TD Bank 2006 Annual Report Download - page 108

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Financial Results
104
(millions of Canadian dollars) On-balance sheet assets1Off-balance sheet financial instruments
Derivative
Credit financial
instruments2,3 instruments4,5
2006 2005 2006 2005 2006 2005
Canada 80% 80% 62% 60% 32% 28%
United States 19 19 34 37 23 27
United Kingdom ––1212 10
Europe – excluding the United Kingdom ––––26 28
Other International 113177
Total 100% 100% 100% 100% 100% 100%
$160,608 $152,243 $64,332 $57,428 $27,921 $33,216
1The real estate industry segment accounted for 8% (2005 – 7%) of the
total loans and customers’ liability under acceptances.
2At October 31, 2006, the Bank had commitments and contingent liability
contracts in the amount of $64,332 million (2005 – $57,428 million).
Included are commitments to extend credit totaling $56,184 million (2005
–$50,656 million), of which the credit risk is dispersed as detailed in the
table above.
3Of the commitments to extend credit, industry segments which equaled or
exceeded 5% of the total concentration were as follows at October 31,
2006: Financial institutions 45% (2005 – 45%); and real estate residential
9% (2005 – 8%).
4At October 31, 2006, the current replacement cost of derivative financial
instruments amounted to $27,921 million (2005 – $33,216 million). Based
on the location of the ultimate counterparty, the credit risk was allocated
as detailed in the table above.
5The largest concentration by counterparty type was with financial institu-
tions, which accounted for 81% of the total (2005 – 83%). The second
largest concentration was with governments which accounted for 9% of
the total. No other industry segment exceeded 5% of the total.
Trading assets and liabilities, including derivatives, are measured
at fair value, with gains and losses recognized in the
Consolidated Statement of Income.
Trading-related income comprises net interest income and
other income. Net interest income arises from interest and
dividends related to trading assets and liabilities, and is reported
net of interest expense and income associated with funding these
assets and liabilities. Non-interest income includes unrealized
gains and losses on security positions held, and gains and
losses that are realized from the purchase and sale of securities.
Non-interest income also includes realized and unrealized gains
and losses on derivative instruments.
Trading-related income excludes underwriting fees and com-
missions on securities transactions, which are shown separately in
the Consolidated Statement of Income.
Trading-related income by product line depicts trading revenue
for each major trading category.
TRADING-RELATED INCOME
NOTE 22
Trading-related Income
(millions of Canadian dollars) 2006 2005 2004
Net interest income $ (65) $457 $1,037
Other income 797 147 (153)
Total trading-related income $732 $604 $ 884
By product
Interest rate and credit portfolios $362 $370 $ 559
Foreign exchange portfolios 306 248 230
Equity and other portfolios 64 (14) 95
Total trading-related income $732 $604 $ 884
Concentration of credit risk exists where a number of borrowers
or counterparties are engaged in similar activities, are located
in the same geographic area or have comparable economic
characteristics. Their ability to meet contractual obligations
may be similarly affected by changing economic, political or
other conditions. The Bank’s portfolio could be sensitive to
changing conditions in particular geographies.
CONCENTRATION OF CREDIT RISK
NOTE 21