The Toronto-Dominion Bank

Good afternoon, everyone, and welcome to the TD Bank Group Q2 2022 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Hales. Please go ahead, Ms. Hales.

Thank you, Operator. Good afternoon, and welcome to TD Bank Group's second quarter 2020 investor presentation. We will begin today's presentation with remarks from Barrett Mizrani, the bank's CEO, after which Kelvin Tran, the bank's CFO, will present our second quarter operating results. Ajay Bambawali, 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 Michael Rhodes, Group Head, Canadian Personal Banking, Paul Douglas, Group Head, Canadian Business Banking, Raymond Chun, Group Head, Wealth Management and Insurance, Leo Salam, President and CEO, TD Bank, America's Most Convenient Bank, and Riyaz 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 Q2 2020 report to shareholders. With that, let me turn the presentation over to Barrett.

Thank you, Brooke, and thank you, everyone, for joining us today. Q2 was a good quarter for TD. Earnings were $3.7 billion, and EPS was $2.02. We had strong revenue performance, up 8% year-over-year, reflecting increased customer activity and the benefits of our deposit-rich franchise. We delivered approximately 200 basis points of operating leverage across the enterprise as we continued to see strong returns from our investments. The bank's CET1 ratio ended the quarter at 14.7%, reflecting TD's consistent ability to generate capital organically, As Kelvin will discuss in his remarks, this quarter we are activating the drip discount as a prudent response to changes in the operating environment. A proven business model enables us to continue to deliver for our shareholders while building the better bank for our customers, colleagues, and communities in the digital age. Let me now turn to each of our businesses and review some highlights from Q2. Our Canadian retail segment earned $2.2 billion. Revenue increased 9%, driven by volume and fee income growth as customer activity continued to accelerate. The personal bank had a strong quarter. The power of our deposit franchise in this rising rate environment was amplified by significant growth this quarter, with deposits up 7% year over year. Moreover, we are seeing strength in critical segments, for example, New-to-Canada account acquisition is up more than 100% year-over-year. In our real estate secured lending business, we are benefiting from our journey-based approach and seeing progress in everything from advisor productivity to pipeline management to account retention. And in our branch network, we are seeing increased branch effectiveness in pull-through and conversion rates. Our cards business continues to perform very well, Card retail sales were up 22% year over year, with a notable rebound in travel-related spend. Focused on creating deeper engagement and loyalty, we launched MyTD Rewards, a new loyalty and rewards hub where customers can easily access and redeem rewards and loyalty benefits online or on the go. Through this platform, customers will be able to take advantage of an integrated partnership with Starbucks Canada, helping them unlock even more value on everyday purchases. This partnership adds to our existing programs with Air Canada, Amazon, Expedia, and Canada Post, as TD continues to collaborate with the biggest consumer brands in the world. It was also a very strong quarter for the business bank, with double-digit growth in loans NTD Auto Finance ranked highest in dealer satisfaction among non-captive lenders with retail credit by J.D. Power for the fifth year in a row. In our wealth business, net asset growth and higher fee-based revenue health offset a moderation in direct investing trading volumes from the old-time peak we saw last year. We've taken market share in both direct investing and as measured by new accounts, trades and revenue, and private wealth management demonstrating the strength of our offerings across investor segments. NTD Asset Management led the banking industry mutual fund sales for the second consecutive quarter. The competitive advantage of our insurance business were also evident in the quarter as we strengthened our number one position in both the direct-to-consumer and affinity spaces. We also launched modernized cloud-based contact center capabilities, including leveraging AI for intent-based call routing. We believe that this investment, which we plan to roll out more broadly across the bank over time, will enhance customer experience and accelerate response times. Turning to the U.S., a U.S. retail bank earned $769 million U.S. dollars in Q2. Excluding PPP runoff, commercial loan volumes continued their momentum quarter over quarter with strong originations and increasing utilization rates. Credit card sales and auto loan originations were up 15% and 36% year over year, respectively. And we saw good retail deposit volume growth while benefiting from higher deposit margin in a rising rate environment. To support commercial customers, we launched a pilot program with a leading fintech to automate cash management by embedding TD banking products and services directly into their enterprise resource planning and accounting software. We added a general-purpose MasterCard to our offerings in Target's digital and store channels, further growing our strategic card partnership beyond the store-only red card. We continue to innovate in the payment space This quarter, TD Auto Finance became the first indirect auto lender in the U.S. to offer real-time payments throughout the day to our dealer clients nationwide, rather than sending batch payments overnight, a significant benefit for our clients. And we launched TD Home Access Mortgage, a new product designed to increase home ownership opportunities in Black and Hispanic communities across several markets within our footprint. TD also received an outstanding rating in its recently concluded Community Reinvestment Act examination. With the contribution from our investment in Schwab of $177 million, segment earnings were $946 million this quarter. And we continue to make progress on our transaction with First Horizon. Since the agreement was announced in late February, our teams in the U.S. have been hard at work. We've held listening sessions and met with over 100 community groups across TD and First Horizons footprints. TD's commitment to local markets and our history of investment in the communities we serve were well received, and I'm pleased by the broad support we've heard for the transaction, including letters of support contributed by hundreds of community groups as part of the regulatory public comment period process. In our wholesale banking business, we delivered solid performance this quarter in a challenging market and geopolitical environment, with earnings of $359 million driven largely by higher trading revenues. This quarter, TD Securities was named the overall Canadian fixed income service quality leader in the Coalition Greenwich Study for the fourth consecutive year. And the business continues to be recognized for the investments we've made to strengthen our global platform and enhance the capabilities we offer our clients. TD Securities was top three in the overall commodities dealers category of the 2022 energy risk commodity rankings and was number two and number two in base and precious metals respectively. Reflecting our leadership in sustainable finance, TD Securities was selected as co-structuring advisor and a joint lead manager on the Government of Canada's inaugural $5 billion green bond issuance, the largest Canadian green bond issued to date. The bank also set interim finance emissions targets this quarter. To help support our net-zero goals, we are focused on two high-emitting sectors, energy and power generations. NTD Securities will work closely with clients to support and enable their transitions to a low-carbon future. Overall, as I reflect on the quarter, I'm pleased with the way we've navigated the rapidly evolving environment. Credit performance remained strong and we saw growth in our businesses. However, we're also seeing elevated uncertainty, higher inflation, and increased risk of a potential economic slowdown. With our disciplined risk management approach and sustainable business model, TD is well positioned to face the challenges and seize the opportunities that lie ahead. To continue to exceed the rapidly changing expectations of our customers, we've launched an initiative we call the Next Evolution of Work, or NEW for short. Historically, the operating model of most banks, including TD, has been designed to support a smaller number of large-scale initiatives. It has served us well. However, it is not designed for the volume of change we are driving today and for what we will need to drive in the future. With new, we are building upon our strengths by modernizing our operating model and technology capabilities. This includes focusing on customer journeys to foster continuous improvement, adapting certain functions of the organization to maximize cross-functional effectiveness, enabling new tooling and platform capabilities, including the use of the cloud, adopting agile at scale processes. Key parts of the organizations have shifted to the new model so far, and we are seeing positive results, including faster time to market and greater efficiencies in how we are building and deploying technology. This is enabling us to move at the speed of the market and introduce new offers and services to our customers in a matter of weeks It's still early days, but we are confident that we are on the right path. TD also continues to lead the industry in AI innovation. For the second consecutive year, a Canadian banking app was honored by the Business Intelligence Group for AI-powered insights developed by Layer 6, our in-house AIT. TD was also recognized by Sealand, a global research and advisory firm focused on technology for financial institutions as the winner of the 2022 Model Bank Award for Customer Engagement for our AI-powered digital experiences intended to improve financial outcomes for our customers. We have world-leading AI capabilities at TD, and their applications extend far beyond banking. Last month, we were proud to announce our investment in Signal One. Signal One will apply AI to help improve healthcare delivery for everyone, a clear need that has been amplified throughout the pandemic. COVID-19 also heightened our focus on healthy facilities. This quarter, we were proud that TD achieved the Well Health Safety Rating certification across our entire North American retail and corporate real estate footprint, one of only a few organizations globally to have certified their entire portfolio. And TD Bank, America's most convenient bank, was recognized by Diversity Inc. as a top company for diversity for the 10th consecutive year and by Forbes as one of the best employers for diversity for the fourth consecutive year. These awards only motivate us to work harder as we strive for a more diverse and inclusive future. TD colleagues will contribute to that future, and we continue to invest in them as they are our most valuable asset. This quarter, I was pleased to announce a 3% pay raise or one-time cash award for the majority of our workforce below the vice president level. After two years of effort, through challenging circumstances, it is the right thing to do, to deliver for all of our stakeholders. It is a privilege to work alongside our over 90,000 TD bankers around the globe, and I thank them for all they do every day. With that, I'll turn things over to Kelvin. Kelvin?