TD Bank 2010 Annual Report Download - page 30

TD BANK GROUP ANNUAL REPORT 2010 MANAGEMENT’S DISCUSSION AND ANALYSIS28
(millions of Canadian dollars, except as noted) 2010 2009 2008
Net interest income $ 336 $ 270 $ 347
Non-interest income 2,121 1,935 1,981
Total revenue 2,457 2,205 2,328
Non-interest expenses 1,813 1,701 1,615
Net Income
Global Wealth 447 345 480
TD Ameritrade 194 252 289
Total $ 641 $ 597 $ 769
Selected volumes and ratio − Global Wealth
Assets under administration (billions of Canadian dollars) $ 224 $ 191 $ 173
Assets under management (billions of Canadian dollars) 183 171 170
Return on invested capital 14.5% 12.8% 19.4%
Efficiency ratio 73.8 77.1 69.4
Average number of full-time equivalent staff 7,043 6,864 6,419
(millions of U.S. dollars) As at Sept. 30
2010 2009
Assets
Receivables from brokers, dealers, and clearing organizations $ 1,208 $ 1,778
Receivables from clients, net of allowance for doubtful accounts 7,391 5,712
Other assets 6,128 10,882
Total assets $ 14,727 $ 18,372
Liabilities
Payable to brokers, dealers, and clearing organizations $ 1,934 $ 2,492
Payable to clients 6,810 9,915
Other liabilities 2,211 2,414
Total liabilities 10,955 14,821
Stockholders’ equity 3,772 3,551
Total liabilities and stockholders’ equity $ 14,727 $ 18,372
WEALTH MANAGEMENT
TABLE 15
CONDENSED CONSOLIDATED BALANCE SHEET
TABLE 16
REVIEW OF FINANCIAL PERFORMANCE
Wealth Management net income for the year was $641 million, an
increase of $44 million, or 7%, compared with last year. Global Wealth
net income, which excludes TD Ameritrade, was $447 million, an
increase of $102 million, or 30%, mainly due to higher fee-based
revenue from higher average client assets in the advice-based and
asset management businesses, and higher net interest margin expan-
sion due to effective treasury management strategies. The Bank’s
reported investment in TD Ameritrade generated $194 million of net
income, a decrease of $58 million, or 23%, compared with last year.
The decrease was driven by the translation effect of a stronger Canadian
dollar and lower earnings in TD Ameritrade. For its fiscal year ended
September 30, 2010, TD Ameritrade reported net income in Canadian
dollars was $592 million, a decrease of $52 million, or 8%, compared
with last year. Wealth Management’s return on invested capital was
14.5%, compared with 12.8% last year.
Revenue for the year was $2,457 million, an increase of $252 million,
or 11%, compared with last year. The increase was primarily due to
higher average assets under management and higher average fees due
to change in mix as a result of client preferences. Online brokerage
revenue increased slightly due to higher net interest income partially
offset by lower transaction revenue. Advice-based revenue increased
primarily due to higher average client assets.
Non-interest expenses for the year were $1,813 million, an increase
of $112 million, or 7%, compared with last year. The increase in
expenses was mainly due to higher variable compensation associated
with the increased fee-based revenue, increased trailer fees related to
higher revenue from increased assets under management, the inclusion
of U.K. acquisitions, higher volume-related expenses, and our continued
investment in growing the sales force in advice-based businesses. These
expenses were partially offset by reduced expenses in the U.S. wealth
management businesses.
The average FTE staffing levels for the year increased by 179, or 3%,
compared with last year. The increase was mainly due to the U.K.
acquisitions, the addition of new client-facing advisors, support staff,
and increased processing staff to support higher business volumes.
The efficiency ratio for the year improved to 73.8% compared to 77.1%
in the prior year.
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 net new client assets and market increases in the
second half of the year. Assets under management of $183 billion
as at October 31, 2010 increased by $12 billion compared with Octo-
ber 31, 2009.
TD AMERITRADE HOLDING CORPORATION
As at October 31, 2010, the Bank’s reported investment in TD Ameri-
trade was 45.93% (July 31, 2010 – 45.95%; October 31, 2009 –
45.06%) of the issued and outstanding shares of TD Ameritrade.
On August 6, 2010, the Stockholders Agreement was amended such
that: (i) the Bank has until January 24, 2014 to reduce its ownership in
TD Ameritrade to 45%; (ii) the Bank is required to commence reduction
of its ownership in TD Ameritrade and continue its reduction as long as
it can be executed at a price per share equal to or greater than the
Bank’s then-applicable average carrying value per share of TD Ameri-
trade; and (iii) in connection with stock repurchases by TD Ameritrade,
the Bank’s ownership interest in TD Ameritrade will not exceed 48%.
The condensed financial statements of TD Ameritrade, based on
its Consolidated Financial Statements filed with the SEC, are provided
as follows: