TD Bank 2002 Annual Report Download - page 22

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20
HOW WE PERFORMED IN 2002
Financial results of key product segments
within TD Securities
Corporate banking revenues declined by 15% in 2002,
reflecting lower assets and capital in the business, higher
non-accrual loan balances and an increase in the losses from
asset sales. In 2003, core lending capital in TD Securities
will amount to approximately $1 billion as we focus on
providing credit only where we can generate relationship
returns of 20% or more.
Investment banking and capital markets revenues declined
by 10% in 2002 as compared with 2001. Investment
banking revenues in 2002 were consistent with 2001. A
substantial slowdown in industry-wide mergers and
acquisitions volumes and muted new equity issue volumes
were offset by continued strength in new debt issuance,
demand for income trusts and higher fees from private equity
placement. Total revenues from our portfolio of capital
markets businesses in 2002 were down approximately 10%
from 2001. In debt capital markets, the low interest rate
environment led to strong new debt issue volumes offset by
widening credit spreads, reduced volatility and a relatively
flat yield curve which led to lower trading revenues and
weaker client flows. Equity capital markets revenues were
also down, reflecting decreased equity market volatility, lower
client-driven trading activity and a decline in trading volumes.
TD Securities private equity business performed poorly as
revenues were down approximately $135 million reflecting
lower realizations and higher writedowns. The private equity
business was scaled down in 2002 through closure of the
U.K. office and reductions in the U.S. business.
TD Securities
(millions of dollars) 2002 2001 2000
Net interest income (TEB) $ 1,496 $ 886 $ 428
Other income 1,159 2,251 2,295
Total revenue 2,655 3,137 2,723
Provision for credit losses 2,490 327 210
Non-interest expenses excluding non-cash goodwill amortization 1,232 1,368 1,189
Income (loss) before taxes (1,067) 1,442 1,324
Provision for (benefit of) income taxes (TEB) (404) 528 546
Net income (loss) – cash basis $ (663) $ 914 $ 778
Selected volumes and ratios
Average loans and customers’ liability under acceptances (billions of dollars) $25 $29 $28
Economic profit (loss) (1,174) 369 311
Full-time equivalent staff at October 31 3,229 2,728 2,500
Return on economic capital – cash basis (18)% 23% 22%
Efficiency ratio – cash basis 46.4 % 43.6% 44.0%
Revenues
(millions of dollars) 2002 2001 Growth
Corporate banking $ 752 $ 886 (15)%
Investment banking
and capital markets 1,744 1,931 (10)
Equity investments 159 320 (50)
Total $ 2,655 $ 3,137 (15)%
Management’s Discussion and Analysis of Operating Performance