TD Bank 2009 Annual Report Download - page 40

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 MANAGEMENT’S DISCUSSION AND ANALYSIS36
(millions of Canadian dollars, except as noted) 2009 2008 2007
Net interest income $ 270 $ 347 $ 318
Non-interest income 1,935 1,981 1,995
Non-interest expenses 1,701 1,615 1,551
Income before provision for income taxes 504 713 762
Provision for income taxes 159 233 261
Global Wealth net income 345 480 501
Equity in net income of an associated company, net of income taxes 252 289 261
Net income – reported $ 597 $ 769 $ 762
Selected volumes and ratio
Assets under administration (billions of Canadian dollars) $ 191 $ 173 $ 185
Assets under management (billions of Canadian dollars) 171 170 160
Return on invested capital 12.8% 19.4% 20.0%
Efficiency ratio 77.1 69.4 67.1
TOTAL WEALTH MANAGEMENT
TABLE 15
(millions of Canadian dollars) As at Sept. 30
2009 2008
Assets
Receivables from brokers, dealers, and clearing organizations $ 1,778 $ 4,177
Receivables from clients, net of allowance for doubtful accounts 5,712 6,934
Other assets 10,882 4,841
Total assets $ 18,372 $ 15,952
Liabilities
Payable to brokers, dealers, and clearing organizations $ 2,492 $ 5,770
Payable to clients 9,915 5,071
Other liabilities 2,414 2,186
Total liabilities 14,821 13,027
Stockholders’ equity 3,551 2,925
Total liabilities and stockholders’ equity $ 18,372 $ 15,952
CONDENSED CONSOLIDATED BALANCE SHEET
TABLE 16
US$515 million. As Lillooet was consolidated in the Bank’s Consolidated
Financial Statements, the replacement of the amended hedge arrange-
ment with the direct ownership of the 27 million shares had no material
impact on the Bank’s financial position or results of operations.
As a result of the issuance of shares on June 11, 2009 by TD Ameri-
trade in connection with its acquisition of thinkorswim Group Inc., the
Bank’s ownership position in TD Ameritrade decreased from 47.5% as
at April 30, 2009 to 45.1% as at October 31, 2009.
The condensed financial statements of TD Ameritrade, based on
its Consolidated Financial Statements filed with the SEC, are provided
as follows:
TD AMERITRADE HOLDING CORPORATION
As at October 31, 2009, the Bank’s reported investment in TD Ameritrade
was 45.1% of the issued and outstanding shares of TD Ameritrade.
On January 24, 2009, the limit in the Bank’s beneficial ownership of
TD Ameritrade under the Stockholders’ Agreement increased from 39.9%
to 45%. Pursuant to the terms of the Stockholders’ Agreement, the
Bank will not exercise the voting rights in respect of any shares held
in excess of the 45% limit. On March 2, 2009, the Bank took delivery
of 27 million shares in settlement of its amended hedging arrange-
ment with Lillooet Limited (Lillooet) at a hedged cost to the Bank of
Assets under administration of $191 billion as at October 31, 2009
increased by $18 billion, or 10%, compared with October 31, 2008,
primarily due to net new client assets and market increases in the
second half of the year. Assets under management of $171 billion
as at October 31, 2009 increased by $1 billion compared with
October 31, 2008.
TD Ameritrade’s contribution to Wealth Management’s net income
was $252 million, down $37 million, or 13%, compared with last year.
TD Ameritrade’s underlying net income decreased US$160 million, or
20%, compared to last year, driven mainly by a 33% decline in asset-
based revenue and a 6% rise in non-interest expenses this year.
However, Wealth Management’s equity share of TD Ameritrade’s net
income declined 13% year-over-year due to lower base earnings and
rising segment allocations. This was partially offset by the positive
translation effect of a weaker Canadian dollar and the increase in the
Bank’s beneficial ownership of TD Ameritrade shares.