TD Bank 2014 Annual Report Download - page 39

TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS 37
The Corporate segment reported net loss for the year was $274 million,
compared with a reported net loss of $331 million last year. The
adjusted net loss for the year was $286 million, compared with an
adjusted net loss of $47 million last year. The year-over-year change
in the adjusted net loss was primarily attributable to an increase in net
corporate expenses as a result of on-going investment in enterprise
and regulatory projects and productivity initiatives. Other items were
slightly unfavourable due to lower gains from treasury and other hedg-
ing activities and the reduction of the allowance for incurred but not
identified credit losses relating to the Canadian loan portfolio, largely
offset by the gain on sale of TD Ameritrade shares and favourable
impact of tax items.
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 includes audit,
legal, anti-money laundering, compliance, corporate and public
affairs, regulatory relationships and government affairs, economics,
enterprise technology solutions, finance, treasury and balance sheet
management, people strategies, marketing, Office of the Ombudsman,
enterprise real estate management, risk management, global physical
security, strategic sourcing, global strategy, enterprise project manage-
ment, corporate environment initiatives, and corporate development.
The enterprise Direct Channels and Distribution Strategy group
is part of Corporate operations and is responsible for the digital,
phone, and 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, America’s Most Convenient Bank, TD Canada
Trust, and TD wealth and insurance businesses.
Ensuring that the Bank stays abreast of emerging trends and devel-
opments is vital to maintaining stakeholder confidence in the Bank and
addressing the dynamic complexities and challenges from changing
demands and expectations of our customers, shareholders, employees,
governments, regulators, and the community at large.
BUSINESS OUTLOOK AND FOCUS FOR 2015
We expect Corporate segment losses to increase next year as
compared to 2014 due to higher expenses and a reduced level
of favourable tax items.
(millions of Canadian dollars) 2014 2013 2012
Net income (loss) – reported $ (274) $ (331) $ (208)
Adjustments for items of note1
Amortization of intangibles 246 232 238
Fair value of derivatives hedging the reclassified available-for-sale securities portfolio (43) (57) 89
Impact of Alberta flood on the loan portfolio (19) 19 –
Gain on the sale of TD Waterhouse Institutional Services (196) – –
Restructuring charges – 90 –
Integration charges, direct transaction costs, and changes in fair value of contingent
consideration relating to the Chrysler Financial acquisition – – 17
Reduction of allowance for incurred but not identified credit losses2 – – (120)
Positive impact due to changes in statutory income tax rates – – (18)
Total adjustments for items of note (12) 284 206
Net income (loss) – adjusted $ (286) $ (47) $ (2)
Decomposition of items included in net income (loss) – adjusted
Net corporate expenses (727) (516) (433)
Other 334 364 327
Non-controlling interests 107 105 104
Net income (loss) – adjusted $ (286) $ (47) $ (2)
BUSINESS SEGMENT ANALYSIS
Corporate
Corporate segment provides centralized advice and counsel to key businesses and comprises the impact
of treasury and balance sheet 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.
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 Beginning in 2013, the change in the “reduction of allowance for incurred but
not identified credit losses” in the normal course of business relating to Canadian
Retail and Wholesale Banking is included in the Corporate segment adjusted net
income and is no longer recorded as an item of note.
CORPORATE
TABLE 22