TD Bank 2010 Annual Report Download - page 35

TD BANK GROUP ANNUAL REPORT 2010 MANAGEMENT’S DISCUSSION AND ANALYSIS 33
Revenue
(millions of Canadian dollars) 2010 2009 2008
Investment banking and capital markets $ 2,351 $ 3,154 $ 553
Corporate banking 454 397 370
Equity investments 69 (330) 327
Total $ 2,874 $ 3,221 $ 1,250
BUSINESS SEGMENT ANALYSIS
Wholesale Banking
Our franchise strategy has delivered solid revenue and net income while reducing our overall risk profile.
BUSINESS HIGHLIGHTS
• Net income on a reported basis for the year of $866 million,
a decrease of $271 million, or 24%, compared with last year.
Net income on an adjusted basis for the year of $987 million,
a decrease of $150 million, or 13%, compared with last year.
• Return on invested capital of 31%, compared with 30%
last year.
• Solid performance across all business lines.
• Grew franchise fixed income, currency and commodities
businesses and enhanced investment banking capabilities.
• Maintained top-three dealer status in Canada (for the nine-
month period ended September 30, 2010):
– #1 in M&A completed (on rolling 12 month basis)
– #1 in equity block trading
– #2 in fixed-income trading
– #2 in fixed-income underwriting
CHALLENGES IN 2010
• European sovereign debt crisis negatively impacted
credit markets.
• Low interest rate, low volatility environment led to reduced
trading opportunities.
• New issuance activity declined among key corporate clients.
INDUSTRY PROFILE
The wholesale banking sector in Canada is a mature market with
competition primarily coming from the Canadian banks and large
global investment firms, and independent dealers in resource sectors.
Throughout 2010, moderating financial markets, normalized trading
conditions and increased competition have put downward pressure
on industry volumes and returns as compared to 2009 and early 2010
levels. Key industry players have shifted their focus to client-driven
revenue as they seek to reduce their risk profile and preserve capital.
In order to compete effectively, firms offer a complete package of
products and solutions to clients. Competition is particularly intense
for transactions with high quality counterparties as securities firms
focus on prudent risk management. Growth opportunities remain for
highly-rated wholesale banks offering a full suite of innovative solu-
tions and services. In particular opportunities will continue to emerge
as governments meet growing funding needs and corporations solidify
their balance sheets in the current rate environment.
OVERALL BUSINESS STRATEGY
To build the franchise and enhance leadership positions by leveraging
TD’s standing as a high quality counter party and providing superior
wholesale banking solutions to high quality corporate, government,
and institutional clients in liquid and transparent financial markets:
• We exist to meet client needs. We focus on providing superior
execution of client-driven transactions.
• In Canada, the strategic objective is to continue to strengthen
our position as a top investment dealer.
• In the U.S., our objective is to extend the goals of the Canadian
franchise and leverage the networks of our U.S. businesses. The
focus is on growing government fixed income and currency trading
businesses.
• Globally, we intend to extend the goals of our North American
franchise, including trading in liquid currencies with high quality
government, institutional, and corporate clients, as well as under-
writing, distributing, and trading high quality fixed income products.
• Support and enhance TD’s brand with our corporate, government,
and institutional client base.
(millions of Canadian dollars)
TOTAL REVENUE
08 09 10
$3,500
2,000
2,500
3,000
1,500
1,000
500
0
$2,874
(millions of Canadian dollars)
NET INCOME
08 09 10
800
1,000
200
600
400
0
$1,200
$866
(billions of Canadian dollars)
RISK-WEIGHTED ASSETS
08 09 10
$60
50
40
30
20
10
0
$32