TD Bank 2012 Annual Report Download - page 23

TD BANK GROUP ANNUAL REPORT 2012 MANAGEMENT’S DISCUSSION AND ANALYSIS 21
Wholesale Banking provides a wide range of capital markets and
investment banking products and services including underwriting and
distribution of new debt and equity issues, providing advice on strate-
gic acquisitions and divestitures, and meeting the daily trading, funding
and investment needs of our clients. Operating under the TD Securities
brand, our clients include highly-rated companies, governments, and
institutions in key financial markets around the world. Wholesale
Banking is an integrated part of TD’s strategy, providing market access
to TD’s wealth and retail operations and providing wholesale banking
solutions to our partners and their customers.
The Bank’s other business activities are not considered reportable
segments and are, therefore, grouped in the Corporate segment.
The Corporate segment includes the impact of treasury and balance
sheet management activities, general provision for credit losses, tax
items at an enterprise level, the elimination of taxable equivalent and
other intercompany adjustments, and residual unallocated revenue
and expenses.
Effective December 1, 2011, results of the acquisition of the MBNA
Canada credit card portfolio are reported primarily in the Canadian
Personal and Commercial Banking and Wealth and Insurance
segments. Integration charges and direct transaction costs relating to
the acquisition of the MBNA Canada credit card portfolio are reported
in Canadian Personal and Commercial Banking.
The results of TD Auto Finance Canada are reported in Canadian
Personal and Commercial Banking. The results of TD Auto Finance U.S.
are reported in U.S. Personal and Commercial Banking. Integration
charges, direct transaction costs, and changes in fair value of contin-
gent consideration related to the Chrysler Financial acquisition are
reported in the Corporate segment.
Effective the first quarter of 2012, executive responsibilities for the
TD Insurance business were moved from Group Head, Canadian
Banking, Auto Finance, and Credit Cards to the Group Head, Wealth
Management, Insurance and Corporate Shared Services. The Bank has
updated and reclassified the corresponding segment reporting results
retroactively for 2011 for comparative purposes in its 2012 reporting.
Effective November 1, 2011, the Bank revised its methodology for
allocating capital to its business segments to align with the future
common equity capital requirements under Basel III at a 7% Common
Equity Tier 1 ratio. The return measures for business segments now
reflect a return on common equity methodology and not return on
invested capital which was reported previously. These changes have
been applied prospectively.
Results of each business segment reflect revenue, expenses, assets,
and liabilities generated by the businesses in that segment. The Bank
measures and evaluates the performance of each segment based on
adjusted results where applicable, and for those segments the Bank
notes that the measure is adjusted. Net income for the operating busi-
ness segments is presented before any items of note not attributed to
the operating segments. For further details, see the “How the Bank
Reports” section in the MD&A. For information concerning the Bank’s
measures of economic profit and adjusted return on common equity,
which are non-GAAP financial measures, see the “Economic Profit and
Return on Common Equity” section. Segmented information also
appears in Note 28 to the 2012 Consolidated Financial Statements.
BUSINESS SEGMENT ANALYSIS
Business Focus
For management reporting purposes, the Bank’s operations and activities are organized around the
following operating business segments: Canadian Personal and Commercial Banking, Wealth and
Insurance, U.S. Personal and Commercial Banking, and Wholesale Banking.
Canadian Personal and Commercial Banking comprises Canadian
personal and business banking, TD Auto Finance Canada, as well as
the Canadian credit card business. Under the TD Canada Trust brand,
the retail operations provide a full range of financial products and
services to nearly 13 million customers through its network of 1,168
branches, more than 2,800 automated banking machines, telephone
and internet banking. TD Commercial Banking serves the unique needs
of medium and large Canadian businesses by offering a broad range of
customized products and services to help business owners meet their
financing, investment, cash management, international trade, and
day-to-day banking needs. TD Auto Finance provides flexible financing
options to customers at point-of-sale for automotive and recreational
vehicle purchases through our auto dealer network. TD Credit Card
businesses, which includes VISA and the credit card portfolio of MBNA
Canada, provides an attractive line-up of credit cards including
co-branded and affinity credit card programs to meet the unique
needs of the customers.
TD Wealth and Insurance comprises our TD Wealth Management
and Insurance businesses globally, including operations in Canada, the
U.S. and Europe. TD Wealth offers a wide range of wealth products
and services to a large and diverse set of retail and institutional clients
in Canada, the U.S. and Europe. TD Wealth consists of Direct Investing,
Advice-based, and Asset Management businesses. Each of these
businesses is focused on providing an exceptional client experience
aligned with the TD brand
.
In the global Direct Investing business, TD has a leading market
share, providing a full set of offerings to personal and institutional
clients in Canada and the U.K. In the U.S., TD has an investment in
TD Ameritrade, which is the industry-leader in direct investing as
measured by average trades per day. TD’s North American Advice-
based business includes financial planning, full service brokerage,
private banking and private investment counsel. In each case, TD’s
Advice-based business is focused on delivering a value proposition that
is matched to our clients’ needs and delivered in an integrated fashion.
TD Asset Management (TDAM) is a leading North American investment
manager comprising both retail (e.g. mutual fund) and institutional
capabilities. Our institutional clients include leading pension funds,
corporations, endowments and foundations in Canada.
TD Insurance offers a broad range of insurance products to Canadians
exclusively through growing direct to consumer distribution channels such
as phone and online. TD insurance has a significant home and auto
insur
ance business and enjoys the number one direct writer position and
number two position in the personal lines market in Canada. TD Insurance
offers authorized credit protection products to over 3 million TD Canada
Trust lending customers, and also sells travel, life and health insurance.
TD
Insurance also has a niche international reinsurance business.
U.S. Personal and Commercial Banking comprises the Bank’s retail
and commercial banking operations in the U.S. operating under the
brand TD Bank, America’s Most Convenient Bank. The retail operations
provide a full range of financial products and services through multiple
delivery channels, including a network of 1,315 stores located along
the east coast from Maine-to-Florida, telephone, mobile and internet
banking and automated banking machines, allowing customers to have
banking access virtually anywhere and anytime. U.S. Personal and
Commercial Banking also serves the needs of businesses, customizing a
broad range of products and services to meet their financing, investment,
cash management, international trade, and day-to-day banking needs.