fund sales, as well as record card sales. Reported expenses increased 8%, reflecting business growth spend including volume-driven and employee-related expenses and investments in technology and marketing. Provisions for credit losses (PCL) decreased by $851 million from the prior year, reflecting lower impaired PCL and a recovery in performing PCL.
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266	266	Canadian Retail continued to innovate to serve customers where and when they want. This includes a new strategic alliance with Canada Post that will see the Personal Bank provide Canadians – particularly those in rural, remote and Indigenous communities – with expanded access to financial services, and the launch of new TD Insurance tools such as mobile severe weather and safety alerts and a new digital virtual assistant. In the Commercial Bank, the acquisition of Wells Fargo’s Canadian Direct Equipment Finance business closed, delivering scaled expertise in equipment leasing and finance.
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268		-U.S. Retail
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	274	+**U.S. Retail**
	275	+
270	270	U.S. Retail net income was $1,295 million (US$1,052 million), an increase of 92% (115% in U.S. dollars) compared with the third quarter last year. The Bank’s investment in The Charles Schwab Corporation (Schwab) contributed $197 million (US$161 million) in earnings, compared with the contribution of $317 million (US$230 million) from TD Ameritrade a year ago.
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272	272	The U.S. Retail Bank, which excludes the Bank’s investment in Schwab, reported record net income of $1,098 million (US$891 million), an increase of 208% (243% in U.S. dollars) from the third quarter last year. In U.S. dollars, revenue increased 5% reflecting higher non-interest income, partially offset by lower deposit margins. PCL decreased by US$729 million ($993 million) reflecting lower impaired and performing PCL. Expenses increased 2% in U.S. dollars, reflecting higher investment in the business and employee-related expenses, partially offset by productivity savings. In Canadian dollars, revenue and expenses declined 6% and 8%, respectively, primarily as a result of appreciation in the Canadian dollar since the third quarter last year.
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274	274	The U.S. Retail Bank continued to support customers by expanding the tools and advice it provides, generating strong results from increased customer activity and higher personal and business deposit volumes. This quarter, TD Bank, America’s Most Convenient Bank® (TD AMCB) introduced TD Essential Banking, a lowcost, no-overdraft-fee deposit account, and announced overdraft policy changes as part of its ongoing efforts to meet evolving customer needs and provide underserved communities with affordable access to mainstream financial services and products. TD AMCB also announced the establishment of a US$100 million equity fund in support of minority-owned small businesses, further demonstrating its commitment to provide opportunity in underserved communities and help combat racial inequities. The U.S. Retail Bank continued to invest in enhancing the customer experience, including the ability to book in-store appointments online for retail, small business and wealth services and simplifying how debit or credit cards are added to digital wallets.
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276		-Wholesale
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	283	+**Wholesale**
	284	+
278	278	Wholesale Banking reported net income of $330 million this quarter, a decrease of 25% compared to the third quarter last year, reflecting lower revenue, partially offset by lower PCL and lower non-interest expenses. Revenue for the quarter was $1,083 million, a decrease of 22% from a year ago, primarily reflecting lower trading-related revenue, partially offset by higher advisory fees. PCL decreased by $121 million from the prior year, reflecting lower impaired and performing PCL.
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280	280	This quarter, TD Securities was named “Canada’s Best Investment Bank” by the 2021 Euromoney Awards and recognized as the 2021 Canadian FX Service Quality Leader as measured by the Greenwich Quality Index for the second year in a row. TD Securities was selected as one of two Structuring Advisors to the Government of Canada’s inaugural issuance of green bonds, reflecting leadership in the Environmental, Social and Governance (ESG) space. The Wholesale Bank continued to invest in its client-centric strategy and further extended its global reach and capabilities with the completion of TD’s acquisition of Headlands Tech Global Markets, LLC.
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283		-References
	290	+= References =
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285	285	{{putFootnotes/}}