TD Bank 2007 Annual Report Download - page 121

TD BANK FINANCIAL GROUP ANNUAL REPORT 2007 Financial Results 117
NOTE 27 SEGMENTED INFORMATION
(millions of Canadian dollars) Loans and customers’ liabilities under acceptances1Credit instruments2,3 Derivative financial instruments4,5
2007 2006 2007 2006 2007 2006
Canada 82%81%65%62%34%32%
United States 16 18 29 34 21 23
United Kingdom 1–1112 12
Europe – excluding the United Kingdom ––2–26 26
Other International 113377
Total 100%100%100%100%100%100%
$185,194 $169,284 $ 71,312 $64,332 $38,417 $27,921
1 Of the total loans and customers’ liability under acceptances, industry
segments which equaled or exceeded 5% of the total concentration were
as follows at October 31, 2007: Real estate 8% (2006 – 8%); and financial
institutions 5% (2006 – 3%).
2 At October 31, 2007, the Bank had commitments and contingent liability
contracts in the amount of $71,312 million (2006 – $64,332 million).
Included are commitments to extend credit totaling $63,629 million (2006
– $56,184 million), of which the credit risk is dispersed as detailed in the
table above.
3 Of the commitments to extend credit, industry segments which
equaled or exceeded 5% of the total concentration were as follows
at October 31, 2007: Financial institutions 45% (2006 – 45%); real estate
residential 9% (2006 – 9%) and oil and gas 5% (2006 – 4%).
4 At October 31, 2007, the current replacement cost of derivative financial
instruments amounted to $38,417 million (2006 – $27,921 million). Based
on the location of the ultimate counterparty, the credit risk was allocated
as detailed in the table above.
5 The largest concentration by counterparty type was with financial institu-
tions, which accounted for 82% of the total (2006 – 81%). The second
largest concentration was with governments, which accounted for 9% of
the total (2006 – 9%). No other industry segment exceeded 5% of the total.
The following table presents the maximum exposure to credit risk
of financial instruments, before taking account of any collateral
held or other credit enhancements.
Gross Maximum Credit Risk Exposure
(millions of Canadian dollars) 2007 2006
Cash and due from banks $ 1,462 $ 1,624
Interest-bearing deposits with banks 14,746 8,763
Securities
Trading 77,637 77,482
Designated as trading under fair value option 2,012 –
Available-for-sale 35,650 –
Held-to-maturity 7,737 –
Investment –46,976
Securities purchased under reverse repurchase agreements 27,648 30,961
Loans
Residential mortgages 58,463 53,386
Consumer installment and other personal loans 67,198 62,800
Credit card loans 5,464 4,743
Business and government loans 43,555 39,679
Business and government loans designated as trading under the fair value option 1,235 –
Customers’ liability under acceptances 9,279 8,676
Derivatives1 (Note 24) 74,734 61,477
Other assets110,499 8,999
Total assets 437,319 405,566
Credit instruments (Note 25)271,312 64,332
Total credit exposure $ 508,631 $ 469,898
1 Non-trading derivatives have been excluded from other assets and included
in derivatives for purposes of this table.
For management reporting purposes, the Bank’s operations and
activities are organized around the following operating business
segments: Canadian Personal and Commercial Banking, Wealth
Management, U.S. Personal and Commercial Banking and
Wholesale Banking.
The Canadian Personal and Commercial Banking segment
comprises the Bank’s personal and business banking in Canada as
well as the Bank’s global insurance operations (excluding the U.S.)
and provides financial products and services to personal, small
business, insurance, and commercial customers. The Wealth
Management segment provides investment products and services
to institutional and retail investors and includes the Bank’s equity
investment in TD Ameritrade. The U.S. Personal and Commercial
Banking segment provides commercial banking, insurance agency,
wealth management, merchant services, mortgage banking and
other financial services in the northeastern U.S. The Wholesale
Banking segment provides financial products and services to
corporate, government, and institutional customers.
The Bank’s other business activities are not considered report-
able segments and are, therefore, grouped in the Corporate seg-
ment. The Corporate segment includes activities from the effects
of asset securitization programs, treasury management, general
provisions for credit losses, elimination of taxable equivalent
adjustments, corporate level tax benefits, and residual unallocated
revenue and expenses.
2 The balance represents the maximum amount of additional commitment
that the Bank could be obligated to extend should the contracts be fully
utilized. The actual maximum exposure may differ from the amount
reported above.
NOTE 26 CONCENTRATION OF CREDIT RISK
Concentration of credit risk exists where a number of borrowers
or counterparties are engaged in similar activities, are located
in the same geographic area or have comparable economic
characteristics. Their ability to meet contractual obligations may
be similarly affected by changing economic, political or other
conditions. The Bank’s portfolio could be sensitive to changing
conditions in particular geographic regions.