TD Bank 2014 Annual Report Download - page 37

TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS 35
BUSINESS HIGHLIGHTS
• Achieved earnings of $813 million and a return on common
equity of 17.5%.
• Delivered strong core revenue growth.
• Recorded a strong performance in M&A and underwriting.
• Significant lead deals for the year include:
– Nalcor Energy Muskrat Falls Project – One of the largest
bond placements in Canadian history, at $5 billion
– PrairieSky Royalty’s $1.7 billion initial public offering
(IPO) – Largest Canadian IPO in 14 years
– World Bank – Lead-managed U.S. Dollar Global transactions
for the first time
• Became the first bank in Canada to launch a Green Bond
to finance environmental initiatives.
• Maintained top-three dealer status in Canada (for the
nine-month period ended September 30, 2014):
– #1 in equity block trading
– #1 in equity block option trading
– #1 in government debt underwriting
– #2 in corporate debt underwriting
– #2 in syndications (on rolling twelve month basis)
CHALLENGES IN 2014
• The sustained low interest rate environment and low
volatility impacted client activities.
• Geopolitical challenges contributed to investor uncertainty.
• Regulatory changes had an impact on TD Securities’
business activities.
INDUSTRY PROFILE
The wholesale banking sector in Canada is a mature market with
competition primarily coming from the Canadian banks, large global
investment firms, and independent niche dealers. Favourable market
conditions in 2014 contributed to an improved trading environment
and strong investment banking volumes. Equity markets remained
healthy with strong underwriting activity, particularly in the energy
sector. However, a challenging macro environment, geopolitical uncer-
tainty, regulatory reforms, and concerns over the timing of interest
rate increases continued to have a negative impact on investor confi-
dence and industry trading volumes. Wholesale banks have continued
to shift their focus to client-driven trading revenue and fee income
to reduce risk and preserve capital. Competition is expected to remain
intense for transactions with high quality counterparties, as securities
firms focus on prudent risk management. Longer term, wholesale
businesses that have a diversified client-focused business model, offer
a wide range of products and services, and exhibit effective cost
management will be well positioned to achieve attractive returns
for shareholders.
OVERALL BUSINESS STRATEGY
• Extend our client-centric franchise model through superior advice
and execution.
• Strengthen our position as a top investment dealer in Canada.
• Support our North American franchise, and work with our business
partners to enhance TD’s brand.
• Maintain a prudent risk profile by focusing on high quality clients,
counterparties, and products.
• Adapt to rapid industry and regulatory changes.
• Be an extraordinary and inclusive place to work by attracting,
developing, and retaining top talent.
(millions of Canadian dollars, except as noted) 2014 2013 2012
Net interest income (TEB) $ 2,210 $ 1,982 $ 1,805
Non-interest income 470 428 849
Total revenue 2,680 2,410 2,654
Provision for (recovery of) credit losses 11 26 47
Non-interest expenses 1,589 1,542 1,570
Net income $ 813 $ 650 $ 880
Selected volumes and ratios
Trading-related revenue $ 1,394 $ 1,273 $ 1,334
Common Equity Tier 1 Capital risk-weighted assets (billions of dollars)1,2 61 47 43
Return on common equity 17.5% 15.6% 21.2%
Efficiency ratio 59.3 64.0 59.2
Average number of full-time equivalent staff3 3,654 3,536 3,553
WHOLESALE BANKING
TABLE 21
1 Prior to 2014, amounts have not been adjusted to reflect the impact of the
New IFRS Standards and Amendments.
2 Effective the third quarter of 2014, each capital ratio has its own RWA measure
due to the OSFI prescribed scalar for inclusion of the CVA. Effective the third
quarter of 2014, the scalars for inclusion of CVA for CET1, Tier 1, and Total
Capital RWA are 57%, 65%, and 77%, respectively.
3 In 2014, the Bank conformed to a standardized definition of full-time equivalent
staff across all segments. The definition includes, among other things, hours for
overtime and contractors as part of its calculations. Results for periods prior to
2014 have not been restated.