TD Bank 2003 Annual Report Download - page 31

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Management’s Discussion and Analysis 29
Wealth Management
(millions of dollars) 2003 2002 2001
Net interest income (TEB) $ 431 $ 426 $ 468
Other income 1,746 1,737 1,820
Total revenue 2,177 2,163 2,288
Non-interest expenses excluding non-cash goodwill/intangible amortization 2,107 1,922 2,026
Income before provision for income taxes 70 241 262
Provision for income taxes (TEB) 145 116 120
Non-controlling interest in net income of subsidiaries –– 6
Net income (loss) – cash basis $ (75) $ 125 $ 136
Selected volumes and ratios
Assets under administration (billions of dollars) $ 267 $ 234 $ 240
Assets under management (billions of dollars) $ 113 $ 112 $ 119
Economic profit (loss) (millions of dollars) $(476) $ (298) $ (288)
Return on average invested capital – cash basis (3.6)% 3.7% 4.2%
Efficiency ratio – cash basis 96.8% 88.9% 88.5%
Average trades per day (thousands) 102 103 120
Revenues1
(millions of dollars) 2003 2002 2001
Discount Brokerage $ 1,462 $1,475 $1,616
Mutual Funds 200 187 182
Private Client Group 152 156 157
Asset Management 102 100 100
Investment Advice 243 238 233
Financial Planning 18 7 –
Total $ 2,177 $2,163 $2,288
TD Asset Management is recognized as one of the largest
quantitative managers in the country. Services provided include
investment management to pension funds, corporations,
institutions, endowments and foundations. Despite the chal-
lenging market environment, revenues improved $2 million
or 2% in 2003.
TD Waterhouse Investment Advice provides full-service
brokerage services to its retail customers throughout Canada.
Although fiscal 2003 represented a challenging environment
for the business, we continued to grow our sales force and
AUA, resulting in revenue growth of $5 million. As a result of
efforts to improve our competitive position, expenses
increased by $45 million or 21% in 2003.
TD Waterhouse Financial Planning continues to aggressively
grow its front-line salesforce and invest in a comprehensive
technology platform. As a result, revenues increased $11 mil-
lion in 2003.
1Certain revenues are presented net of internal transfers.
Economic outlook
Wealth Management is expected to benefit from improved
investor sentiment, which reflects increased optimism about
the economic outlook. Stronger economic growth in Canada,
the United States and overseas should translate into higher
corporate profits in the coming year. At the same time,
improved economic growth and expectations of central bank
rate hikes may push bond yields higher over the course of the
next 12 months. However, central banks are expected to be
slow to tighten monetary policy. Nevertheless, by late 2004
the Bank of Canada will be back in tightening mode, gradually
raising the return investors receive on cash. This economic
and financial backdrop is likely to translate into increased
activity in all areas of Wealth Management.
Wealth Management may also benefit from increased
inflows stemming from the need of some defined benefit
pension plans to increase their asset base. The use of more
conservative assumptions about future rates of returns by
institutional investors, including pension funds, could translate
into increased demand for Wealth Management services. See
page 32 for discussion of factors that may affect future results.