TD Bank Group Reports Fourth Quarter and Fiscal 2019 Results

FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth quarter last year:

• Reported diluted earnings per share were $1.54, compared with $1.58.
• Adjusted diluted earnings per share were $1.59, compared with $1.63.
• Reported net income was $2,856 million, compared with $2,960 million.
• Adjusted net income was $2,946 million, compared with $3,048 million.

FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year:

• Reported diluted earnings per share were $6.25, compared with $6.01.
• Adjusted diluted earnings per share were $6.69, compared with $6.47.
• Reported net income was $11,686 million, compared with $11,334 million.
• Adjusted net income was $12,503 million, compared with $12,183 million.

FOURTH QUARTER ADJUSTMENTS (ITEMS OF NOTE)

The fourth quarter reported earnings figures included the following items of note:

• Amortization of intangibles of $74 million ($62 million after tax or 3 cents per share), compared with $76 million ($63 million after tax or 4 cents per share) in the fourth quarter last year.
• Charges associated with the acquisition of Greystone of $30 million ($28 million after tax or 2 cents per share).

TORONTO, Dec. 5, 2019 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the fourth quarter ended October 31, 2019. Fourth quarter reported earnings were $2.9 billion, down 4% on a reported and down 3% on an adjusted basis, compared with the same quarter last year. Results include restructuring charges of $154 million ($114 million after tax or 6 cents per share) in the current quarter.

"In 2019, we demonstrated the strength and resilience of our franchise as we continued to acquire and serve our customers while increasing loan and deposit volumes," said Bharat Masrani, Group President and Chief Executive Officer, TD Bank Group. "Throughout the year, we generated earnings growth amidst a challenging macroeconomic environment while we made strategic investments to strengthen our business, deliver for our customers, and modernize and simplify our operations."

Canadian Retail

Canadian Retail reported net income was $1,745 million and adjusted net income was $1,773 million, an increase of $4 million on a reported basis and $32 million on an adjusted basis, compared with the same quarter last year. Revenue growth of 5% reflected increased loan and deposit volumes and higher revenue in the Wealth and Insurance businesses, which combined with good expense controls led to positive operating leverage this quarter. Canadian Retail continues to invest in front-line advisors and customer service specialists, to help customers feel confident about their financial future. In addition, the segment made further investments in core infrastructure and new digital capabilities such as its new TD Wheels app and new mobile-enabled credit card controls.

U.S. Retail

U.S. Retail reported and adjusted net income was $1,191 million (US$900 million), an increase of 7% (5% in U.S. dollars) on a reported basis and 5% (3% in U.S. dollars) on an adjusted basis, compared with the same quarter last year. TD Ameritrade contributed $291 million (US$219 million) in reported and adjusted earnings to the segment, an increase of 28% (25% in U.S. dollars) on a reported basis and 15% (13% in U.S. dollars) on an adjusted basis, compared to the same quarter last year.

The U.S. Retail Bank, which excludes the Bank's investment in TD Ameritrade, contributed $900 million (US$681 million), up 2% (flat in U.S. dollars) from the same quarter last year. Higher loan and deposit volumes were offset by lower margins. This quarter, the U.S. Retail Bank ranked "Highest in Customer Satisfaction with Small Business Banking in the South Region" according to the J.D. Power Small Business Banking Satisfaction Study, a testament to the investments made to upgrade the Small Business Banking digital platform and the segment's ongoing dedication to providing legendary customer service and convenience.

Wholesale

Wholesale Banking net income was $160 million, down $126 million compared with the fourth quarter last year. This quarter, the Wholesale Bank had solid performance in trading, advisory, and underwriting activities. Lower revenue was primarily impacted by derivative valuation charges incurred in the fourth quarter, mainly in connection with significant upgrades made to the derivative valuation system and related methodologies. The Wholesale Bank also saw increased provisions for credit losses related to a limited number of exposures, and higher expenses, including restructuring, as it reduces the cost structure of certain areas of the business. This year, TD Securities once again placed first overall in the StarMine Analyst Awards and was tied for First in Overall Canadian Fixed Income by Greenwich.

Capital

TD's Common Equity Tier 1 Capital ratio on a Basel III fully phased-in basis was 12.1%.

Innovation

"We have made terrific progress extending our digital leadership in 2019, investing in new capabilities across the Bank," added Masrani. "This quarter, we opened our new TD Cyber Fusion Centre, co-locating leading experts from across TD with a focus on strengthening our cyber defences, protecting our customers and safeguarding the Bank. We are also deploying the power of Artificial Intelligence in innovative ways, accelerating the introduction of new digital experiences while leading industry-wide conversations on the development of this groundbreaking technology through our recently released Responsible AI report."

Conclusion

"As we enter 2020, we remain focused on our long-term strategy and are proud of the businesses we continue to build. No matter the operating environment, we are guided by our proven business model, purpose-driven brand, and forward-focused approach, all with the aim to deliver for our customers, colleagues, and shareholders each and every day," added Masrani.

"I want to thank our more than 85,000 colleagues around the globe for living the TD brand, and for their unwavering commitment to delivering legendary experiences for our customers," concluded Masrani.

The foregoing contains forward-looking statements. Please refer to the "Caution Regarding Forward-Looking Statements".

 

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.

 

HOW WE PERFORMED

How the Bank Reports

The Bank prepares its Consolidated Financial Statements in accordance with IFRS, the current GAAP, and refers to results prepared in accordance with IFRS as "reported" results. The Bank also utilizes non-GAAP financial measures referred to as "adjusted" results to assess each of its businesses and to measure the Bank's overall performance. To arrive at adjusted results, the Bank removes "items of note", from reported results. The items of note relate to items which management does not believe are indicative of underlying business performance. The Bank believes that adjusted results provide the reader with a better understanding of how management views the Bank's performance. The items of note are disclosed in Table 3. As explained, adjusted results differ from reported results determined in accordance with IFRS. Adjusted results, items of note, and related terms used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.

The Bank's U.S. strategic cards portfolio comprises of agreements with certain U.S. retailers pursuant to which TD is the U.S. issuer of private label and co-branded consumer credit cards to their U.S. customers. Under the terms of the individual agreements, the Bank and the retailers share in the profits generated by the relevant portfolios after credit losses. Under IFRS, TD is required to present the gross amount of revenue and provisions for credit losses related to these portfolios in the Bank's Consolidated Statement of Income. At the segment level, the retailer program partners' share of revenues and credit losses is presented in the Corporate segment, with an offsetting amount (representing the partners' net share) recorded in Non-interest expenses, resulting in no impact to Corporate 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.

The following table provides the operating results on a reported basis for the Bank.

 

The following table provides a reconciliation between the Bank's adjusted and reported results.

 

 

 

RETURN ON COMMON EQUITY

The Bank's methodology for allocating capital to its business segments is aligned with the common equity capital requirements under Basel III. For fiscal 2019, the capital allocated to the business segments is based on 10% CET1 Capital. Capital allocated to the business segments was based on 9% for fiscal 2018.

Adjusted return on common equity (ROE) is adjusted net income available to common shareholders as a percentage of average common equity.

Adjusted ROE is a non-GAAP financial measure and is not a defined term under IFRS. Readers are cautioned that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other issuers.

 

RETURN ON TANGIBLE COMMON EQUITY

Tangible common equity (TCE) is calculated as common shareholders' equity less goodwill, imputed goodwill and intangibles on an investment in TD Ameritrade and other acquired intangible assets, net of related deferred tax liabilities. Return on tangible common equity (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 items of note, as a percentage of average TCE. Adjusted ROTCE provides a useful measure of the performance of the Bank's income producing assets, independent of whether or not they were acquired or developed internally. TCE, ROTCE, and adjusted ROTCE are each non-GAAP financial measures and are not defined terms under IFRS. Readers are cautioned that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other issuers.

 

Impact of Foreign Exchange Rate on U.S. Retail Segment Translated Earnings

The following table reflects the estimated impact of foreign currency translation on key U.S. Retail segment income statement items.

 

 

SIGNIFICANT AND SUBSEQUENT EVENTS, AND PENDING TRANSACTIONS

Bank Supports Acquisition of TD Ameritrade Holding Corporation by The Charles Schwab Corporation

On November 25, 2019, the Bank announced its support for the acquisition of TD Ameritrade Holding Corporation (TD Ameritrade), of which the Bank is a major shareholder, by The Charles Schwab Corporation (Schwab), through a definitive agreement announced by those companies. Under the terms of the transaction, all TD Ameritrade shareholders, including the Bank, would exchange each TD Ameritrade share they own for 1.0837 shares of Schwab. As a result, the Bank will exchange its approximate 43% in TD Ameritrade for an approximate 13.4% stake in Schwab, consisting of up to 9.9% voting common shares and the remainder in non-voting common shares, convertible upon transfer to a third party. TD expects to record a revaluation gain at closing.

The transaction is subject to certain closing conditions, including majority approval by the shareholders of each of TD Ameritrade and Schwab, and majority approval of TD Ameritrade's shareholders other than TD and certain other shareholders of TD Ameritrade that have entered into voting agreements.  In addition, the transaction is subject to receipt of regulatory approvals. The transaction is expected to close in the second half of calendar 2020, subject to all applicable closing conditions having been satisfied.

If the transaction closes, it is expected to have minimal capital impact on the Bank, and the Bank expects to account for its investment in Schwab using the equity method of accounting. The Bank and Schwab have entered into a new Stockholders' Agreement that will become effective upon closing, under which the Bank will have two seats on Schwab's Board of Directors, subject to the Bank meeting certain conditions. Under the agreement, the Bank will be subject to customary standstill and lockup restrictions. The Bank and Schwab have also entered into a revised and extended long-term Insured Deposit Account (IDA) agreement that will become effective upon closing and extends to 2031. Starting on July 1, 2021, IDA deposits, which were $142 billion (US$108 billion) as at October 31, 2019, can be reduced at Schwab's option by up to US$10 billion a year, with a floor of US$50 billion. The servicing fee under the revised IDA agreement will be set at 15 basis points (bps) upon closing.

Agreement for Air Canada Credit Card Loyalty Program

On January 10, 2019, the Bank's long-term loyalty program agreement (the "Loyalty Agreement") with Air Canada became effective in conjunction with Air Canada completing its acquisition of Aimia Canada Inc., which operates the Aeroplan loyalty business (the "Transaction"). Under the terms of the Loyalty Agreement, the Bank will become the primary credit card issuer for Air Canada's new loyalty program when it launches in 2020 through to 2030. TD Aeroplan cardholders will become members of Air Canada's new loyalty program and their miles will be transitioned when Air Canada's new loyalty program launches in 2020.

In connection with the Transaction, the Bank paid $622 million plus applicable sales tax to Air Canada, of which $547 million ($446 million after sales and income taxes) was recognized in non-interest expenses – other in the Canadian Retail segment, and $75 million was recognized as an intangible asset which will be amortized over the Loyalty Agreement term. In addition, the Bank prepaid $308 million plus applicable sales tax for the future purchase of loyalty points over a ten-year period. The Bank also expects to incur additional pre-tax costs of approximately $100 million over two years to build the functionality required to facilitate the new program. The Transaction reduced the Bank's CET1 ratio by approximately 13 bps.

Acquisition of Greystone

On November 1, 2018, the Bank acquired 100% of the outstanding equity of Greystone for consideration of $821 million, of which $479 million was paid in cash and $342 million was paid in the Bank's common shares. The value of 4.7 million common shares issued as consideration was based on the volume weighted-average market price of the Bank's common shares over the 10 trading day period immediately preceding the fifth business day prior to the acquisition date and was recorded based on market price at close. Common shares of $167 million issued to employee shareholders in respect of the purchase price are being held in escrow for two years post-acquisition, subject to their continued employment, and are being recorded as a compensation expense over the two-year escrow period.

The acquisition was accounted for as a business combination under the purchase method. As at November 1, 2018, the acquisition contributed $165 million of assets and $46 million of liabilities. The excess of accounting consideration over the fair value of the identifiable net assets has been allocated to customer relationship intangibles of $140 million, deferred tax liability of $37 million, and goodwill of $432 million. Goodwill is not deductible for tax purposes. The results of the acquisition have been consolidated from the acquisition date and reported in the Canadian Retail segment.

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 Canadian personal and commercial banking, wealth, and insurance businesses; U.S. Retail, which includes the results of the U.S. personal and business banking operations, wealth management services, and the Bank's investment in TD Ameritrade; 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 the Bank Reports" section of this document, the "Business Focus" section in the 2019 MD&A, and Note 29 of the Bank's Consolidated Financial Statements for the year ended October 31, 2019. For information concerning the Bank's measure of adjusted return on average common equity, which is a non-GAAP financial measure, refer to the "How We Performed" section of this document.

Provision for credit losses (PCL) related to performing (Stage 1 and Stage 2) and impaired (Stage 3) financial assets, loan commitments, and financial guarantees is recorded within the respective segment.

Net interest income within Wholesale Banking is calculated on a taxable equivalent basis (TEB), which means that the value of non-taxable or tax-exempt income, including dividends, is adjusted to its equivalent before-tax value. Using TEB allows the Bank to measure income from all securities and loans consistently and makes for a more meaningful comparison of net interest income with similar institutions. The TEB increase to net interest income and provision for income taxes reflected in Wholesale Banking's results are reversed in the Corporate segment. The TEB adjustment for the quarter was $36 million, compared with $28 million in the fourth quarter last year, and $37 million in the prior quarter.

 

Quarterly comparison – Q4 2019 vs. Q4 2018

Canadian Retail reported net income for the quarter was $1,745 million, an increase of $4 million, compared with the fourth quarter last year. The increase in earnings reflects revenue growth, partially offset by higher PCL, non-interest expenses including charges associated with the acquisition of Greystone, and insurance claims. On an adjusted basis, net income for the quarter was $1,773 million, an increase of $32 million, or 2%. The reported and adjusted annualized ROE for the quarter was 37.9% and 38.5%, respectively, compared with 45.1% in the fourth quarter last year.

Canadian Retail revenue is derived from Canadian personal and commercial banking, wealth, and insurance businesses. Revenue for the quarter was $6,133 million, an increase of $281 million, or 5%, compared with the fourth quarter last year.

Net interest income increased $151 million, or 5%, reflecting volume growth. Average loan volumes increased $19 billion, or 5%, reflecting 4% growth in personal loans and 9% growth in business loans. Average deposit volumes increased $16 billion, or 5%, reflecting 6% growth in personal deposits, 3% growth in business deposits, and 4% growth in wealth deposits. Net interest margin was 2.96%, an increase of 2 bps, reflecting higher interest rates, partially offset by competitive pricing in term deposits and loans.

Non-interest income increased $130 million, or 5%, reflecting an increase in insurance revenues, higher fee-based revenue in the wealth business, and the acquisition of Greystone.

Assets under administration (AUA) were $422 billion as at October 31, 2019, an increase of $33 billion, or 8%, compared with the fourth quarter last year, reflecting new asset growth and increases in market value. Assets under management (AUM) were $353 billion as at October 31, 2019, an increase of $64 billion, or 22%, compared with the fourth quarter last year, reflecting the acquisition of Greystone and increases in market value.

PCL for the quarter was $400 million, an increase of $137 million, or 52%, compared with the fourth quarter last year. PCL – impaired was $324 million, an increase of $79 million, or 32%, reflecting low prior period provisions in commercial, higher insolvencies in the other personal lending and credit card portfolios, and volume growth. PCL – performing was $76 million, an increase of $58 million, reflecting credit migration across the consumer lending and commercial portfolios, including the impact of parameter updates, and volume growth. Total PCL as an annualized percentage of credit volume was 0.37%, or an increase of 12 bps.

Insurance claims and related expenses for the quarter were $705 million, an increase of $21 million, or 3%, compared with the fourth quarter last year. The increase reflects higher current year claims related to business growth, partially offset by more favourable prior years' claims development and less severe weather-related events.

Reported non-interest expenses for the quarter were $2,637 million, an increase of $107 million, or 4%, compared with the fourth quarter last year, reflecting higher spend supporting business growth including employee-related costs and charges associated with the acquisition of Greystone, partially offset by lower marketing costs. On an adjusted basis, non-interest expenses were $2,607 million, an increase of $77 million, or 3%.

The reported and adjusted efficiency ratio for the quarter was 43.0% and 42.5%, respectively, compared with 43.2% in the fourth quarter last year.

Quarterly comparison – Q4 2019 vs. Q3 2019

Canadian Retail reported net income for the quarter decreased $145 million, or 8%, compared with the prior quarter. The decrease in earnings reflects higher non-interest expenses and PCL. On an adjusted basis, net income decreased $143 million, or 7%. The reported and adjusted annualized ROE for the quarter was 37.9% and 38.5%, respectively, compared with 41.7% and 42.2%, respectively, in the prior quarter.

Revenue decreased $13 million compared with the prior quarter. Net interest income increased $51 million, or 2%, reflecting volume growth. Average loan volumes increased $7 billion, or 2%, reflecting 1% growth in personal loans and 2% growth in business loans. Average deposit volumes increased $7 billion, or 2%. Net interest margin was 2.96%, consistent with the prior quarter.

Non-interest income decreased $64 million, or 2%, reflecting a decrease in the fair value of investments supporting claims liabilities as well as a revaluation of points liabilities offset by growth in fee revenues.

AUA increased $3 billion, or 1%, compared with the prior quarter, reflecting new asset growth. AUM increased $3 billion, or 1%, reflecting increases in market value.

PCL for the quarter increased $84 million, or 27%, compared with the prior quarter. PCL – impaired increased by $42 million, or 15%, reflecting credit migration in the auto and commercial portfolios. PCL – performing increased by $42 million, reflecting credit migration in the credit card and commercial portfolios. Total PCL as an annualized percentage of credit volume was 0.37%, an increase of 8 bps.

Insurance claims and related expenses for the quarter decreased $7 million, or 1%, compared with the prior quarter.

Reported non-interest expenses increased $104 million, or 4%, compared with the prior quarter, reflecting higher spend supporting business growth including employee-related expenses, and investment in strategic initiatives. On an adjusted basis, non-interest expenses increased $100 million, or 4%.

The reported and adjusted efficiency ratio for the quarter was 43.0% and 42.5%, respectively, compared with 41.2% and 40.8%, respectively, in the prior quarter.

 

Quarterly comparison – Q4 2019 vs. Q4 2018

U.S. Retail reported net income for the quarter was $1,191 million (US$900 million), an increase of $77 million (US$45 million), or 7% (5% in U.S. dollars), compared with the fourth quarter last year. On an adjusted basis, net income for the quarter increased $52 million (US$26 million), or 5% (3% in U.S. dollars). The reported and adjusted annualized ROE for the quarter was 11.8%, compared with 12.8% and 13.0%, respectively, in the fourth quarter last year.

U.S. Retail net income includes contributions from the U.S. Retail Bank and the Bank's investment in TD Ameritrade. Net income for the quarter from the U.S. Retail Bank and the Bank's investment in TD Ameritrade were $900 million (US$681 million) and $291 million (US$219 million), respectively.

The reported contribution from TD Ameritrade of US$219 million increased US$44 million, or 25%, compared with the fourth quarter last year, primarily reflecting higher asset-based revenue and charges associated with the Scottrade transaction in the same quarter last year, partially offset by higher operating expenses. Adjusted contribution from TD Ameritrade increased US$25 million, or 13%.

U.S. Retail Bank net income of US$681 million for the quarter increased US$1 million.

U.S. Retail Bank revenue is derived from personal and business banking, and wealth management. Revenue for the quarter was US$2,230 million, an increase of US$35 million, or 2%, compared with the fourth quarter last year. Net interest income increased US$41 million, or 2%, reflecting growth in loan and deposit volumes. Net interest margin was 3.18%, a 15 bps decrease, primarily reflecting lower deposit margins and balance sheet mix. Non‑interest income decreased US$4 million, or 1%.

Average loan volumes increased US$10 billion, or 7%, compared with the fourth quarter last year, due to growth of 7% in both personal and business loans. Average deposit volumes increased US$8 billion, or 3%, reflecting 4% growth in personal and 7% growth in business deposit volumes, partially offset by a decrease in sweep deposit volume from TD Ameritrade.

AUA were US$21 billion as at October 31, 2019, relatively flat, compared with the fourth quarter last year. AUM were US$44 billion as at October 31, 2019, a decrease of US$8 billion, or 16%, reflecting net fund outflows including the impact of the strategic disposition of U.S. money market funds in the first quarter of this year.

PCL for the quarter was US$223 million, an increase of US$36 million, or 19%, compared with the fourth quarter last year. PCL – impaired was US$203 million, an increase of US$46 million, or 29%, driven by higher provisions for the commercial portfolio and volume growth and seasoning in the auto and credit card portfolios. PCL – performing was US$20 million, a decrease of US$10 million. 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 0.55%, or an increase of 5 bps.

Non-interest expenses for the quarter were US$1,261 million, which included US$52 million of restructuring charges. Non-interest expense increased US$5 million, compared with the fourth quarter last year, primarily due to the restructuring charges and business volume growth, partially offset by productivity savings and an adjustment in post-retirement benefit costs.

The efficiency ratio for the quarter was 56.5%, compared with 57.3% in the fourth quarter last year.

Quarterly comparison – Q4 2019 vs. Q3 2019

U.S. Retail net income decreased $96 million (US$67 million), or 7% (7% in U.S. dollars), compared with the prior quarter. The annualized ROE for the quarter was 11.8%, compared to 12.9%, in the prior quarter.

The contribution from TD Ameritrade was US$219 million, flat to the prior quarter, as higher asset-based revenue and higher trading volumes in the current quarter were offset by a gain on disposition of assets in the Trust business in the prior quarter.

U.S. Retail Bank net income for the quarter decreased US$66 million, or 9%, compared with the prior quarter, due to higher PCL and restructuring charges, partially offset by higher loan and deposit volumes.

Revenue for the quarter decreased US$17 million, or 1%, compared with the prior quarter. Net interest income was relatively flat, with deposit margin compression, partially offset by higher loan and deposit volumes. Net interest margin was 3.18%, a 9 bps decrease compared to the prior quarter primarily due to lower deposit margins. Non‑interest income decreased US$18 million, or 3%.

Average loan volumes increased US$3 billion, or 2%, compared with the prior quarter, due to growth in personal loans of 4%. Average deposit volumes increased US$6 billion, or 2%, reflecting 5% growth in business deposit volumes and a 3% increase in sweep deposit volume from TD Ameritrade.

AUA were US$21 billion as at October 31, 2019, relatively flat, compared with the prior quarter. AUM were US$44 billion as at October 31, 2019, relatively flat, compared with the prior quarter.

PCL for the quarter increased US$32 million, or 17%, compared with the prior quarter. PCL – impaired increased by US$65 million, or 47%, primarily reflecting seasonal trends in the auto and credit card portfolios and prior period parameter updates in the consumer lending portfolios. PCL – performing decreased by US$33 million, primarily reflecting prior quarter parameter updates in the consumer lending portfolios, partially offset by seasonal trends in the auto and credit card 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 0.55%, or an increase of 7 bps.

Non-interest expenses for the quarter increased US$53 million, or 4%, compared with the prior quarter, reflecting the restructuring charges and higher costs related to business volume growth, partially offset by an adjustment in post-retirement benefit costs.

The efficiency ratio for the quarter was 56.5%, compared with 53.8% in the prior quarter.

 

Quarterly comparison – Q4 2019 vs. Q4 2018

Wholesale Banking net income for the quarter was $160 million, a decrease of $126 million compared with the fourth quarter last year reflecting lower revenue, higher non-interest expenses, and higher PCL.

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 $848 million, a decrease of $83 million compared with the fourth quarter last year primarily reflecting derivative valuation charges of $96 million, as well as lower equity underwriting and advisory fees, partially offset by higher debt underwriting fees.

PCL for the quarter was $41 million, compared to $8 million in the fourth quarter last year. PCL – impaired was $8 million. PCL – performing was $33 million reflecting credit migration.

Non-interest expenses were $600 million, an increase of $49 million compared with the fourth quarter last year. The increase reflects restructuring charges of $23 million, higher securities lending fees and software costs, and the impact of foreign exchange translation, partially offset by lower variable compensation.

Quarterly comparison – Q4 2019 vs. Q3 2019

Wholesale Banking net income for the quarter decreased $84 million compared with the prior quarter largely reflecting lower revenue and higher PCL.

Revenue for the quarter decreased $66 million compared with the prior quarter primarily reflecting derivative valuation charges and lower loan fees, partially offset by higher trading-related revenue.

PCL for the quarter was $41 million, compared to $1 million in the prior quarter. PCL – impaired was $8 million. PCL – performing was $33 million reflecting credit migration.

Non-interest expenses for the quarter increased $6 million compared with the prior quarter. The increase reflects restructuring charges of $23 million, partially offset by lower variable compensation.

 

Quarterly comparison – Q4 2019 vs. Q4 2018

Corporate segment's reported net loss for the quarter was $240 million, compared with a reported net loss of $181 million in the fourth quarter last year. The year-over-year increase in reported net loss was primarily attributable to lower contribution from other items and non-controlling interests, partially offset by lower net corporate expenses. Other items decreased primarily reflecting lower revenue from treasury and balance sheet management activities in the current quarter. Net corporate expenses decreased largely reflecting lower net pension expenses in the current quarter, partially offset by restructuring charges of $51 million. Adjusted net loss was $178 million, compared with an adjusted net loss of $118 million in the fourth quarter last year.

Quarterly comparison – Q4 2019 vs. Q3 2019

Corporate segment's reported net loss for the quarter was $240 million, compared with a reported net loss of $173 million in the prior quarter. The quarter-over-quarter increase in reported net loss was primarily attributable to lower contribution of other items and increased net corporate expenses. Net corporate expenses increased largely reflecting restructuring charges of $51 million in the current quarter. Other items decreased primarily reflecting lower revenue from treasury and balance sheet management activities this quarter. Adjusted net loss was $178 million, compared with an adjusted net loss of $109 million in the prior quarter.

 

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current period.

 

 

Certain comparative amounts have been recast to conform with the presentation adopted in the current period.

 

 

 

 

Certain comparative amounts have been reclassified to conform with the presentation adopted in the current period.

Appendix A – Segmented Information

For management reporting purposes, the Bank reports its results under three key business segments: Canadian Retail, which includes the results of the Canadian personal and commercial banking businesses, Canadian credit cards, TD Auto Finance Canada and Canadian wealth and insurance businesses; U.S. Retail, which includes the results of the U.S. personal and commercial banking businesses, U.S. credit cards, TD Auto Finance U.S., U.S. wealth business, and the Bank's investment in TD Ameritrade; and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results for these segments for the three and twelve months ended October 31 are presented in the following tables.

 

SHAREHOLDER AND INVESTOR INFORMATION                                                                 

Shareholder Services

 

For all other shareholder inquiries, please contact TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or email tdshinfo@td.com.

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Annual Report on Form 40-F (U.S.)

A copy of the Bank's Annual Report on Form 40-F for fiscal 2019 will be filed with the Securities and Exchange Commission later today and will be available at http://www.td.com. You may obtain a printed copy of the Bank's Annual Report on Form 40-F for fiscal 2019 free of charge upon request to TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or e-mail tdshinfo@td.com.

Access to Quarterly Results Materials

Interested investors, the media, and others may view this fourth quarter earnings news release, results slides, supplementary financial information, supplemental regulatory disclosure, and the 2019 Consolidated Financial Statements and MD&A documents on the TD website at www.td.com/investor/.

General Information

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Quarterly Earnings Conference Call

TD Bank Group will host an earnings conference call in Toronto, Ontario on December 5, 2019. The call will be available live via TD's website at 1:30 p.m. ET. The call and audio webcast will feature presentations by TD executives on the Bank's financial results for the fourth quarter, followed by a question-and-answer period with analysts. The presentation material referenced during the call will be available on the TD website at www.td.com/investor/qr_2019.jsp on December 5, 2019, by approximately 12 p.m. ET. A listen-only telephone line is available at 416-641-6150 or 1-866-696-5894 (toll free) and the passcode is 2727354#.

The audio webcast and presentations will be archived at www.td.com/investor/qr_2019.jsp. Replay of the teleconference will be available from 3:30 p.m. ET on December 5, 2019, until 11:59 p.m. ET on Thursday, January 2, 2020, by calling 905-694-9451 or 1-800-408-3053 (toll free). The passcode is 3336790#.

Annual Meeting

Thursday, April 2, 2020

Design Exchange

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 branches and serves over 26 million customers in three key businesses operating in a number of locations in financial centres 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 TD Ameritrade; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 13 million active online and mobile customers. TD had $1.4 trillion in assets on October 31, 2019. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

SOURCE TD Bank Group

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