TD Bank 2014 Annual Report Download - page 60
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TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS58
(millions of Canadian dollars, except as noted) 2012
Tier 1 Capital
Common shares $ 18,525
Contributed surplus 196
Retained earnings 21,763
Fair value (gain) loss arising from changes in the institution’s own credit risk (2)
Net unrealized foreign currency translation gains (losses) on investment
in subsidiaries, net of hedging activities (426)
Preferred shares1 3,394
Innovative instruments1 3,700
Adjustments for transition to measurement under IFRS 387
Gross Tier 1 Capital 47,537
Goodwill and intangibles in excess of 5% limit (12,311)
Net Tier 1 Capital 35,226
Securitization – other (650)
50% shortfall in allowance2 (103)
50% substantial investments (2,731)
Investment in insurance subsidiaries (753)
Adjusted Net Tier 1 Capital 30,989
Tier 2 Capital
Innovative instruments 26
Subordinated notes and debentures (net of amortization and ineligible) 11,198
Eligible collective allowance (re-standardized approach) 1,142
Accumulated net after-tax unrealized gain on available-for-sale equity
securities in other comprehensive income 99
Securitization – other (1,272)
50% shortfall in allowance2 (103)
50% substantial investments (2,731)
Investment in insurance subsidiaries (753)
Total Tier 2 Capital 7,606
Total Regulatory Capital $ 38,595
Regulatory Capital Ratios and Multiples
Tier 1 Capital ratio3 12.6%
Total Capital ratio3 15.7%
Asset-to-capital multiple 18.0
CAPITAL STRUCTURE AND RATIOS – BASEL II
TABLE 44
1 Effective 2012, in accordance with IAS 32, Financial Instruments: Presentation,
the Bank is required to classify certain classes of preferred shares and innovative
Tier 1 Capital investments as liabilities on the balance sheet. For regulatory capital
purposes, these capital instruments have been grandfathered by OSFI and continue
to be included in Tier 1 Capital.
2 When expected loss as calculated within the Internal Risk Based (IRB) approach
exceeds total allowance for credit losses, the difference is deducted 50% from
Tier 1 Capital and 50% from Tier 2 Capital. When expected loss as calculated
within the IRB approach is less than the total allowance for credit losses, the
difference is added to Tier 2 Capital.
3 OSFI’s target Tier 1 and Total Capital ratios for Canadian banks are 7% and
10%, respectively.