TD Bank 2010 Annual Report Download - page 29

TD BANK GROUP ANNUAL REPORT 2010 MANAGEMENT’S DISCUSSION AND ANALYSIS 27
BUSINESS HIGHLIGHTS
• Wealth Management net income of $641 million was 7%
above 2009, while Global Wealth, which excludes TD Ameri-
trade, was up 30%, primarily due to higher net interest
margin and the growth in assets under management and
assets under administration due to client growth and
improved equity markets. The Bank’s investment in TD Ameri-
trade contributed earnings of $194 million for the year, 23%
lower than the previous year.
• Revenue increased 11% compared with last year, primarily
due to higher fee-based revenue from higher average client
assets in the advice-based and asset management businesses
and net interest margin expansion. These increases were
partially offset by lower transaction revenue in the online
brokerage operation in Canada.
• Global Wealth assets under administration of $224 billion
as at October 31, 2010, increased by $33 billion, or 17%,
compared with October 31, 2009 primarily due to the addition
of new client assets and market appreciation. Assets under
management of $183 billion as at October 31, 2010 increased
by $12 billion compared with October 31, 2009 due to net
new client assets and recent market appreciation.
• The online brokerage business experienced higher trading
volumes, increasing 12% over record volumes experienced in
2009. In the fourth quarter 2010, we launched an innovative
global trading platform that provides Canadian customers
with direct online access to leading European and Asia
Pacific markets. In the U.K., our online brokerage operation
maintained the number one market position, as ranked by
trades per day.
•
The advice-based businesses grew with the addition
of 43 net
new client-facing advisors in Canada.
• TD Mutual Funds successfully launched TD Mutual Fund
Corporate Class, Premium Series expansion of fixed income
funds and TD Ultra Short Term Bond Funds in the fourth
quarter 2010, generating nearly $570 million of net sales
in two months.
• TD Investment Management was recognized by Benefits
Canada as the fastest growing pension money manager for
2010 in the greater than $10 billion assets category.1
CHALLENGES IN 2010
• Transaction revenue for online brokerage business in Canada
was significantly impacted by the higher proportion of trades
being generated by an active trader segment.
• Continued low interest rate environment impacted margins.
INDUSTRY PROFILE
TD Wealth Management operates in three geographic regions:
Canada, the U.S., and the U.K. In Canada, the industry is extremely
competitive consisting of major banks, large insurance companies,
and monoline wealth organizations. TD has a leading market share in
online brokerage and asset management, and a growing share of the
advice-based businesses. Given the level of competition in Canada,
success lies in our ability to deliver increased functionality in our online
business, and to provide investment solutions and advice to manage
our advised clients’ wealth accumulation, preservation and transition
to meet their pre-retirement and retirement needs.
In the U.S., the wealth management industry is large but frag-
mented, consisting of banks, private banks, mutual fund companies
and discount brokers. In our Maine-to-Florida footprint, the Bank
competes against national and regional banks, as well as brokerages.
In the U.K. and Europe, the industry is led by strong regional players
with little pan-European presence or brand. TD competes by providing
multi-currency and multi-exchange online brokerage services for retail
investors, and custody and clearing services for corporate clients.
OVERALL BUSINESS STRATEGY
Global Online Investing
• Build on leadership through pricing, best-in-class service, and
intuitive functionality while continuing to expand global presence.
Canadian Advice-based Business
• Provide comprehensive investment and wealth planning services
to deliver on pre-retiree and retiree clients’ needs in terms of the
preservation and transition of wealth.
• Continue to deepen the business’s referral relationship with
Canadian personal and commercial banking partners.
North American Private Client Group
• Focus on catering to the investment and advice needs of high
net worth clients.
• Current priorities are to continue alignment of this advisory
relationship to deepen referrals, while expanding into high
opportunity markets.
North American Asset Management
• Deepen channel penetration, broaden institutional relationships,
and expand international equity capability.
1
The recognition is based on the Benefits Canada / CIIN Money Managers Survey
conducted for the year ended June 2010.