TD Bank 2006 Annual Report Download - page 21

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Management’s Discussion and Analysis 17
(millions of Canadian dollars) 2006 vs 2005 2005 vs 2004
Favourable (unfavourable) due to change in Favourable (unfavourable) due to change in
Average Average Net Average Average Net
volume rate change volume rate change
Total earning assets $1,332 $1,461 $2,793 $1,634 $ 10 $1,644
Total interest-bearing liabilities (742) (1,688) (2,430) (525) (884) (1,409)
Net interest income $590 $(227) $ 363 $1,109 $(874) $235
ANALYSIS OF CHANGE IN NET INTEREST INCOME
TABLE 5
FINANCIAL RESULTS OVERVIEW
Revenues
AT A GLANCE OVERVIEW
•Total revenues increased by $1,207 million, or 10%, from
the prior year.
•Net interest income was up $363 million, or 6%, from the
prior year.
•Other income was up $844 million, or 14%, from the prior
year.
Total revenues were $13,104 million, an increase of 10% from
2005. The growth was a result of both organic business growth
and acquisitions as 2006 had a full year inclusion of TD
Banknorth, compared with a partial year in 2005.
NET INTEREST INCOME
Net interest income was $6,371 million in 2006, a year-over-year
increase of $363 million or 6%. The increase was primarily a
result of higher volumes and improved margins in Canadian
Personal and Commercial Banking. Additionally, there was an
increase in the U.S. Personal and Commercial Banking segment
due to the inclusion of a full year of TD Banknorth results and
the acquisition of Hudson by TD Banknorth. Partially offsetting
these increases was a reduction in Wholesale Banking due to
lower trading-related net interest income and Wealth
Management had lower net interest income due to the sale of
TD Waterhouse U.S.A. to Ameritrade.
Net Interest Margin
The net interest margin declined by seven basis points in 2006,
from 2.09% to 2.02%. This was largely a result of lower trading-
related net interest income, which declined by $522 million.
Excluding trading-related net interest income and trading-related
assets, the net interest margin was up slightly, compared with
2005. This was a result of overall margin improvements in
Canadian Personal and Commercial Banking, particularly on
deposits, which benefited from a higher interest rate environ-
ment in the first half of the year. This increase was partially offset
by the margin compression in U.S. Personal and Commercial
Banking results and tighter corporate credit spreads in Wholesale
Banking.
060405
$7,000
0
6,000
5,000
4,000
3,000
2,000
1,000
Net interest income
(millions of Canadian dollars)