TD Bank 2009 Annual Report Download - page 28

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 MANAGEMENT’S DISCUSSION AND ANALYSIS24
NON-INTEREST EXPENSES
(millions of Canadian dollars)
07 0809
10,000
12,000
$14,000
8,000
6,000
4,000
2,000
0
EFFICIENCY RATIO
(percent)
07 0809
80%
60
40
20
0
FINANCIAL RESULTS OVERVIEW
Expenses
AT A GLANCE OVERVIEW
•Reported non-interest expenses were $12,211 million, an
increase of $2,709 million, or 29%, from the prior year.
•Adjusted non-interest expenses were $11,016 million, an
increase of $1,725 million, or 19%, from the prior year.
•Reported efficiency ratio was 68.4%, a decline in efficiency
of 360 bps from 64.8% in the prior year.
•
Adjusted efficiency ratio was 59.2%, an improvement in
efficiency of 540 bps from 64.6% in the prior year.
NON-INTEREST EXPENSES
Reported non-interest expenses for 2009 were $12,211 million,
compared with $9,502 million in 2008, an increase of $2,709 million,
or 29%. Reported non-interest expenses included $429 million of
restructuring and integration charges attributable to the Commerce
acquisition; the prior year included $111 million of restructuring and
integration charges and also benefited from a $477 million reduction
of expenses related to the release of the Enron litigation reserve.
Adjusted non-interest expenses were $11,016 million, compared with
$9,291 million in 2008, an increase of $1,725 million, or 19%. U.S.
Personal and Commercial Banking non-interest expenses increased
primarily due to the full-year inclusion of Commerce and increased
FDIC premiums. Wholesale Banking non-interest expenses increased
primarily due to higher variable compensation driven by stronger
results. Canadian Personal and Commercial Banking non-interest
expenses increased largely due to higher employee compensation and
investment in new branches. Wealth Management non-interest
expenses increased primarily due to the full year inclusion of U.S.
wealth management businesses and continued investment in the
sales force in the advice-based businesses.
EFFICIENCY RATIO
Efficiency ratio measures operating efficiency and is calculated by
taking the non-interest expenses as a percentage of total revenue.
A lower ratio indicates a more efficient business operation.
The Bank’s adjusted efficiency ratio improved from 2008, primarily
due to the increase in Wholesale Banking revenue.
(millions of Canadian dollars, except as noted) 2009 vs. 2008
2009 2008 2007 % change
Salaries and employee benefits
Salaries $ 3,671 $ 3,089 $ 2,737 18.8%
Incentive compensation 1,342 1,235 1,286 8.7
Pension and other employee benefits 826 660 583 25.2
Total salaries and employee benefits 5,839 4,984 4,606 17.2
Occupancy
Rent 559 463 390 20.7
Depreciation 323 225 163 43.6
Property tax 50 33 21 51.5
Other 281 214 162 31.3
Total occupancy 1,213 935 736 29.7
Equipment
Rent 285 216 192 31.9
Depreciation 277 213 199 30.0
Other 335 254 223 31.9
Total equipment 897 683 614 31.3
Amortization of other intangible assets 653 577 499 13.2
Restructuring costs 36 48 67 (25.0)
Marketing and business development 566 491 445 15.3
Brokerage-related fees 274 252 233 8.7
Professional and advisory services 740 569 488 30.1
Communications 239 210 193 13.8
Other expenses
Capital and business taxes 274 234 196 17.1
Postage 156 138 122 13.0
Travel and relocation 138 106 84 30.2
Other 1,186 275 692 331.3
Total other expenses 1,754 753 1,094 132.9
Total expenses $ 12,211 $ 9,502 $ 8,975 28.5%
Efficiency ratio – reported 68.4% 64.8% 62.8% 360 bps
Efficiency ratio – adjusted 59.2 64.6 59.6 (540)
NON-INTEREST EXPENSES AND EFFICIENCY RATIO
TABLE 9