TD Bank 2007 Annual Report Download - page 35

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2007 Management’s Discussion and Analysis 31
ECONOMIC OUTLOOK
• Economic conditions should remain favourable to personal
and commercial banking, but loan and deposit growth is likely
to soften.
• Personal deposits growth is expected to slow in line
with after-tax income growth, but both will remain at
healthy levels.
• Core deposits are likely to outperform term deposits, reflect-
ing some moderation in after-tax income growth and the
impact of slower consumer spending.
• A cooling in Canadian housing markets will likely temper
mortgage growth. Nevertheless, the pace of increase should
remain solid and home equity loans will likely outperform tra-
ditional mortgages.
• Consumer spending is expected to slow, particularly on
big-ticket items. This is expected to dampen growth in
personal loans.
• Commercial deposit growth will likely be dampened by slower
profits growth, but should still rise at a respectable rate. Core
deposits are expected to rise slightly more than term deposits.
• Business investment is expected to remain strong, maintaining
demand for commercial loans. The expiration of the Federal
government’s accelerated capital cost allowance at the end of
2008 may prompt higher investment activity in 2008, with
some consequent moderation in 2009.
• Personal and commercial banking conditions are likely to
prove strongest in western Canada.
BUSINESS OUTLOOK AND FOCUS FOR 2008
Following three very strong years of growth, the outlook
for revenue growth is expected to moderate in 2008 as
volume growth slows in the credit cards business and
margins continue to be vulnerable to volatility in the
credit markets. Volume growth is susceptible to a U.S.-led
economic downturn. Revenue growth will benefit from
the increased leadership position in branch hours and
new branch and marketing investments, as well as
improved customer cross-sell and productivity improve-
ments. PCL rates as a function of loan volumes are
expected to reflect evolving conditions in the Canadian
economy. Expense growth will be slightly higher relative
to last year due to investments in new branches, longer
hours and systems and infrastructure to maintain
momentum in revenue growth. Our priorities for 2008
are as follows:
• Expand on our industry-leading customer service conve-
nience through continued investments in longer branch
hours, new branches, employee training and develop-
ment programs, and new sales and underwriting tools.
• Engage our strong employee base through a caring
performance-based culture.
• Focus and entrench community spirit and involvement at
all levels within the organization.
• Continue to develop relationships with more Canadians
and deepen relationships with our existing customers,
and grow underrepresented businesses.