TD Bank 2011 Annual Report Download - page 24

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TD BANK GROUP ANNUAL REPORT 2011 MANAGEMENT’S DISCUSSION AND ANALYSIS22
ECONOMIC SUMMARY AND OUTLOOK
The economic outlook for the Canadian economy has softened some-
what over the last few months. The Canadian economy is on track for
a healthy 3.0% annualized gain in the third quarter of 2011, largely
driven by gains in trade. The sharp rebound in the quarter reflects the
unwinding of temporary factors that weighed heavily on growth in the
prior quarter, such as the supply disruptions caused by the Japanese
earthquake and a number of shutdowns in the energy sector. Looking
beyond temporary factors, underlying economic fundamentals have
begun to fade. Following three years of significant borrowing, house-
holds appear fatigued. Consumer spending has down shifted to an
average annual pace of 1.0% over the last three quarters, following
a 3.3% gain in 2010. Continued low interest rates are expected to
keep debt affordable and households in a good position to support
economic growth. However, as households take a more cautious
approach to accumulating debt, we anticipate a modest pace of
consumer spending going forward. Still, much of Canada’s economic
woes are expected to stem from negative external forces, such as the
ongoing European financial crisis and a tepid economic recovery in the
United States – both of which are expected to weigh on Canadian
export growth and business spending. Overall, we expect the Canadian
economy to grow by just 2.3% in 2011 and 2% in 2012, with economic
growth picking up to a more respectable pace of 2.6% in 2013. This
pace of economic growth and the number of international risks loom-
ing over the global economy are expected to keep the Bank of Canada
rate on hold until early 2013.
NET INCOME BY BUSINESS SEGMENT
(as a percentage of total net income)
60
70%
40
50
20
10
30
0
09 10 1109 10 1109 10 1109 10 11
Canadian Personal and Commercial Banking
Wealth Management
U.S. Personal and Commercial Banking
Wholesale Banking