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TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Management’s Discussion and Analysis
44
(millions of Canadian dollars)
Loans authorized Amount outstanding
Loan amount 2006 2005 2004 2006 2005 2004
(thousands of Canadian dollars)
0 – 24 $1,200 $1,137 $1,054 $621 $589 $522
25 – 49 1,075 1,000 768 665 648 445
50 – 99 1,722 1,582 1,308 976 931 727
100 – 249 3,714 3,251 2,701 2,260 1,988 1,608
250 – 499 3,449 3,100 2,484 2,022 1,798 1,452
500 – 999 3,757 3,235 2,537 1,924 1,653 1,286
1,000 – 4,999 11,285 9,735 6,969 5,226 4,457 3,185
Total1$26,202 $23,040 $17,821 $13,694 $12,064 $9,225
1Personal loans used for business purposes arenot included in these totals.
The retail business portfolio continued to be the dominating
category for lending activity. During the year, the portfolio,
which primarily comprised residential mortgages and consumer
installments and other personal loans, increased by $3 billion,
or 2%,and totalled $121 billion at year end. The growth was
primarily due to the expansion of the Canadian market that
grew 6% as a result of continuing good demand for domestic
consumer lending products, adding $6 billion to the portfolio.
This helped offset a decline in the U.S. retail business.
The total retail portfolio represents 71% of net loans,
including acceptances, compared with 75% in 2005 and 79% in
2004. This portfolio declined in overall percentage as a result of
growth in business and government loans. Residential mortgages
represented 32% of the portfolio in 2006, compared with 33%
in 2005 and 40% in 2004. Consumer installment and other
personal loans were 40% of total loans, compared with 41% in
2005 and 39% in 2004. The portion of business and government
credit exposureincreased to 29% in 2006, from 25% in 2005
and 21% in 2004, mainly due to an increase in activity in the
domestic markets and growth in the US real estate sector.
The majority of credit risk exposure relates to the loan and
acceptances portfolio, however, the Bank also engages in
activities that have off-balance sheet credit risk. These include
credit instruments and derivative financial instruments, as
explained in Note 21.
GROUP FINANCIAL CONDITION
Credit Portfolio Quality
AT A GLANCE OVERVIEW
•Loans and acceptances portfolio net of allowances for
credit losses was $169 billion, up $11 billion or 7% from
the prior year.
•Impaired loans after specific allowance were $239 million,
up $43 million or 22%.
•Provision for credit losses was $409 million, compared
with $55 million in 2005.
•Total allowances for credit losses increased by $24 mil-
lion, or 2%, to $1,317 million in 2006.
LOAN PORTFOLIO
Overall in 2006 the Bank's credit quality remained stable as a
result of buoyant economic conditions in North America, estab-
lished business and risk management strategies and a continuing
low interest rate environment. The Bank experienced a low level
of new impaired loan formations during the year.
During 2006, the loans and acceptances portfolio continued
to be diversified between retail and business and government.
The Bank increased its credit portfolio by $11 billion, or 7%,
from the prior year, largely due to a 20% increase globally in
business and government loans and acceptances. Loans author-
ized and amounts outstanding to small and mid-sized business
customers are provided in Table 22 below.
LOANS TO SMALL AND MID-SIZED BUSINESS CUSTOMERS
TABLE 22
U.S. GAAP
Total assets under U.S. GAAP were $401 billion as at October 31,
2006, $8 billion higher than under Canadian GAAP. The differ-
ence was primarily due to non-cash collateral. Under U.S. GAAP,
certain non-cash collateral received in securities lending transac-
tions is recognized as an asset and a liability is recorded for the
obligation to return the collateral. Under Canadian GAAP, non-
cash collateral received as part of a security lending transaction is
not recognized in the Consolidated Balance Sheet. Total liabilities
under U.S. GAAP were $375 billion as at October 31, 2006,
$4 billion higher than under Canadian GAAP. The increase is
mainly due to the U.S./Canadian GAAP difference for derivative
instruments recorded in other liabilities. Under U.S. GAAP, all of
the Bank’s non-trading derivatives are required to be recorded
on the Consolidated Balance Sheet at fair value. Under current
Canadian GAAP, only certain non-trading derivatives are record-
ed on the Consolidated Balance Sheet.