The Toronto-Dominion Bank

Good afternoon, everyone. Welcome to the TD Bank Group Q4 2021 Earnings Conference Call. I would now like to turn the meeting over to Ms. Gillian Manning. Please go ahead, Ms. Manning.

Thank you, Operator. Good afternoon and welcome to TD Bank Group's fourth quarter 2021 investor presentation. We will begin today's presentation with remarks from Bharat Mazrani, the bank's CEO, after which Kelvin Tran, the bank's CFO, will present our fourth quarter operating results. Ajay Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from pre-qualified analysts and investors on the phone. Also present today to answer your questions are Terry Currie, Group Head, Canadian Personal Banking, Greg Bracca, President and CEO, TD Bank, America's Most Convenient Bank, and Riaz Ahmed, Group Head, Wholesale Banking. Please turn to slide two. At this time, I would like to caution our listeners that this presentation contains forward-looking statements. that there are risks that actual results could differ materially from what is discussed, and that certain material factors or assumptions were applied in making these forward-looking statements. Any forward-looking statements contained in this presentation represent the views of management and are presented for the purpose of assisting the bank's shareholders and analysts in understanding the bank's financial position, objectives and priorities, and anticipated financial performance. Forward-looking statements may not be appropriate for other purposes. I would also like to remind listeners that the bank uses non-GAAP financial measures such as adjusted results to assess each of its businesses and to measure overall bank performance. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Barrett will be referring to adjusted results in his remarks. Additional information on items of note, the bank's use of non-GAAP and other financial measures, The bank's reported results and factors and assumptions related to forward-looking information are all available in our annual 2021 report to shareholders. With that, let me turn the presentation over to Barrett.

Thank you, Jillian, and thank you, everyone, for joining us today. Q4 was a great quarter for TD, and it caps off a strong year. Earnings were $3.9 billion for the quarter, and EPS was $2.09, up 31% from a year ago. On a full year basis, earnings were $14.6 billion and EPS was $7.91, up nearly 50%, reflecting higher revenue and a recovery in provisions for credit losses. Our retail businesses recorded strong volume and free income growth as we added new customers and deepened existing relationships in an environment of rising activity. Our wholesale bank, built on last year's record performance, winning key client mandates and continuing to advance our U.S. dollar strategy. And our CET1 ratio ended the year at 15.2%, up more than 200 basis points from the fourth quarter of last year. Reflecting these strong results, we declared a $0.10 dividend increase today, bringing our dividend to $0.89 per share per quarter. and we announced our intention to repurchase up to 50 million common shares for cancellation, subject to regulatory approval. We are pleased to be able to return capital to shareholders while retaining significant flexibility to continue investing in organic and inorganic growth opportunities. I'm proud of what we've accomplished this year. We've stood shoulder to shoulder with our customers, colleagues, and communities, supporting them through the worst of the pandemic and helping them participate in the recovery. There's still much work to do to ensure that this recovery is sustained and sustainable, but we meet the challenge from a position of strength, powered by our proven business model, guided by our long-term strategy, and investing purposefully in our businesses to position them for future growth. Our Canadian retail segment earned $8.5 billion this year, with higher revenues across the banking, wealth, and insurance businesses. We delivered record real estate secure lending originations, card retail sales, wealth assets, and insurance premiums. And we extended our lead in deposits and personal money movement as customers responded to our expanded advice and product offerings by bringing us more of their business. We're winning with customers with the capabilities we've developed to deliver legendary experiences. Our TD Aeroplane Visa Infinite and MBNA Rewards Platinum Plus cards received top billing in several industry reviews, reflecting the investments we've made to enhance the depth and breadth of our premier suite of credit cards. In addition to being named Best Digital Bank in North America by Global Finance, we were named Canada's Best Consumer Digital Bank, ranking number one in seven categories, including Best Mobile Banking App, best information security and fraud management, and best open banking APIs, as well as most innovative digital bank for the third year running. And as the number one financial institution patent filer in Canada, with over 300 patents granted to date, we are investing in the R&D to keep TD at the forefront of shaping the future of banking. A U.S. retail bank earned $3.3 billion in fiscal 2021, with improving top-line growth throughout the year, strong deposit volumes, triple P loan forgiveness, and a steady recovery in consumer lending and fee income helped offset continued margin pressure. We built on our lead in core deposits, ranking eighth nationally, supported by further market share gains. We saw personal loan volumes rebound in the latter half of the year with higher year-end balances in mortgages, cards, and indirect auto. We ranked number one for SBA lending in our Maine to Florida footprint for a fifth year running, and we were the number seven PPP lender nationwide, helping small business customers obtain forgiveness for nearly 100,000 loans with gross carrying value of almost $9 billion. While this is weighing on our loan balances in the near term, it has strengthened our leadership with small business customers in our footprint that are at the heart of our One TD strategy. That One TD strategy also helped us earn two JD Power Awards this year. TD Bank, America's most convenient bank, ranked first in JD Power's 2021 Small Business Banking Satisfaction Study in the South region, our third win in this category. And TD Auto Finance took top spot in the 2021 Dealer Finance Satisfaction Study for non-captive lenders with prime credit for the second year in a row. And we continue to deliver on our omni-channel strategy, amplifying unexpectedly human customer experiences with enhanced digital capabilities, including launching a new robo-advisor solution for our wealth clients and entering into a data access agreement with Akoya designed to help customers share their data with fintechs and aggregators safely and securely as we continue to demonstrate principled leadership on open banking. Our wholesale banking segment delivered strong results this year with earnings of $1.6 billion. Over the last several years, TD Securities has made significant strides building on its strengths in Canada and investing in the global expansion of its U.S. dollar strategy. The dealer has grown its revenue base by almost 35% since 2018, added over 100 new corporate lending clients, and expanded its product, industry, and ESG advisory capabilities. The progress is evident in strong client activity across the dealer's footprint. This quarter, our Canadian banking team acted as financial advisor to Agnico Eagle on a spending merger with Kirkland Lake Gold Corporation. for a combined market capitalization of 24 billion U.S. dollars, the second largest gold M&A transaction ever, and the largest gold merger of equals transaction. In the U.S., we've grown our U.S. prime services business, adding 27 funds and 8 billion U.S. dollars in gross assets over the last year. And in Europe, TD Securities was one of five joint lead managers, and the only Canadian dealer on the European Union's 12 billion euros inaugural green bond, the largest green bond ever, issue ever. Overall, I'm very pleased with our performance this year. We see continued upside to volume and fee income as the recovery progresses, as well as the potential for higher spread revenue from rising rates. Coupled with our proven business model, the growth opportunities in each of our businesses, and our ability to deploy capital, we believe we can grow adjusted EPS by 7% to 10% over the medium term. While we have good momentum entering the year, the road ahead is likely to be bumpy and it will be challenging to meet our medium-term objective in 2022. In addition to a complex macroeconomic environment, we are likely to see normalizations in PCLs, insurance claims, and wealth trading activity, along with declining revenue related to PPP loan forgiveness. As always, we will stay focused on our long-term strategy and continue to execute on our enterprise priorities, delivering more value for customers across our distribution channels, leveraging our data, analytics, and AI capabilities to elevate the customer experience, transforming the way we work to achieve better, faster outcomes. investing in our colleagues to ensure they have the skills and resources to grow and succeed in a changing world, and continuing to embed ESG in everything we do, from meeting our commitments to increase the representation of women, black, and indigenous peoples in our executive ranks, to executing on our climate action plan and helping build the sustainable future the world urgently needs. To wrap up, I'm proud of the strong financial results and returns we've generated for shareholders this year. I'm equally proud of the value we delivered for all our stakeholders. Last month, TD was named to the Dow Jones Sustainability World Index for the eighth year in a row, a measure of our long track record of good environmental stewardship, social responsibility, and corporate governance. We were also recognized as an employer of choice in numerous surveys, one of the world's best employers in 2021, according to Forbes, a top diversity employer, according to Canada's best diversity employers and Diversity Inc. in the U.S., home to a top team and two executives in American Bankers' 2021 Most Powerful Women program, and a member of the Bloomberg Gender Equality Index for five years running. But the greatest recognition is the 90,000 TD Bankers who choose to make their careers at TD. They are the real force behind our success and the reason I'm confident we will continue to build on these achievements as we pursue our shared vision to be the better Bay. I thank them for their hard work and dedication. And finally, a word to our customers, colleagues, and communities in British Columbia affected by the devastating flooding. We are thinking of you and will continue to focus on providing whatever support we can through this upheaval.