TD Bank 2011 Annual Report Download - page 26

TD BANK GROUP ANNUAL REPORT 2011 MANAGEMENT’S DISCUSSION AND ANALYSIS24
BUSINESS HIGHLIGHTS
• Posted record earnings of $3,611 million, up 17% from last year.
• Delivered 2% operating leverage and record annual efficiency
of 46.7%.
• Strong loan volume, supported by stable credit quality.
• Ongoing investment in customer-facing areas with the objec-
tive of further improving customer service and convenience.
Opened 170 new branches since 2006, including 24 new
branches in 2011.
• Combined our existing auto lending business with our
purchase of Chrysler Financial.
• Achieved external recognition as an industry leader in
customer service excellence with distinctions that included
the following:
– Rated #1 for “Customer Service Excellence” among
Canada’s five major banks by Synovate, an independent
market research firm for the seventh year in a row. The
Synovate Best Banking Awards for 2011 were based on
survey responses from 40,353 households for the year
ended August 2011, regionally and demographically
representative of the entire Canadian population. Known
as the Customer Service Index, the survey has been in
existence since 1987.
– Ranked highest in customer satisfaction among the five
major Canadian banks for the sixth consecutive year by
J.D. Power and Associates. 2011 results represented
responses from 12,740 Canadian retail banking customers,
fielded in March and June 2011 by J.D. Power and
Associates, a global marketing information services firm.
TD Canada Trust set the highest benchmark scores across
six major drivers of customer satisfaction: account activi-
ties, account information, product offerings, facility, fees,
and problem resolution.
• TD Insurance gross originated insurance premiums grew 5%, and
TD General Insurance retained the #1 direct writer position.
CHALLENGES IN 2011
• Continued low interest rate environment led to a decline
in margins.
• Heightened competition from the major Canadian banks and
other competitors in residential secured lending, credit cards,
and term deposits.
• Consumer deleveraging in lines of credit.
INDUSTRY PROFILE
The personal and business banking environment in Canada is very
competitive among the major banks as well as some strong regional
players. The intense competition makes it difficult to sustain market
share gains and distinctive competitive advantage over the long term.
The Canadian auto finance industry is also very competitive among
the major banks and captive finance companies. Continued success
depends upon outstanding customer service and convenience, disci-
plined risk management practices, and expense management. The
Canadian property and casualty insurance industry features a relatively
large number of participants each with limited market share. The life
and health insurance industry in Canada and the reinsurance market
internationally are more consolidated featuring a few large players.
OVERALL BUSINESS STRATEGY
The strategy for Canadian Personal and Commercial Banking is to:
• Integrate the elements of the comfortable customer experience
into everything we do.
• Be recognized as an extraordinary place to work.
• Use our strengths to build out under-represented businesses.
• Simplify activities to be an efficient revenue growth engine.
• Invest in the future to deliver top tier earnings performance
consistently.
(millions of Canadian dollars, except as noted) 2011 2010 2009
Net interest income $ 7,320 $ 7,134 $ 6,348
Non-interest income 3,490 3,237 3,101
Total revenue 10,810 10,371 9,449
Provision for credit losses 820 1,046 1,155
Non-interest expenses 5,052 4,934 4,725
Net income – reported $ 3,611 $ 3,095 $ 2,472
Selected volumes and ratios
Return on invested capital 39.0% 33.4% 28.1%
Margin on average earning assets (including securitized assets) 2.77 2.92 2.90
Efficiency ratio 46.7 47.6 50.0
Number of Canadian retail branches 1,150 1,127 1,116
Average number of full-time equivalent staff 34,560 34,108 32,725
CANADIAN PERSONAL AND COMMERCIAL BANKING
TABLE 17