The Toronto-Dominion Bank

Good morning, everyone. Welcome to the TD Bank Group Q3 2024 earnings conference call. I would like to turn the meeting over to Ms. Brooke Hales, Head of Investor Relations. Please go ahead, Ms. Hales.

Thank you, Operator. Good morning and welcome to TD Bank Group's third quarter 2024 investor presentation. Many of us are joining today's meeting from lands across North America. North America is known as Turtle Island by many Indigenous communities. I am currently situated in Toronto. As such, I would like to begin today's meeting by acknowledging that I am on the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee and the Wendat peoples, and is now home to many diverse First Nations, Métis and Inuit peoples. We also acknowledge that Toronto is covered by Treaty 13, signed with the Mississaugas of the Credit, and the Williams Treaty signed with multiple Mississaugas and Chippewa bands. 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 third quarter operating results. Ajay Bhambwale, 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 Raymond Chung, Group Head, Canadian Personal Banking. Barbara Hooper, Group Head, Canadian Business Banking. Tim Wiggin, Group Head, Wealth Management and Insurance. Leo Salaam, President and CEO, TD Bank, America's Most Convenient Bank. And Riaz Ahmed, Group Head, Wholesale Banking. Please turn to slide two. As noted on slide two, our comments during this call may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Barrett and Kelvin will both be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our Q3-24 report to shareholders. With that, let me turn the presentation over to Barrett.

Thank you, Brooke, and thank you, everyone, for joining us today. In Q3, TD delivered earnings of $3.6 billion in EPS of $2.05. Business fundamentals were strong across the bank. Before I get into the details, I want to spend a few minutes on the announcement we made late yesterday. We continue to actively pursue a resolution of our AML matters. Discussions have been productive, and while we are not through the tunnel yet, we can see the light at the end of this journey. In our release, we noted that it is our expectation that a global resolution can be achieved by the end of the calendar year. The $2.6 billion U.S. provision we just announced, combined with the $450 million U.S. provision announced last quarter, represents our current estimates of the total fines to be paid related to these matters. I also want to spend a minute on the remediation program itself. This is important work and the remediation program is well underway. In May, we updated you on our progress. We've advanced on all fronts since then. We've onboarded leadership with deep subject matter expertise supported by increased staffing resources. We've hired from other banks, regulators, government, and even law enforcement. We've invested in data and technology to enable improved transaction monitoring and data analytics capabilities. And we've implemented new cross-functional procedures for preventing, detecting, and reporting suspicious activity. While there's still much work ahead, we are pleased with the progress we've made. This is a priority. A U.S. business is an important part of the bank and of our future. We must focus on the work required to meet our obligations and responsibilities and build that future on stronger foundations. As I've said before, the failures were serious. We own it. We know what the issues are, and we are fixing them. I look forward to providing additional clarity as soon as I can. Let's now turn to our third quarter earnings. Revenue grew 8% year-over-year, driven by higher fee income in our markets-driven businesses and higher volumes and deposit margins in Canadian personal and commercial banking. PCLs were stable quarter-over-quarter, reflecting continued strong credit performance. We completed our restructuring program announced in the fourth quarter last year, delivering efficiencies across the enterprise and continue to prioritize investments in our risk and control infrastructure. As of quarter end, the bank's CET1 ratio was 12.8%, reflecting the impact of the AML investigations, provisions, and shares bought back during the quarter, partially offset by organic capital generation. The sale of 40.5 million shares of Schwab, which brings our holding to approximately 10.1%, further strengthens our capital ratio, ensuring the bank stays well above regulatory requirements after taking this provision. TD remains very well capitalized with ample liquidity and the means to invest in our AML remediation program, in our business, and in the customer experience. Banking continues to shape the future of banking. This quarter, TD completed the migration of its main data platform to the cloud, eliminating related legacy systems and modernizing the bank's data infrastructure. Enhancing scalability, security, and speed, TD's cloud-based platform is a key foundation for our forward-focused, data-driven organization. And we were proud that TD was recently named the best consumer digital bank in Canada for the fourth consecutive year and the best transformation and innovation in North America for the second consecutive year, both by Global Finance. Let me now turn to each of our businesses and review some highlights from Q3. Our Canadian personal and commercial banking segment delivered record revenues, reaching $5 billion for the first time and record net income, up 13% year-over-year. These strong results were driven by robust loan and deposit growth and substantial positive operating leverage. Across the segment, we are enhancing products and offerings through personalization and execution against our 1TD strategy. including strong momentum and referrals from our retail branch network to wealth. In real estate secured lending, the bank continued to deliver market share gains while supporting our growing customer base. NTD, which already has Canada's largest credit card account base, reached a new milestone with over 8 million active accounts. In addition, according to the 2024 Bond Loyalty Report, TD credit cards ranked number one across major issuers in program loyalty. In personal lending, the bank is supporting the financial journey of Canada's next generation of doctors, dentists, and veterinarians by enhancing TD's student line of credit offering and deepening relationships as their needs evolve. TD grew its leading deposit franchise with another strong quarter for account openings. And in the new to Canada market, we extended our packages beyond accounts to include offers for both TD Direct Investing and the TD Cash Back Visa Card as we add even more value for new Canadians. In business banking, TD grew loans by 7% year-over-year. This quarter, the bank launched TD Innovation Partners, a new team offering broad suite of services to further address the needs of technology and innovation companies. TD already has more than a million business banking customers across Canada, and now with TD Innovation Partners, the bank is helping the next generation of technology companies at every step of their journeys. Turning to the U.S., the U.S. Retail Bank continued to deliver strong operating momentum with sequential earnings growth and stable deposits excluding sweeps and peer-leading loan growth year-over-year. TD grew consumer loans 8% Year-over-year, with proprietary bank card balances up 16%. We simplified our infrastructure and drove productivity savings across our credit card business with the migration of retail card services into our consolidated, more advanced cards platform. In commercial banking, middle market loan balances grew 18%. These strong results were driven in part by continued execution of our 1TD strategies. As TD Bank, America's most convenient bank, and TD Securities collaborated to bring industry expertise to middle market clients and prospects and leverage relationships to capture sponsor-backed finance opportunities. And this quarter, we are proud that for the fifth year in a row, TD Auto Finance received the highest ranking in the J.D. Power U.S. Dealer Finance Satisfaction Study. J.D. Power also awarded TD Bank, America's most convenient bank, the highest ranking in online banking satisfaction among national banks, according to its US Online Banking Satisfaction Study, reflecting our investments in digital banking and our dedication to delivering legendary customer experiences across all our distribution channels. The wealth management and insurance segment demonstrated resilience this quarter, as strong fundamentals, including record revenues, enabled the business to earn through a significant increase in claims. For the last few years, we've seen an increase in the frequency of weather events. With TD's winning direct-to-consumer business model and our ability to adapt to changes in the environment, I'm confident that the insurance business will continue to deliver an attractive return on equity over time. Our advice businesses saw significant retail net asset growth across all our channels, coupled with market appreciation driving total assets up 15% year-over-year. In direct investing, a leadership position is the result of consistent innovation to bring market-leading capabilities to our clients. You saw that last quarter with the launch of TD Active Trader, and we've continued to innovate. This month, TD was the first bank in Canada to launch real-time partial shares, enabling investors to buy and sell a fraction of stocks, indices, and ETFs, making investing more accessible. This launch reflects the power of 1TD with TD Securities providing the backend execution to support this new functionality. Our insurance business was impacted by the severe weather events in the greater Toronto area and the wildfires in Alberta in Q3 and by hailstorms in Calgary and floods in Montreal this month. At TD Insurance, we are there for our customers in their moment of need. I want to thank TD colleagues for their tremendous efforts for our customers through these events. To support the communities impacted by wildfires, TD has made donations to the Canadian Red Cross and is facilitating customer donations at branches across Canada. Wholesale banking continued its growth with revenues up 14% year over year on broader, stronger capabilities. We continue to make good progress, integrating our teams, deepening our client relationships, and gaining momentum across our banking and markets businesses. In addition, we enhance U.S. share trading execution for our clients with a fully launched and automated TDSX private room. Overall, our businesses perform well in Q3, and I'm confident in the strength of our franchise. We are operating in a challenging environment with significant market volatility, rapidly evolving rate expectations, and heightened geopolitical risk. Amidst uncertainty in the outlook for the economies in both Canada and the U.S., retail customers and business clients alike are generally taking a cautious approach. As always, TD will be there for them as we navigate the coming months together. And those of you in Toronto have likely noticed an addition to the city's skyline, the new TD Terrace building. Inside the building is a state-of-the-art TD branch built as a next-generation innovation center enabling the bank to test new capabilities in a live environment. The bank's unique and inclusive culture continues to attract talent. TD received a top score of 100 in the 2024 Disability Equality Index for the 10th consecutive year in the U.S., and with the expansion of the index to Canada for the first time this year, the bank achieved the same top score in Canada as well. Across our businesses, our customers are at the heart of who we are and what we do. That's why, 10 years ago, we launched our first TD Thanks You campaign to showcase our gratitude for their unwavering support. In this milestone year, we've taken our appreciation to the skies through spectacular drone light shows in cities across Canada. Our colleagues live our commitment to our customers every day, and I want to thank them for all their efforts. I'm confident that together we will continue to deliver for all our stakeholders. With that, I'll turn things over to Kelvin.