TD Bank 2002 Annual Report Download - page 5

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TO OUR SHAREHOLDERS
To our shareholders
A Look Back
2002 was a difficult year for the Bank.
Capital markets continued to struggle and for the third straight
year North America’s major stock market indices reported losses,
representing the longest continuous down stretch since the end
of the Second World War. In addition, several high profile cases
of corporate malfeasance were uncovered.
Figuratively speaking, investor confidence was brought to its
knees.
The after-effects of the telecom bubble bursting resonated well
into 2002 and the utilities sector in the U.S. and U.K. domestic
markets suffered a rapid and unprecedented deterioration in the
latter part of the year.
All of these events had a severe impact on our wholesale
banking business.
Consequently, our financial results for the year were mixed
and unsatisfactory overall.
Swift and Decisive Action
We had no choice but to move swiftly and aggressively to change
the risk profile of the Bank, and overhaul our corporate lending
strategy.
Our corporate loan book was divided into core and non-core
relationships. Loans in the non-core book are being exited, a
process that we expect to substantially complete over the next
three-year period. Core client relationships will be strengthened.
Changes were made to our lending standards, and our
procedures and practices. We intend to reduce the total amount
of capital available for corporate lending and have implemented
an enhanced credit framework with stricter industry, portfolio
and name concentration limits. A new organizational structure
has been put in place to lead and support these initiatives, and
lines of responsibility and accountability have been made clearer.
Looking ahead, we are confident that these changes have
dramatically and fundamentally reduced our risk profile, and
positioned our wholesale banking business for renewed growth
and performance in the years ahead.
Additionally, these moves have accelerated our transition
towards focusing more of our financial and intellectual capital on
our retail businesses, which are less volatile and where we have
a leading Canadian position and key competitive advantages with
our service model.
In the near term, we expect to derive 70% of our earnings
from this area of our business, ultimately growing to reach our
goal of 80% of our total earnings mix over the longer-term.
Personal and Commercial Banking
The integration of the Canada Trust franchise with our TD Bank
Financial Group retail network, the largest merger in Canadian
banking history, is now essentially complete.
TD Canada Trust revenue grew during 2002 and we generated
good increases in a number of key product segments. Our
Customer Satisfaction Index reached a record high at year end,
which we believe is a testament to the hard work and dedication
of our employees.
At year end, TD Canada Trust's overall share of its market was
21.46 percent, compared to 21.86 percent a year ago.
Notwithstanding this slight overall decline and the challenges
presented by branch integration, our share of the market is stable,
close to pre-merger levels and well within our expectations.
This year, we will direct much of our attention to streamlining
our processes and investing in our infrastructure to support our
service model. In doing so, we expect to realize improved
operational and cost efficiencies.
Chairman of the Board
President and Chief Executive Officer
A. Charles Baillie
W. Edmund Clark
Our results for 2002 did not measure up to
expectations or reflect our capabilities. Looking
ahead, we understand our challenge very
clearly – to demonstrate that we can deliver
consistent value for our shareholders.