TD Bank 2011 Annual Report Download - page 16

TD BANK GROUP ANNUAL REPORT 2011 MANAGEMENT’S DISCUSSION AND ANALYSIS14
margin loans. Wholesale Banking net interest income decreased due
to lower trading and non-trading-related net interest income.
NET INTEREST MARGIN
Net interest margin improved by 2 basis points (bps) in the year to
2.37% from 2.35% last year largely due to higher margins on acquired
portfolios in U.S. Personal and Commercial Banking, partially offset by
the low interest rate environment and competitive pricing.
FINANCIAL RESULTS OVERVIEW
Revenue
AT A GLANCE OVERVIEW
•
Reported revenue was $21,594 million, an increase
of $2,029 million, or 10%, compared with last year.
•
Adjusted revenue was $21,418 million, an increase
of $1,855 million, or 9%, compared with last year.
•
Net interest income increased by $1,288 million, or 11%,
compared with last year.
•
Reported non-interest income increased by $741 million,
or 9%, compared with last year.
•
Adjusted non-interest income increased by $567 million,
or 7%, compared with last year.
NET INTEREST INCOME
Net interest income for the year was $12,831 million, an increase of
$1,288 million, or 11%, compared with last year. Higher net interest
income was driven by increases in all retail segments, partially offset by
a decline in Wholesale Banking. U.S. Personal and Commercial Banking
net interest income increased due to the impact of acquisitions and
strong organic volume growth, partially offset by the translation effect
of a stronger Canadian dollar. Canadian Personal and Commercial
Banking net interest income increased largely due to strong volume
growth in loans and deposits, partially offset by a lower margin on aver-
age earning assets. Wealth Management net interest income increased
due to improved net interest margin and higher client deposits and
NET INTEREST INCOME
(millions of Canadian dollars)
09 10 11
$15,000
0
12,000
9,000
3,000
6,000
(millions of Canadian dollars, except as noted) 2011 2010 2009
Average Average Average Average Average Average
balance Interest rate balance Interest rate balance Interest rate
Earning assets
Deposits with banks $ 21,411 $ 354 1.65% $ 21,880 $ 668 3.05% $ 16,775 $ 442 2.63%
Securities
Trading 62,017 1,458 2.35 55,438 1,387 2.50 51,020 2,137 4.19
Non-trading 118,178 2,706 2.29 108,299 2,393 2.21 97,390 2,617 2.69
Total securities 180,195 4,164 2.31 163,737 3,780 2.31 148,410 4,754 3.20
Securities purchased under reverse
repurchase agreements 62,277 411 0.66 50,611 334 0.66 39,288 917 2.33
Loans
Mortgages2 107,309 3,676 3.43 92,104 3,260 3.54 82,447 3,392 4.11
Consumer instalment and other personal 105,175 6,101 5.80 96,930 6,142 6.34 86,567 5,508 6.36
Credit card 8,998 1,074 11.94 8,559 1,008 11.78 7,784 994 12.77
Business and government2,3 57,012 2,679 4.70 56,426 2,195 3.89 64,985 2,880 4.43
Total loans 278,494 13,530 4.86 254,019 12,605 4.96 241,783 12,774 5.28
Total earning assets $ 542,377 $ 18,459 3.40% $ 490,247 $ 17,387 3.55% $ 446,256 $ 18,887 4.23%
Interest-bearing liabilities
Deposits
Personal $ 253,352 $ 2,148 0.85% $ 234,053 $ 2,600 1.11% $ 209,292 $ 3,289 1.57%
Banks 16,172 56 0.35 13,704 42 0.31 15,720 130 0.83
Business and government 175,553 2,085 1.19 159,380 1,936 1.21 171,826 2,399 1.40
Total deposits 445,077 4,289 0.96 407,137 4,578 1.12 396,838 5,818 1.47
Subordinated notes and debentures 12,626 659 5.22 12,420 667 5.37 12,475 671 5.38
Obligations related to securities sold short
and under repurchase agreements 59,705 619 1.04 52,437 562 1.07 29,286 978 3.34
Preferred shares and Capital Trust Securities 582 38 6.53 698 37 5.30 1,450 94 6.48
Securitization liabilities 1,486 23 1.55 – – – – – –
Total interest-bearing liabilities $ 519,476 $ 5,628 1.08% $ 472,692 $ 5,844 1.24% $ 440,049 $ 7,561 1.72%
Total net interest income on
average earnings assets $ 542,377 $ 12,831 2.37% $ 490,247 $ 11,543 2.35% $ 446,256 $ 11,326 2.54%
NET INTEREST INCOME ON AVERAGE EARNING BALANCES1
TABLE 7
1 Net interest income includes dividends on securities.
2 Includes trading loans that the Bank intends to sell immediately or in the near term
with a fair value of $253 million (2010 – $188 million) and amortized cost of
$253 million (2010 – $188 million), and loans designated as trading under the fair
value option of $14 million (2010 – $85 million) and amortized cost of $5 million
(2010 – $86 million). No allowance is recorded for trading loans or loans designated
as trading under the fair value option.
3 As a result of the 2009 Amendments to CICA Handbook Section 3855, Financial
Instruments – Recognition and Measurement, certain available-for-sale and held-to-
maturity securities were reclassified to loans.