TD Bank 2003 Annual Report Download - page 34

As noted in the Caution regarding forward-looking statements on
page 9 of this Annual Report, all forward-looking statements, by
their very nature, are subject to inherent risks and uncertainties,
general and specific, which may cause the Bank’s actual results to
differ materially from the expectations expressed in the forward-
looking statements. Some of these factors are discussed below.
Other factors, including strategic, credit, market, liquidity, interest
rate, operational, regulatory and other risks are discussed in the
Managing Risk section of this Annual Report starting on page 33
and in other regulatory filings made in Canada and with the
U.S Securities and Exchange Commission (SEC).
Industry factors
General business and economic conditions in the regions in
which we conduct business
The Bank operates in Canada, the United States, and other coun-
tries. As a result, the Bank’s earnings are significantly affected by
the general business and economic conditions in the geographic
regions in which it operates. These conditions include short-term
and long-term interest rates, inflation, fluctuations in the debt
and capital markets, exchange rates, the strength of the economy,
threats of terrorism and the level of business the Bank conducts
in a specific region.
Monetary policy
The Bank’s earnings are affected by the monetary policies of the
Bank of Canada and the Federal Reserve System in the United
States and other financial market developments. Changes in the
supply of money and the general level of interest rates can
impact the Bank’s profitability. A change in the level of interest
rates affects the interest spread between the Bank’s deposits
and loans and as a result impacts the Bank’s net interest income.
Changes in monetary policy and in the financial markets are
beyond the Bank’s control and difficult to predict or anticipate.
Level of competition
The Bank’s performance is impacted by the level of competition
in the markets in which it operates. The Bank currently operates
in a highly competitive industry. Customer retention can be influ-
enced by many factors such as the pricing of products or services,
changes in customer service levels and changes in products or
services offered.
Changes in laws and regulations
Laws and regulations have been put in place by various govern-
ments and regulators to protect the financial and other interests
of the Bank’s customers, employees and shareholders. Changes
to laws and regulations, including changes in their interpretation
or implementation, could affect the Bank by limiting the products
or services it can provide and increasing the ability of competitors
to compete with its products and services. Also, the Bank’s failure
to comply with applicable laws and regulations could result in
sanctions and financial penalties that could adversely impact its
earnings and damage the Bank’s reputation.
Accuracy and completeness of information on customers
and counterparties
The Bank depends on the accuracy and completeness of informa-
tion about customers and counterparties. In deciding whether to
extend credit or enter into other transactions with customers and
counterparties, the Bank may rely on information furnished by
them, including financial statements and other financial informa-
tion. The Bank may also rely on the representations of customers
and counterparties as to the accuracy and completeness of that
information and with respect to financial statements, on the
reports of auditors. The Bank’s financial condition and earnings
could be negatively impacted to the extent it relies on financial
statements that do not comply with generally accepted account-
ing principles, that are materially misleading, or that do not fairly
present, in all material respects, the financial condition and
results of operations of the customers and counterparties.
Bank specific factors
New products and services to maintain or increase market share
The Bank’s ability to maintain or increase its market share
depends, in part, on its ability to adapt products and services to
evolving industry standards. There is increasing pressure on finan-
cial services companies to provide products and services at lower
prices. This can reduce the Bank’s net interest income and revenues
from fee-based products and services. In addition, the wide-
spread adoption of new technologies, including internet-based
services, could require the Bank to make substantial expenditures
to modify or adapt existing products and services. The Bank
might not be successful in introducing new products and services,
achieving market acceptance of its products and services, and/or
developing and maintaining loyal customers.
Acquisitions
The Bank regularly explores opportunities to acquire other financial
services companies. The Bank’s ability to successfully complete an
acquisition is often subject to regulatory approval, and the Bank
cannot be certain when or if, or on what terms and conditions,
any required regulatory approvals will be granted. Acquisitions
can affect future results depending on management’s success in
integrating the acquired business. If the Bank encounters difficul-
ty in integrating the acquired business, this can prevent the Bank
from realizing expected revenue increases, cost savings, increases
in market share and other projected benefits from the acquisition.
Also, the negative impact of any divestitures required by regula-
tory authorities in connection with acquisitions may be greater
than expected.
Ability to attract and retain key executives
The Bank’s future performance depends to a large extent on
its ability to attract and retain key executives. There is intense
competition for the best people in the financial services sector.
There is no assurance that the Bank will be able to continue to
attract and retain key executives, although this is the goal of
the Bank’s management resources policies and practices.
Business infrastructure
Third parties provide key components of the Bank’s business
infrastructure such as internet connections and network access.
Disruptions in internet, network access or other voice or data
communication services provided by these third parties could
adversely affect the Bank’s ability to deliver products and services
to customers and otherwise conduct business.
Other factors
Other factors beyond the Bank’s control that may affect the Bank’s
future results include changes in tax laws, unexpected changes in
consumer spending and saving habits, technological changes, the
possible impact on the Bank’s businesses of international conflicts
and terrorism, natural disasters, such as earthquakes, and the
Bank’s anticipation of and success in managing the risks implied by
the factors discussed above within a disciplined risk environment.
The Bank cautions that the preceding discussion of factors
that may affect future results is not exhaustive. When relying on
forward-looking statements to make decisions with respect to the
Bank, investors and others should carefully consider these factors
as well as other uncertainties, potential events and industry and
Bank specific factors that may adversely impact the Bank’s future
results. The Bank does not undertake to update any forward-
looking statements, written or oral, that may be made from time
to time by or on its behalf.
Factors That May Affect Future Results
TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Management’s Discussion and Analysis32