TD Bank 2014 Annual Report Download - page 41

TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS 39
BALANCE SHEET
Factors Affecting Assets and Liabilities
Total assets were $862 billion as at October 31, 2013, an increase
of $51 billion, or 6%, from October 31, 2012. The net increase was
primarily due to a $36 billion increase in loans (net of allowance for
loan losses), a $30 billion increase in held-to-maturity securities, and
a $7 billion increase in interest-bearing deposits with banks, partially
offset by a $23 billion decrease in financial assets at fair value.
Interest-bearing deposits with banks increased $7 billion primarily
due to an increase in Wholesale Banking driven by higher U.S. Federal
Reserve deposits.
Financial assets at fair value decreased $23 billion largely due to
a reclassification from available-for-sale securities to held-to-maturity
securities and a decrease in derivative assets in Wholesale Banking.
Held-to-maturity securities increased $30 billion due to a reclassifi-
cation from available-for-sale securities and an increase in securities
in the U.S. Retail segment.
Loans (net of allowance for loan losses) increased $36 billion
primarily driven by increases in the U.S. Retail and Canadian Retail
segments. The increase in the U.S. Retail segment was due to growth
in credit card and business and government loans. Target added
$6 billion to total loans. Canadian Retail segment loans increased
primarily due to growth in residential mortgages and business and
government loans.
Total liabilities were $811 billion as at October 31, 2013, an increase
of $48 billion, or 6%, from October 31, 2012. The net increase was
primarily due to a $54 billion increase in deposits, partially offset by
a $7 billion decrease in financial liabilities at fair value.
Financial liabilities at fair value decreased $7 billion largely due
to a decrease in derivative liabilities, partially offset by an increase
in trading deposits in Wholesale Banking.
Deposits increased $54 billion primarily due to increases in personal
non-term and business and government deposits in the U.S. Retail and
Canadian Retail segments and bank deposits in Wholesale Banking,
partially offset by a decrease in personal term deposits in the Canadian
Retail segment.
Equity was $51 billion as at October 31, 2013, an increase of
$3 billion, or 7%, from October 31, 2012, primarily due to higher
retained earnings.
Assets under administration increased $35 billion, or 14%, while
assets under management increased $8 billion, or 4%, compared with
last year, mainly driven by growth in new client assets for the period
and market appreciation.
PCL for the year was $929 million, a decrease of $222 million,
or 19%, compared with last year. Personal banking PCL was
$882 million for the year, a decrease of $206 million, or 19%,
compared with last year due primarily to better credit performance,
enhanced collection strategies, and lower bankruptcies. Business
banking PCL was $47 million, a decrease of $16 million, due to
higher recoveries. Annualized PCL as a percentage of credit volume
was 0.30%, a decrease of 9 bps, compared with last year. Net
impaired loans were $882 million, a decrease of $118 million,
or 12%, compared with last year.
Insurance claims and related expenses for the year were
$3,056 million, an increase of $632 million, or 26%, compared with
last year, primarily due to unfavourable prior years’ claims develop-
ment related to the Ontario auto insurance market, and higher claims
associated with volume growth and weather-related events.
Reported non-interest expenses for the year were $7,754 million,
an increase of $269 million, or 4%, compared with last year. Adjusted
non-interest expenses for the year were $7,602 million, an increase of
$221 million, or 3%, compared with last year. The increase was driven
by higher employee related costs including higher revenue-based
variable expenses in the wealth business, investment in initiatives
to grow the business, and volume growth, partially offset by initiatives
to increase productivity.
The average full-time equivalent (FTE) staffing levels decreased by
2,436, or 6%, compared with last year, primarily due to transfer of
FTEs to the corporate segment. The reported efficiency ratio worsened
to 43.6%, while the adjusted efficiency ratio worsened to 42.7%,
compared with 44.0% and 43.3%, respectively, in the same period
last year.
Canadian Retail reported net income for the year was $4,569 million,
an increase of $106 million, or 2%, compared with last year. Adjusted
net income for the year was $4,681 million, an increase of $114 million,
or 2%, compared with last year. The increase in adjusted earnings was
primarily due to loan and deposit volume growth, higher wealth assets,
lower credit losses, and effective expense management, partially offset
by lower earnings in the insurance business. The reported annualized
return on common equity for the year was 42.3%, while the adjusted
annualized return on common equity was 43.3%, compared with
41.3% and 42.3%, respectively, last year.
Reported revenue for the year was $17,782 million, an increase of
$789 million, or 5%, compared with last year. Adjusted revenue for
the year was $17,782 million, an increase of $753 million, or 4%,
compared with last year. Adjusted net interest income increased
$280 million, or 3%, driven primarily by good loan and deposit volume
growth, higher mortgage refinancing revenue, partially offset by lower
margin on average earnings assets. Non-interest income increased
$473 million, or 6%, largely driven by wealth asset growth, higher
volume-related fee growth, strong direct investing trading volumes,
equity market appreciation, and higher insurance revenue. Reported
margin on average earning assets decreased 3 bps, while the adjusted
margin on average earning assets decreased 4 bps primarily due to
decline in deposit margins from the low interest rate environment.
Personal banking lending volume growth slowed throughout the
year impacted by lower growth in the housing market, moderation in
household borrowing, and regulatory changes in the Canadian market
which tightened mortgage eligibility criteria. Compared with last year,
average real estate secured lending volume increased $8.9 billion, or
4%. Auto lending average volume increased $0.3 billion, or 2%, while
all other personal lending average volumes were relatively flat.
Business loans and acceptances average volume increased $5.2 billion,
or 13%, with market share gains. Average personal deposit volumes
increased $6.3 billion, or 4%, due to strong growth in core chequing
and savings accounts, partially offset by lower term deposit volume.
Average business deposit volumes increased $5.2 billion, or 8%.
2013 FINANCIAL RESULTS OVERVIEW
2013 Financial Performance by Business Line