TD Bank 2011 Annual Report Download - page 37

TD BANK GROUP ANNUAL REPORT 2011 MANAGEMENT’S DISCUSSION AND ANALYSIS 35
(millions of Canadian dollars) 2011 2010 2009
Net loss – reported $ (567) $ (931) $ (1,719)
Adjustments for items of note:1
Amortization of intangibles2 426 467 492
Decrease (increase) in fair value of derivatives hedging the reclassified
available-for-sale debt securities portfolio (134) (5) 450
Decrease (increase) in fair value of credit default swaps hedging the
corporate loan book, net of provision for credit losses (13) 4 126
Provision for (recovery of) income taxes due to changes in statutory income tax rates – (11) –
Provision (release of) for insurance claims – (17) –
General allowance increase (release) in Canadian Personal and Commercial Banking and Wholesale Banking – (44) 178
Settlement of TD Banknorth shareholder litigation – – 39
FDIC special assessment charge – – 35
Integration charges relating to the Chrysler Financial acquisition 14 – –
Total adjustments for items of note 293 394 1,320
Net loss – adjusted $ (274) $ (537) $ (399)
Decomposition of items included in net loss – adjusted
Net securitization $ (65) $ (22) $ (10)
Net corporate expenses (434) (401) (315)
Other 225 (114) (74)
Net loss – adjusted $ (274) $ (537) $ (399)
CORPORATE
TABLE 26
1 For explanation of items of note, see the “Non-GAAP Financial Measures –
Reconciliation of Adjusted to Reported Net Income” table in the “Financial Results
Overview” section of this document.
2 Effective 2011, amortization of software is recorded in amortization of intangibles.
For the purpose of the items of note only, software amortization is excluded from
the amortization of intangibles.
BUSINESS OUTLOOK AND FOCUS FOR 2012
Overall, we expect the operating environment to remain
challenging in 2012. Unresolved issues in the macroeconomic
environment are expected to perpetuate the high volatility and
low liquidity conditions that plagued 2011. This environment
coupled with increased competition will yield lower volumes
and fewer trading opportunities. However, when economic
conditions stabilize, capital markets activity should improve
with potential increases in debt and equity origination and
M&A and advisory fees.
The Corporate segment reported net loss for the year was $567 million,
compared with a reported net loss of $931 million last year. The adjusted
net loss for the year was $274 million, compared with an adjusted net
loss of $537 million last year. The year-over-year change in the adjusted
net loss was primarily attributable to segment transfers and higher
earnings on unallocated capital. Segment transfers reduced the adjusted
Corporate segment net loss by $144 million.
CORPORATE MANAGEMENT
The Corporate segment’s mandate is to provide centralized advice
and counsel to our key businesses and to those who serve our global
customers directly. This includes support from a wide range of func-
tional groups, as well as the design, development, and implementation
of processes, systems, and technologies to ensure that the Bank’s key
businesses operate efficiently, reliably, and in compliance with all
applicable regulatory requirements.
The corporate management function of the Bank comprises audit,
legal, compliance, corporate and public affairs, government and regu-
latory affairs, economics, enterprise technology solutions, finance,
Our key priorities for 2012 are as follows:
• Continue to build the franchise by broadening and deepening
client relationships and investing in flow-based businesses
including U.S rates and global currency trading businesses.
• Target business to achieve a normalized rate of return on
equity of 15% to 20% while remaining within the risk appetite
of the Bank.
• Maintain an effective risk management and controls culture
while improving operational efficiency through disciplined
expense management.
treasury and balance sheet management, people strategies, marketing,
office of the ombudsman, enterprise real estate management, risk
management, global physical security, strategic sourcing, global strat-
egy, enterprise project management, corporate environment initiatives,
and corporate development.
The enterprise Direct Channels and Distribution Strategy group is
part of Corporate Operations and is responsible for the online, phone,
and ABM/ATM channels, delivering a best in class experience across
TD’s North American businesses. The vision of the group is to create
an even more integrated, seamless, effortless, and legendary customer
experience for TD Bank, TD Canada Trust, and TD Wealth
Management.
Ensuring that the Bank stays abreast of emerging trends and devel-
opments is vital to maintaining stakeholder confidence in the Bank and
to addressing the dynamic complexities and challenges from changing
demands and expectations of our customers, shareholders and employ-
ees, governments, regulators, and the community at large.
BUSINESS SEGMENT ANALYSIS
Corporate
Corporate segment provides centralized advice and counsel to key businesses and comprises the impact
of asset securitization programs, treasury management, general provisions for credit losses, tax items at an
enterprise level, the elimination of taxable equivalent and other intercompany adjustments, and residual
unallocated revenue and expenses.