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TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Management’s Discussion and Analysis
18
(millions of Canadian dollars) 2006 2005 2004
Average Average2Average Average2Average Average2
balance Interest rate balance Interest rate balance Interest rate
Earning assets
Deposits with banks $ 11,680 $ 302 2.59% $ 10,654 $ 415 3.90% $ 7,760 $ 517 6.66%
Securities
Investment 40,172 1,782 4.44 32,354 1,503 4.65 27,678 1,219 4.40
Trading 76,679 2,653 3.46 77,906 2,536 3.26 71,188 2,438 3.42
Total securities 116,851 4,435 3.80 110,260 4,039 3.66 98,866 3,657 3.70
Securities purchased under reverse
repurchase agreements 30,910 1,413 4.57 27,253 907 3.33 28,306 734 2.59
Loans
Mortgages 60,325 3,131 5.19 58,033 2,807 4.84 52,155 2,625 5.03
Consumer instalment and other
personal 62,797 4,036 6.43 55,975 3,067 5.48 45,215 2,373 5.25
Credit card 3,830 509 13.29 2,690 323 12.01 2,289 271 11.84
Business and government 28,562 1,743 6.10 23,288 1,218 5.23 20,778 955 4.60
Total loans 155,514 9,419 6.06 139,986 7,415 5.30 120,437 6,224 5.17
Total earning assets $314,955 $15,569 4.94% $288,153 $12,776 4.43% $255,369 $11,132 4.36%
Interest-bearing liabilities
Deposits
Personal $132,135 $ 3,027 2.29% $122,032 $ 2,509 2.06% $108,586 $ 2,077 1.91%
Banks 15,874 661 4.16 14,683 462 3.15 16,166 309 1.91
Business and government 105,252 3,393 3.22 99,827 2,158 2.16 81,139 1,467 1.81
Total deposits 253,261 7,081 2.80 236,542 5,129 2.17 205,891 3,853 1.87
Subordinated notes and debentures 6,956 388 5.58 5,626 328 5.83 5,731 312 5.44
Obligations related to securities
sold short and under repurchase
agreements 44,287 1,603 3.62 34,499 1,164 3.37 34,730 1,024 2.95
Preferred shares and
capital trust securities 1,790 126 7.04 2,215 147 6.64 2,672 170 6.36
Total interest-bearing liabilities $306,294 $ 9,198 3.00% $278,882 $ 6,768 2.43% $249,024 $ 5,359 2.15%
Total net interest income $ 6,371 1.94% $ 6,008 2.00% $ 5,773 2.21%
1Net interest income includes dividends on securities.
2Calculation is subject to rounding.
OTHER INCOME
Other income was $6,733 million in 2006, an increase of $844
million, or 14%, from 2005.
Investment and securities services revenues decreased by
$246 million, or 10%, from 2005, primarily due to a decrease
in discount brokerage fees of $322 million, or 37%, from 2005,
mainly as a result of the sale of TD Waterhouse U.S.A. to
Ameritrade. This decrease was partially offset by an increase in
securities and full service brokerage revenues of $61 million,
or 7%, mainly due to higher trading revenues, solid growth
in assets under administration, resulting in higher fee-based
commissionsand trailer fees.
Credit fees increased by $28 million, or 8%, from 2005, pri-
marily due to higher credit administration fees and fee initiatives
in Canadian Personal and Commercial Banking. Investment
securities gains were up $63 million, or 26%, from 2005, due
to strong results from the equity investment portfolio. Trading
income increased by $650 million, which was largely offset by a
decrease in trading-related net interest income. See the discus-
sion on trading-related income in the following section. Service
charges increased by $150 million, or 19%, from 2005, largely
due to repricing initiatives and account growth. Income from
loan securitizations decreased by $68 million, or 16%, from
2005 as higher gains on the sale from increased Home Equity
Line of Credit (HELOC) securitizations was more than offset by
losses in mortgage-backed securities due to the higher interest
rate environment. Card services revenues increased by $104 mil-
lion, or 37%, from 2005, primarily due to increased net retail
sales and fee initiatives. Insurance revenues, net of claims,
increased by $70 million, or 8%, from 2005, primarily due to
improved loss ratio and better reinsurance results. Trust fees
increased by $19 million, or 17%, from 2005, primarily due to
the inclusion of full year results for TD Banknorth. Foreign
exchange (non-trading) increased by $42 million, or 40%, from
2005, mainly due to higher spread revenue in Canadian Personal
and Commercial Banking.
NET INTEREST INCOME ON AVERAGE EARNING BALANCES1
TABLE 6