TD Bank 2011 Annual Report Download - page 49

Download and view the complete annual report

Please find page 49 of the 2011 TD Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

TD BANK GROUP ANNUAL REPORT 2011 MANAGEMENT’S DISCUSSION AND ANALYSIS 47
PROVISION FOR CREDIT LOSSES
The provision for credit losses is the amount charged to income to
bring the total allowance for credit losses, including both specific and
general allowances, to a level that management considers adequate to
absorb all credit-related losses in the Bank’s loan portfolio. Provisions
in the year are reduced by any recoveries.
The Bank recorded total provision for credit losses of $1,465 million
in 2011, compared with a total provision of $1,625 million in 2010.
This amount comprised $1,430 million of specific provisions and
$35 million in general provisions. Total provision for credit losses
as a percentage of net average loans and acceptances decreased to
0.51% from 0.62% in 2010. In Canada, residential and personal loans
required specific provisions of $765 million, a decrease of $96 million,
or 11%, over 2010. Business and government loans required specific
provisions of $53 million, a decrease of $64 million, or 55%, over
2010. Business and government specific provisions were distributed
across all industry sectors. In the U.S., residential and personal loans
required specific provisions of $214 million, a decrease of $29 million,
or 12%, over 2010. Other personal loans represented the most signifi-
cant portion of this decrease. Business and government loans required
specific provisions of $232 million, a decrease of $147 million, or
39%, over 2010. Similar to impaired loans, business and government
specific provisions were highly concentrated in the real estate sector.
Decreased provisions for credit losses in 2011 were due to continued
improvement in portfolio credit quality. Geographically, 57% of specific
provisions were attributed to Canada and 31% to the U.S. The balance
resulted from 6% of debt securities classified as loans and 6% of acquired
credit-impaired loans. Canadian specific provisions were concentrated
in Ontario, which represented 44% of total specific provisions,
increased from 41% in 2010. U.S. specific provisions were concen-
trated in New Jersey and New York, representing 7% and 4% of total
specific provisions, compared to 8% and 4% respectively in 2010.
Table 36 provides a summary of provisions charged to the
Consolidated Statement of Income.
(millions of Canadian dollars) 2011 2010 2009
Net new specifics (net of reversals) $ 1,597 $ 1,866 $ 1,723
Recoveries (167) (140) (109)
Total specific provision 1,430 1,726 1,614
Change in general allowance
TD Financing Services Inc.1 – – 90
U.S. Personal and Commercial Banking 32 (48) 521
Canadian Personal and Commercial
Banking and Wholesale Banking – (60) 255
Other 3 7 –
Total general provision 35 (101) 866
Total provision for credit losses $ 1,465 $ 1,625 $ 2,480
1 Effective November 1, 2009, TD Financing Services aligned their loan loss method-
ology with that used for all other Canadian Personal and Commercial Banking retail
loans; any general provisions resulting from the revised methodology are included
in Canadian Personal and Commercial Banking and Wholesale Banking. General
provisions recorded prior to January 31, 2010 are specific to the legal entity
formerly known as VFC Inc.
PROVISION FOR CREDIT LOSSES
TABLE 36