TD Bank 2003 Annual Report Download - page 24

TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Management’s Discussion and Analysis22
•Fiscal 2003 demonstrated continued buoyancy in real
estate in both home purchase and refinance activity.
•The industry will continue to be extremely competitive due
to historical low interest rates and the emergence of non-
traditional and third party mortgage providers. Competitive
pricing reduced net interest margins throughout 2003 and
further compression is expected in 2004.
•Objectives for 2004 are to grow volume and maximize
revenue by enhancing the customer’s real estate financing
experience through improvements in the application and
legal process and by continuing to offer customers a full
range of options between traditional mortgage products
and home equity lines of credit.
Personal deposits
•Offers a complete range of Canadian and U.S. dollar
chequing, savings and term investment vehicles designed
to promote primary banking relationships, retirement
savings and retirement income options.
•During 2003, the industry experienced strong growth
in personal deposits at a rate of over 6% with growth pri-
marily in more liquid investment vehicles. Core deposit
margins narrowed due to the impact of the low rate envi-
ronment and customer preference, which weighted volume
growth towards the Guaranteed Investment Account.
Term deposit margins narrowed due to competitive pricing
in short-term products. Further compression in term
deposit margins may occur in 2004 however core deposit
margins are expected to be stable.
•Experienced a modest market share decline in short-term
deposits in a competitive rate environment, but kept the
number one position in personal deposit market share with
growth in both non-term and term volumes of 7% and
4%, respectively.
•Continued moderate growth in term deposit volumes in
2004 is expected. Non-term volumes are projected to grow
at a slower rate. An increased emphasis will be placed on
growing personal chequing acccounts to compensate for
the projected slow down in volume growth.
Consumer lending
•Offers Lines of Credit, Loans, Overdraft Protection products
and a wide selection of Visa credit cards including Classic,
Premium and Rewards cards such as the GM Visa card and
the TD Gold Travel Visa card.
•Revenue from credit cards grew by 9% on 7% growth in
both outstandings and purchase volumes while revenues
from other products were up 3% on 1% volume growth.
•Credit quality improved due to better adjudication and
collection processes. Provision for credit losses as a percent
of consumer lending volume improved to 1.98% from
2.14% last year.
•The tighter adjudication standards contributed to the
relatively low volume growth in unsecured lending which
in turn had a negative impact on market share.
•Consumers responded positively to the TD Gold Travel
“travel on your terms” rewards feature, as evidenced by
both new account growth and increased card usage.
•Deepening relationships with existing customers, building
on the Gold Travel Visa momentum and continuing to build
an enhanced risk management platform will be the key
initiatives in 2004.
Small business banking and merchant services
•Small business banking’s focus is on quick and efficient
delivery of deposit, lending and cash management services
across the breadth of the entire branch network. With
longer hours, any branch banking, dedicated service tellers
and a top ranked internet service, superior access and
service is provided to small business customers.
•Merchant services is a premier debit and credit payment
solution provider providing point-of-sale technology and
24/7 support service to over 85,000 merchant locations
across Canada.
•Revenue from small business deposits grew 7% on 10%
volume growth and reduced margins while lending revenue
was up 7% on 6% volume growth. Lending market share
improved to 16.58% from 16.04% last year.
•In 2004 focus will be on continued sales growth
and retention.
Commercial banking
•Offers lending, deposit, savings and investment products
to medium-sized businesses plus a full range of day-to-day
banking, cash management, trade and treasury services.
•Continued momentum in the growth of commercial
deposits, which increased by 16%.
•Continued expansion of web capability that began in
2002. More than 50% of clients exclusively access cash
management services through the internet.
1Other revenue includes internal commissions on sales of mutual funds and other
Wealth Management products, fees for foreign exchange, safety deposit box rentals
and other branch services. The funding costs for the Canada Trust acquisition is
also included in Other. Revenues in 2001 also include certain revenues that are of
a non-recurring nature.
Revenues
(millions of dollars) 2003 2002 2001
Real estate secured lending $ 806 $ 759 $ 711
Personal deposits 2,006 1,997 1,942
Consumer lending 1,145 1,086 993
Small business banking 701 659 633
Commercial banking 562 594 595
Insurance, net of claims 451 407 350
Other1218 266 415
Total $ 5,889 $5,768 $5,639