Mullen Group Ltd. 2020 Year-End and Fourth Quarter Earnings Conference Call and Webcast

·2-min read

OKOTOKS, AB, Jan. 13, 2021 /CNW/ - (TSX: MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") intends to release its 2020 Year-End and Fourth Quarter earnings results after market close on Wednesday, February 10, 2021, and has scheduled a conference call and webcast as follows:

Date:

February 11, 2021



Time:

11:00 a.m. ET



Conference Call Dial-in:

1-800-319-4610 (for participants in North America)


416-915-3239 (Toronto or Overseas participants)



Webcast:

www.mullen-group.com

A replay of the call will be available approximately two hours after the completion of the call until Thursday, February 25, 2021, by dialing 1-800-319-6413 or 604-638-9010, access code 5914 followed by the pound sign.

About Mullen Group Ltd.

Mullen Group is a company that owns a network of independently operated businesses. The Corporation is recognized as one of the leading suppliers of trucking and logistics services in Canada providing a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation. In addition, we provide a diverse set of specialized services related to the energy, mining, forestry and construction industries in western Canada, including water management, fluid hauling and environmental reclamation. The corporate office provides the capital and financial expertise, legal support, technology and systems support, shared services and strategic planning to its independent businesses.

Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL". Additional information is available on our website at www.mullen-group.com or on SEDAR at www.sedar.com.

Contact Information

Mr. Murray K. Mullen - Chairman of the Board, Chief Executive Officer and President
Mr. P. Stephen Clark - Chief Financial Officer
Mr. Richard J. Maloney - Senior Vice President
Ms. Joanna K. Scott - Corporate Secretary & Vice President, Corporate Services

121A - 31 Southridge Drive
Okotoks, Alberta, Canada T1S 2N3
Telephone: 403-995-5200
Fax: 403-995-5296

Cision
Cision

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SOURCE Mullen Group Ltd.

Cision
Cision

View original content: http://www.newswire.ca/en/releases/archive/January2021/13/c0174.html

2,946


9,968


12,503


Preferred dividends


64


68


68


267


252


Net income available to common shareholders and













non-controlling interests in subsidiaries – adjusted


2,906


2,259


2,878


9,701


12,251


Attributable to:












Non-controlling interests in subsidiaries, net of income taxes






18


Net income available to common shareholders – adjusted


2,906


2,259


2,878


9,701


12,233


Pre-tax adjustments for items of note












Amortization of intangibles3


(61)


(63)


(74)


(262)


(307)


Net gain on sale of the investment in TD Ameritrade4


1,421




1,421



Charges related to the long-term loyalty agreement with Air Canada5






(607)


Charges associated with the acquisition of Greystone6


(25)


(25)


(30)


(100)


(117)


Less: Impact of income taxes












Amortization of intangibles3


(8)


(9)


(12)


(37)


(48)


Net gain on sale of the investment in TD Ameritrade4


(829)




(829)



Charges related to the long-term loyalty agreement with Air Canada5






(161)


Charges associated with the acquisition of Greystone6


(1)



(2)


(2)


(5)


Total adjustments for items of note


2,173


(79)


(90)


1,927


(817)


Net income available to common shareholders – reported

$

5,079

$

2,180

$

2,788

$

11,628

$

11,416


1

Adjusted non-interest expenses excludes the following items of note: Net gain on sale of the investment in TD Ameritrade, as explained in footnote 4 – fourth quarter 2020 – $1,421 million. Amortization of intangibles, as explained in footnote 3 – fourth quarter 2020 – $38 million, third quarter 2020 – $38 million, second quarter 2020 – $44 million, first quarter 2020 – $46 million, fourth quarter 2019 – $50 million, third quarter 2019 – $50 million, second quarter 2019 – $55 million, first quarter 2019 – $56 million, reported in the Corporate segment. Charges related to the long-term loyalty agreement with Air Canada, as explained in footnote 5 – first quarter 2019 – $607 million; this amount was reported in the Canadian Retail segment. Charges associated with the acquisition of Greystone, as explained in footnote 6 – fourth quarter 2020 – $25 million, third quarter 2020 – $25 million, second quarter 2020 – $26 million, first quarter 2020 – $24 million, fourth quarter 2019 – $30 million, third quarter 2019 – $26 million, second quarter 2019 – $30 million, first quarter 2019 – $31 million; this amount was reported in the Canadian Retail segment.

2

Adjusted equity in net income of an investment in TD Ameritrade excludes the following items of note: Amortization of intangibles, as explained in footnote 3 – fourth quarter 2020 $23 million, third quarter 2020 $25 million, second quarter 2020 $24 million, first quarter 2020 $24 million, fourth quarter 2019 – $24 million, third quarter 2019 – $25 million, second quarter 2019 – $23 million, first quarter 2019 – $24 million. The earnings impact of this item was reported in the Corporate segment.

3

Amortization of intangibles relates to intangibles acquired as a result of asset acquisitions and business combinations, including the after tax amounts for amortization of intangibles relating to the Equity in net income of the investment in TD Ameritrade. Although the amortization of software and asset servicing rights are recorded in amortization of intangibles, they are not included for purposes of the items of note.

4

On October 6, 2020, the Bank acquired an approximately 13.5% stake in Schwab following completion of the Schwab transaction. As a result, the Bank recognized a net gain on sale of its investment in TD Ameritrade primarily related to a revaluation gain, the release of cumulative foreign currency translation gains offset by the release of designated hedging items and related taxes, and the release of a deferred tax liability related to the Bank's investment in TD Ameritrade, net of direct transaction costs. These amounts were reported in the Corporate segment.

5

On January 10, 2019, the Bank's long-term loyalty program agreement with Air Canada became effective in conjunction with Air Canada completing its acquisition of Aimia Canada Inc., which operates the Aeroplan loyalty business (the "Transaction"). In connection with the Transaction, the Bank recognized an expense of $607 million ($446 million after-tax) in the Canadian Retail segment.

6

On November 1, 2018, the Bank acquired Greystone Capital Management Inc., the parent company of Greystone Managed Investments Inc. ("Greystone"). The Bank incurred acquisition-related charges including compensation to employee shareholders issued in common shares in respect of the purchase price, direct transaction costs, and certain other acquisition-related costs. These amounts have been recorded as an adjustment to net income and were reported in the Canadian Retail segment.


TABLE 4: RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE (EPS)1

(Canadian dollars)


For the three months ended

For the twelve months ended



October 31

July 31

October 31

October 31

October 31



2020

2020

2019

2020

2019


Basic earnings per share – reported

$

2.80

$

1.21

$

1.54

$

6.43

$

6.26


Adjustments for items of note2


(1.20)


0.04


0.05


(1.06)


0.45


Basic earnings per share – adjusted

$

1.60

$

1.25

$

1.59

$

5.37

$

6.71














Diluted earnings per share – reported

$

2.80

$

1.21

$

1.54

$

6.43

$

6.25


Adjustments for items of note2


(1.20)


0.04


0.05


(1.07)


0.44


Diluted earnings per share – adjusted

$

1.60

$

1.25

$

1.59

$

5.36

$

6.69


1

EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding during the period.

2

For explanations of items of note, refer to the "Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income" table in the "How We Performed" section of this document.


TABLE 5: NON-GAAP FINANCIAL MEASURES – Reconciliation of Reported to Adjusted Provision for Income Taxes

(millions of Canadian dollars, except as noted)

For the three months ended


For the twelve months ended




October 31


July 31


October 31


October 31


October 31




2020


2020


2019


2020


2019


Provision for income taxes – reported

$

(202)


$

445


$

646


$

1,152


$

2,735


Total adjustments for items of note1


838



9



14



868



214


Provision for income taxes – adjusted

$

636


$

454


$

660


$

2,020


$

2,949


Effective income tax rate – reported


(4.4)

%


18.8

%


20.2

%


9.7

%


20.7

%

Effective income tax rate – adjusted2,3


19.7



18.7



20.1



18.8



20.8


1

For explanations of items of note, refer to the "Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income" table in the "How We Performed" section of this document.

2

The tax effect for each item of note is calculated using the statutory income tax rate of the applicable legal entity.

3

Adjusted effective income tax rate is the adjusted provision for income taxes before other taxes as a percentage of adjusted net income before taxes.

RETURN ON COMMON EQUITY
The Bank's methodology for allocating capital to its business segments is largely aligned with the common equity capital requirements under Basel III. Capital allocated to the business segments was decreased to 9% CET1 Capital effective the second quarter of 2020 compared with 10.5% in the first quarter of 2020, and 10% in fiscal 2019.

Adjusted return on common equity (ROE) is adjusted net income available to common shareholders as a percentage of average common equity.

Adjusted ROE is a non-GAAP financial measure and is not a defined term under IFRS. Readers are cautioned that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other issuers.


TABLE 6: RETURN ON COMMON EQUITY

(millions of Canadian dollars, except as noted)


For the three months ended


For the twelve months ended




October 31


July 31


October 31


October 31


October 31




2020


2020


2019


2020


2019


Average common equity

$

86,883


$

86,794


$

81,286


$

85,203


$

78,638


Net income available to common shareholders – reported


5,079



2,180



2,788



11,628



11,416


Items of note, net of income taxes1


(2,173)



79



90



(1,927)



817


Net income available to common shareholders – adjusted

$

2,906


$

2,259


$

2,878


$

9,701


$

12,233


Return on common equity – reported


23.3

%


10.0

%


13.6

%


13.6

%


14.5

%

Return on common equity – adjusted


13.3



10.4



14.0



11.4



15.6


1

For explanations of items of note, refer to the "Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income" table in the "How We Performed" section of this document.

RETURN ON TANGIBLE COMMON EQUITY
Tangible common equity (TCE) is calculated as common shareholders' equity less goodwill, imputed goodwill and intangibles on the investments in Schwab and TD Ameritrade and other acquired intangible assets, net of related deferred tax liabilities. Return on tangible common equity (ROTCE) is calculated as reported net income available to common shareholders after adjusting for the after–tax amortization of acquired intangibles, which are treated as an item of note, as a percentage of average TCE. Adjusted ROTCE is calculated using reported net income available to common shareholders, adjusted for items of note, as a percentage of average TCE. Adjusted ROTCE provides a useful measure of the performance of the Bank's income producing assets, independent of whether or not they were acquired or developed internally. TCE, ROTCE, and adjusted ROTCE are each non-GAAP financial measures and are not defined terms under IFRS. Readers are cautioned that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other issuers.


TABLE 7: RETURN ON TANGIBLE COMMON EQUITY

(millions of Canadian dollars, except as noted)


For the three months ended


For the twelve months ended




October 31


July 31


October 31


October 31


October 31




2020


2020


2019


2020


2019


Average common equity

$

86,883


$

86,794


$

81,286


$

85,203


$

78,638


Average goodwill


17,087



17,534



17,046



17,261



17,070


Average imputed goodwill and intangibles on
















investments in Schwab and TD Ameritrade


4,826



4,184



4,119



4,369



4,146


Average other acquired intangibles1


449



492



613



509



662


Average related deferred tax liabilities


(237)



(264)



(267)



(255)



(260)


Average tangible common equity


64,758



64,848



59,775



63,319



57,020


Net income available to common shareholders – reported


5,079



2,180



2,788



11,628



11,416


Amortization of acquired intangibles, net of income taxes2


53



54



62



225



259


Net income available to common shareholders after

















adjusting for after-tax amortization of acquired intangibles


5,132



2,234



2,850



11,853



11,675


Other items of note, net of income taxes2


(2,226)



25



28



(2,152)



558


Net income available to common shareholders – adjusted

$

2,906


$

2,259


$

2,878


$

9,701


$

12,233


Return on tangible common equity


31.5

%


13.7

%


18.9

%


18.7

%


20.5

%

Return on tangible common equity – adjusted


17.9



13.9



19.1



15.3



21.5


1

Excludes intangibles relating to software and asset servicing rights.

2

For explanations of items of note, refer to the "Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income" table in the "How We Performed" section of this document.

Impact of Foreign Exchange Rate on U.S. Retail Segment Translated Earnings
The following table reflects the estimated impact of foreign currency translation on key U.S. Retail segment income statement items.


TABLE 8: IMPACT OF FOREIGN EXCHANGE RATE ON U.S. RETAIL SEGMENT TRANSLATED EARNINGS

(millions of Canadian dollars, except as noted)

For the three months ended

For the twelve months ended


October 31, 2020 vs.

October 31, 2020 vs.


October 31, 2019

October 31, 2019


Increase (Decrease)

Increase (Decrease)

U.S. Retail Bank





Total revenue

$

(3)

$

138

Non-interest expenses


(2)


83

Net income


(1)


3

Equity in net income of an investment in TD Ameritrade1


3


15

U.S. Retail segment net income – after tax


2


18

Earnings per share (Canadian dollars)





Basic

$

$

0.01

Diluted



0.01

1 Equity in net income of an investment in TD Ameritrade and the foreign exchange impact are reported with a one-month lag.


Average foreign exchange rate (equivalent of CAD $1.00)

For the three months ended

For the twelve months ended


October 31

October 31

October 31

October 31


2020

2019

2020

2019

U.S. dollar

0.756

0.756

0.743

0.753






SIGNIFICANT EVENTS

Acquisition of TD Ameritrade Holding Corporation by The Charles Schwab Corporation
On October 6, 2020, Schwab completed its acquisition of TD Ameritrade, of which the Bank was a major shareholder. Under the terms of the Schwab transaction, all TD Ameritrade shareholders, including the Bank, exchanged each TD Ameritrade share they owned for 1.0837 common shares of Schwab. At closing, in exchange for the Bank's approximately 43% ownership in TD Ameritrade, the Bank received an approximately 13.5% stake in Schwab, consisting of 9.9% voting common shares and the remainder in non-voting common shares, convertible into voting common shares upon transfer to a third party. The transaction resulted in a net gain on sale of the Bank's investment in TD Ameritrade of $2.3 billion after-tax in the fourth quarter of 2020. The transaction had an approximately neutral impact on CET1 at closing.

The Bank and Schwab are party to a stockholder agreement (the "Stockholder Agreement"), which became effective upon closing of the Schwab transaction. Under the Stockholder Agreement: (i) subject to meeting certain conditions, the Bank has two seats on Schwab's Board of Directors, (ii) the Bank is not permitted to own more than 9.9% voting common shares of Schwab, and (iii) the Bank is subject to customary standstill and lockup restrictions, including, subject to certain exceptions, transfer restrictions. In addition, the Bank and Schwab entered into the Schwab IDA Agreement, which became effective upon closing and has an initial expiration date of July 1, 2031. Starting on July 1, 2021, deposits under the Schwab IDA Agreement, which were $195 billion (US$146 billion) as at October 31, 2020, can be reduced at Schwab's option by up to US$10 billion a year (subject to certain adjustments based on the change in the balance of the sweep deposits between closing and July 1, 2021), with a floor of US$50 billion. The servicing fee under the Schwab IDA Agreement is set at 15 bps per annum on the aggregate average daily balance in the sweep accounts.

The Bank reports its investment in Schwab using the equity method of accounting. The Bank's share of Schwab's earnings available to common shareholders is reported with a one-month lag, and the Bank will begin recording its share of Schwab's earnings on this basis in the first quarter of fiscal 2021.

HOW OUR BUSINESSES PERFORMED

For management reporting purposes, the Bank reports its results under three key business segments: Canadian Retail, which includes the results of the Canadian personal and commercial banking, wealth, and insurance businesses; U.S. Retail, which includes the results of the U.S. personal and business banking operations, wealth management services, and the Bank's investment in TD Ameritrade (Schwab as of October 6, 2020); and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results of each business segment reflect revenue, expenses, assets, and liabilities generated by the businesses in that segment. Where applicable, the Bank measures and evaluates the performance of each segment based on adjusted results and ROE, and for those segments the Bank indicates that the measure is adjusted. For further details, refer to the "How the Bank Reports" section of this document, the "Business Focus" section in the 2020 MD&A, and Note 29 of the Bank's Consolidated Financial Statements for the year ended October 31, 2020. For information concerning the Bank's measure of adjusted return on average common equity, which is a non-GAAP financial measure, refer to the "How We Performed" section of this document.

PCL related to performing (Stage 1 and Stage 2) and impaired (Stage 3) financial assets, loan commitments, and financial guarantees is recorded within the respective segment.

Net interest income within Wholesale Banking is calculated on a taxable equivalent basis (TEB), which means that the value of non-taxable or tax-exempt income, including dividends, is adjusted to its equivalent before-tax value. Using TEB allows the Bank to measure income from all securities and loans consistently and makes for a more meaningful comparison of net interest income with similar institutions. The TEB increase to net interest income and provision for income taxes reflected in Wholesale Banking's results are reversed in the Corporate segment. The TEB adjustment for the quarter was $44 million, compared with $36 million in the fourth quarter last year, and $47 million in the prior quarter.


TABLE 9: CANADIAN RETAIL

(millions of Canadian dollars, except as noted)



For the three months ended



October 31


July 31


October 31



2020


2020


2019


Net interest income

$

2,982


$

2,910


$

3,173


Non-interest income


3,047



3,116



2,960


Total revenue


6,029



6,026



6,133


Provision for credit losses – impaired


199



372



324


Provision for credit losses – performing


52



579



76


Total provision for credit losses


251



951



400


Insurance claims and related expenses


630



805



705


Non-interest expenses – reported


2,684



2,533



2,637


Non-interest expenses – adjusted1


2,659



2,508



2,607


Provision for (recovery of) income taxes – reported


662



474



646


Provision for (recovery of) income taxes – adjusted1


663



474



648


Net income – reported


1,802



1,263



1,745


Net income – adjusted1

$

1,826


$

1,288


$

1,773












Selected volumes and ratios










Return on common equity – reported2


40.5

%


28.3

%


37.9

%

Return on common equity – adjusted1,2


41.0



28.8



38.5


Net interest margin (including on securitized assets)


2.71



2.68



2.96


Efficiency ratio – reported


44.5



42.0



43.0


Efficiency ratio – adjusted1


44.1



41.6



42.5


Assets under administration (billions of Canadian dollars)

$

433


$

434


$

422


Assets under management (billions of Canadian dollars)


358



366



353


Number of Canadian retail branches


1,085



1,087



1,091


Average number of full-time equivalent staff


40,725



40,652



41,650


1

Adjusted non-interest expenses exclude the following items of note: Charges associated with the acquisition of Greystone in the fourth quarter 2020 – $25 million ($24 million after tax), third quarter 2020 – $25 million ($25 million after tax), fourth quarter 2019 – $30 million ($28 million after tax). For explanations of items of note, refer to the "Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income" table in the "How We Performed" section of this document.

2

Capital allocated to the business segment was reduced to 9% CET1 effective the second quarter of 2020 compared with 10.5% in the first quarter of 2020, and 10% in fiscal 2019.

Quarterly comparison – Q4 2020 vs. Q4 2019
Canadian Retail reported net income for the quarter was $1,802 million, an increase of $57 million, or 3%, compared with the fourth quarter last year. The increase in earnings reflects lower PCL and lower insurance claims, partially offset by lower revenue and higher non-interest expenses. On an adjusted basis, net income for the quarter was $1,826 million, an increase of $53 million, or 3%. The reported and adjusted annualized ROE for the quarter was 40.5% and 41.0%, respectively, compared with 37.9% and 38.5%, respectively, in the fourth quarter last year.

Canadian Retail revenue is derived from the Canadian personal and commercial banking, wealth, and insurance businesses. Revenue for the quarter was $6,029 million, a decrease of $104 million, or 2%, compared with the fourth quarter last year.

Net interest income was $2,982 million, a decrease of $191 million, or 6%, reflecting lower deposit margins, partially offset by deposit and loan volume growth. Average loan volumes increased $13 billion, or 3%, reflecting 3% growth in personal loans and 4% growth in business loans. Average deposit volumes increased $68 billion, or 20%, reflecting 15% growth in personal deposits, 23% growth in business deposits, and 42% growth in wealth deposits. Net interest margin was 2.71%, a decrease of 25 bps, reflecting lower interest rates.

Non-interest income was $3,047 million, an increase of $87 million, or 3%, reflecting higher transaction and fee-based revenue in the wealth business, and higher insurance revenue, partially offset by lower fees in the banking businesses.

Assets under administration (AUA) were $433 billion as at October 31, 2020, an increase of $11 billion, or 3%, compared with the fourth quarter last year, reflecting new asset growth. Assets under management (AUM) were $358 billion as at October 31, 2020, an increase of $5 billion, or 1%, compared with the fourth quarter last year, reflecting market appreciation.

PCL for the quarter was $251 million, a decrease of $149 million, or 37%, compared with the fourth quarter last year. PCL – impaired was $199 million, a decrease of $125 million, or 39%, primarily reflected in the consumer lending portfolios, largely reflecting the ongoing impact of bank and government assistance programs. PCL – performing was $52 million, a decrease of $24 million, reflecting a smaller increase to the performing allowance for credit losses this quarter. Performing provisions in the current quarter were largely recorded in the commercial lending portfolios. Total PCL as an annualized percentage of credit volume was 0.22%, or a decrease of 15 bps.

Insurance claims and related expenses for the quarter were $630 million, a decrease of $75 million, or 11%, compared with the fourth quarter last year. The decrease reflects lower current accident year claims, no severe weather-related events and favourable prior years' claims development, partially offset by an increase in certain current year claims reserves, as well as an increase in the fair value of investments supporting claims liabilities which resulted in a similar increase to non-interest income.

Reported non-interest expenses for the quarter were $2,684 million, an increase of $47 million, or 2%, compared with the fourth quarter last year, reflecting higher spend supporting business growth including technology, volume-driven expenses, and marketing, partially offset by a reduction in project and other discretionary spend. On an adjusted basis, non-interest expenses were $2,659 million, an increase of $52 million, or 2%.

The reported and adjusted efficiency ratio for the quarter was 44.5% and 44.1%, respectively, compared with 43.0% and 42.5%, respectively, in the fourth quarter last year.

Quarterly comparison – Q4 2020 vs. Q3 2020
Canadian Retail reported net income for the quarter increased $539 million, or 43%, compared with the prior quarter. The increase in earnings reflects lower PCL and lower insurance claims, partially offset by higher non-interest expenses. On an adjusted basis, net income increased $538 million, or 42%. The reported and adjusted annualized ROE for the quarter was 40.5% and 41.0%, respectively, compared with 28.3% and 28.8%, respectively, in the prior quarter.

Revenue increased $3 million compared with the prior quarter. Net interest income increased $72 million, or 2%, primarily reflecting volume growth. Average loan volumes increased $6 billion, or 1%, reflecting 2% growth in personal loans and 1% decrease in business loans. Average deposit volumes increased $16 billion, or 4%. Net interest margin was 2.71%, an increase of 3 bps, reflecting improving loan margins.

Non-interest income decreased $69 million, or 2%, reflecting a $97 million decrease in the fair value of investments supporting claims liabilities which resulted in a similar decrease to insurance claims, partially offset by a recovery in customer activity, including retail sales and higher fee-based income in our banking business.

AUA decreased $1 billion compared with the prior quarter reflecting a decrease in market value. AUM decreased $8 billion, or 2%, reflecting a decrease in net assets.

PCL for the quarter decreased $700 million, or 74%, compared with the prior quarter. PCL – impaired decreased by $173 million, or 47%, reflected in the consumer lending portfolios, largely reflecting the ongoing impact of bank and government assistance programs. PCL – performing decreased by $527 million, reflecting a smaller increase to the performing allowance for credit losses this quarter in the consumer and commercial lending portfolios. Total PCL as an annualized percentage of credit volume was 0.22%, a decrease of 64 bps.

Insurance claims and related expenses for the quarter decreased $175 million, or 22%, compared with the prior quarter, reflecting favourable prior years' claims development, no severe weather-related events and changes in the fair value of investments supporting claims liabilities which resulted in a similar decrease to non-interest income, partially offset by higher current year claims and an increase in certain current year claims reserves.

Reported non-interest expenses increased $151 million, or 6%, compared with the prior quarter, reflecting higher spend supporting business growth and higher marketing costs. On an adjusted basis, non-interest expenses increased $151 million, or 6%.

The reported and adjusted efficiency ratio for the quarter was 44.5% and 44.1%, respectively, compared with 42.0% and 41.6%, respectively, in the prior quarter.


TABLE 10: U.S. RETAIL

(millions of dollars, except as noted)





For the three months ended



October 31


July 31


October 31


Canadian Dollars


2020



2020



2019


Net interest income

$

2,071


$

2,256


$

2,232


Non-interest income


646



595



717


Total revenue – reported


2,717



2,851



2,949


Provision for credit losses – impaired


147



290



268


Provision for credit losses – performing


425



607



27


Total provision for credit losses


572



897



295


Non-interest expenses


1,660



1,646



1,669


Provision for (recovery of) income taxes


(47)



(48)



85


U.S. Retail Bank net income


532



356



900


Equity in net income of an investment in TD Ameritrade1,2


339



317



291


Net income

$

871


$

673


$

1,191












U.S. Dollars










Net interest income

$

1,566


$

1,648


$

1,687


Non-interest income


488



437



543


Total revenue – reported


2,054



2,085



2,230


Provision for credit losses – impaired


111



211



203


Provision for credit losses – performing


322



444



20


Total provision for credit losses


433



655



223


Non-interest expenses


1,254



1,205



1,261


Provision for (recovery of) income taxes


(36)



(35)



65


U.S. Retail Bank net income


403



260



681


Equity in net income of an investment in TD Ameritrade1,2


255



230



219


Net income

$

658


$

490


$

900













Selected volumes and ratios










Return on common equity3


9.0

%


6.7

%


11.8

%

Net interest margin4


2.27



2.50



3.18


Efficiency ratio


61.1



57.8



56.5


Assets under administration (billions of U.S. dollars)

$

24


$

23


$

21


Assets under management (billions of U.S. dollars)


39



40



44


Number of U.S. retail stores


1,223



1,220



1,241


Average number of full-time equivalent staff


26,460



26,408



26,513


1

The Bank's share of TD Ameritrade's earnings is reported with a one-month lag. The same convention is being followed for Schwab, and the Bank will begin recording its share of Schwab's earnings in the first quarter of fiscal 2021. Refer to "Significant Events" in the "How We Performed" section of this document.

2

The after-tax amounts for amortization of intangibles relating to the Equity in net income of the investment in TD Ameritrade is recorded in the Corporate segment with other acquired intangibles.

3

Capital allocated to the business segment was reduced to 9% CET1 effective the second quarter of 2020 compared with 10.5% in the first quarter of 2020, and 10% in fiscal 2019.

4

Net interest margin excludes the impact related to sweep deposits arrangements and the impact of intercompany deposits and cash collateral. In addition, the value of tax-exempt interest income is adjusted to its equivalent before-tax value.

Quarterly comparison – Q4 2020 vs. Q4 2019
U.S. Retail net income for the quarter was $871 million (US$658 million), a decrease of $320 million (US$242 million), or 27% (27% in U.S. dollars), compared with the fourth quarter last year. The reported and adjusted annualized ROE for the quarter was 9.0%, compared with 11.8%, in the fourth quarter last year.

U.S. Retail net income includes contributions from the U.S. Retail Bank and the Bank's investment in TD Ameritrade. Net income for the quarter from the U.S. Retail Bank and the Bank's investment in TD Ameritrade were $532 million (US$403 million) and $339 million (US$255 million), respectively.

The contribution from TD Ameritrade of US$255 million increased US$36 million, or 16%, compared with the fourth quarter last year, primarily reflecting higher trading volumes and lower operating expenses, partially offset by reduced trading commissions and lower asset-based revenue.

U.S. Retail Bank net income of US$403 million decreased US$278 million, or 41%, primarily reflecting higher PCL and lower revenue.

U.S. Retail Bank revenue is derived from personal and business banking, and wealth management. Revenue for the quarter was US$2,054 million, a decrease of US$176 million, or 8%, compared with the fourth quarter last year. Net interest income decreased US$121 million, or 7%, reflecting lower deposit margins, partially offset by growth in loan and deposit volumes. Net interest margin was 2.27%, a decrease of 91 bps, primarily reflecting lower deposit margins and balance sheet mix. Non-interest income decreased US$55 million, or 10%, primarily reflecting lower deposit fees.

Average loan volumes increased US$12 billion, or 7%, compared with the fourth quarter last year, reflecting growth in personal and business loans of 3% and 10%, respectively, with significant increases in business loans reflecting originations under the SBA PPP. Average deposit volumes increased US$81 billion, or 30%, reflecting a 35% increase in sweep deposit volumes, a 37% increase in business deposit volumes, and a 17% increase in personal deposit volumes.

AUA were US$24 billion as at October 31, 2020, an increase of US$3 billion, or 16%, compared with the fourth quarter last year, reflecting loan and deposit growth. AUM were US$39 billion as at October 31, 2020, a decrease of US$5 billion, or 11%, reflecting net fund outflows.

PCL for the quarter was US$433 million, an increase of US$210 million, compared with the fourth quarter last year. PCL – impaired was US$111 million, a decrease of US$92 million, or 45%, primarily reflected in the consumer lending portfolios, largely reflecting the ongoing impact of bank and government assistance programs. PCL – performing was US$322 million, an increase of US$302 million, primarily related to a significant deterioration in the economic outlook, including the impact of credit migration, and predominantly reflected in the commercial lending portfolios. U.S. Retail PCL including only the Bank's contractual portion of credit losses in the U.S. strategic cards portfolio, as an annualized percentage of credit volume, was 1.01%, or an increase of 46 bps.

Non-interest expenses for the quarter were US$1,254 million, a decrease of US$7 million, compared with the fourth quarter last year, primarily reflecting restructuring charges in the prior year and productivity savings this year, partially offset by costs to support customers and employees during the COVID-19 pandemic, higher employee-related costs, and a prior year adjustment to post-retirement benefit costs.

The efficiency ratio for the quarter was 61.1%, compared with 56.5% in the fourth quarter last year.

Quarterly comparison – Q4 2020 vs. Q3 2020
U.S. Retail net income increased $198 million (US$168 million), or 29% (34% in U.S. dollars), compared with the prior quarter. The annualized ROE for the quarter was 9.0%, compared to 6.7%, in the prior quarter.

The contribution from TD Ameritrade was US$255 million, an increase of US$25 million, or 11%, compared with the prior quarter, primarily reflecting higher asset-based revenue and higher trading volumes, partially offset by reduced trading commissions.

U.S. Retail Bank net income for the quarter increased US$143 million, or 55%, compared with the prior quarter.

Revenue for the quarter decreased US$31 million, or 1%. Net interest income decreased US$82 million, or 5%, reflecting continued deposit margin compression, partially offset by deposit volume growth. Net interest margin was 2.27%, a decrease of 23 bps reflecting lower deposit margins and balance sheet mix. Non-interest income increased US$51 million, or 12%, primarily reflecting higher deposit and credit card fees, partially offset by the valuation of certain investments in the prior quarter.

Average loan volumes decreased US$2 billion, or 1%, compared with the prior quarter, reflecting a decline in business loans of 3%, resulting from pay downs on commercial lines of credit, partially offset by an increase in personal loans of 1%. Average deposit volumes increased US$10 billion, or 3%, reflecting a 5% increase in business deposit volumes, a 3% increase in personal deposit volumes, and a 1% increase in sweep deposit volumes.

AUA were US$24 billion as at October 31, 2020, an increase of US$1 billion, or 6%, compared with the prior quarter. AUM were US$39 billion as at

October 31, 2020, a decrease of US$1 billion, or 3%, compared with the prior quarter, reflecting net outflows.

PCL for the quarter decreased US$222 million, compared with the prior quarter. PCL – impaired decreased by US$100 million, primarily reflected in the consumer lending portfolios, largely reflecting the ongoing impact of bank and government assistance programs. PCL – performing decreased by US$122 million, reflecting a smaller increase to the performing allowance for credit losses this quarter. Performing provisions in the current quarter were largely recorded in the commercial lending portfolios. U.S. Retail PCL including only the Bank's contractual portion of credit losses in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 1.01%, or a decrease of 50 bps.

Non-interest expenses for the quarter increased US$49 million, or 4%, compared with the prior quarter, reflecting higher employee-related costs, investments in the business, and marketing.

The efficiency ratio for the quarter was 61.1%, compared with 57.8%, in the prior quarter.


TABLE 11: WHOLESALE BANKING

(millions of Canadian dollars, except as noted)


For the three months ended



October 31


July 31


October 31



2020


2020


2019


Net interest income (TEB)

$

609


$

531


$

278


Non-interest income


645



866



570


Total revenue


1,254



1,397



848


Provision for (recovery of) credit losses – impaired


(19)



52



8


Provision for (recovery of) credit losses – performing


13



71



33


Total provision for (recovery of) credit losses


(6)



123



41


Non-interest expenses


581



669



600


Provision for (recovery of) income taxes (TEB)


193



163



47


Net income

$

486


$

442


$

160












Selected volumes and ratios










Trading-related revenue (TEB)

$

761


$

942


$

411


Average gross lending portfolio (billions of Canadian dollars)1


61.0



69.4



52.5


Return on common equity2


23.0

%


19.7

%


8.5

%

Efficiency ratio


46.3



47.9



70.8


Average number of full-time equivalent staff


4,659



4,632



4,570


1

Includes gross loans and bankers' acceptances relating to Wholesale Banking, excluding letters of credit, cash collateral, credit default swaps (CDS), and allowance for credit losses.

2

Capital allocated to the business segment was reduced to 9% CET1 effective the second quarter of 2020 compared with 10.5% in the first quarter of 2020, and 10% in fiscal 2019.

Quarterly comparison – Q4 2020 vs. Q4 2019
Wholesale Banking net income for the quarter was $486 million, an increase of $326 million compared with the fourth quarter last year reflecting higher revenue, lower non-interest expenses, and lower PCL.

Wholesale Banking revenue is derived primarily from capital markets and corporate and investment banking services provided to corporate, government, and institutional clients. Wholesale Banking generates revenue from corporate lending, advisory, underwriting, sales, trading and research, client securitization, trade finance, cash management, prime services, and trade execution services. Revenue for the quarter was $1,254 million, an increase of $406 million, or 48%, compared with the fourth quarter last year primarily reflecting higher trading-related revenue, higher loan fees and higher debt underwriting fees, as well as derivative valuation charges of $96 million in the prior year.

PCL for the quarter was a benefit of $6 million, compared with provisions of $41 million in the fourth quarter last year. PCL – impaired was a recovery of $19 million. PCL – performing was $13 million.

Non-interest expenses were $581 million, a decrease of $19 million, or 3%, compared with the fourth quarter last year. The decrease reflects lower variable compensation.

Quarterly comparison – Q4 2020 vs. Q3 2020
Wholesale Banking net income for the quarter increased $44 million, or 10%, compared with the prior quarter reflecting lower PCL and lower non-interest expenses, partially offset by lower revenue.

Revenue for the quarter decreased $143 million, or 10%, primarily reflecting lower trading-related revenue and lower underwriting fees, partially offset by higher other revenue.

PCL for the quarter decreased by $129 million. PCL – impaired was a recovery of $19 million, a decrease of $71 million reflecting credit migration in the prior quarter. PCL – performing was $13 million, a decrease of $58 million, reflecting a smaller increase to the performing allowance for credit losses this quarter.

Non-interest expenses for the quarter decreased $88 million, or 13%, reflecting lower variable compensation, partially offset by a legal provision and higher technology related costs.


TABLE 12: CORPORATE

(millions of Canadian dollars)

For the three months ended



October 31

July 31

October 31



2020

2020

2019


Net income (loss) – reported

$

1,984

$

(130)

$

(240)


Adjustments for items of note1








Amortization of intangibles before income taxes


61


63


74


Net gain on sale of the investment in TD Ameritrade


(1,421)




Less: impact of income taxes


837


9


12


Net income (loss) – adjusted

$

(213)

$

(76)

$

(178)










Decomposition of items included in net income (loss) – adjusted








Net corporate expenses

$

(302)

$

(153)

$

(201)


Other


89


77


23


Net income (loss) – adjusted

$

(213)

$

(76)

$

(178)










Selected volumes








Average number of full-time equivalent staff


17,849


17,889


17,316


1

For explanations of items of note, refer to the "Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income" table in the "How We Performed" section of this document.

Quarterly comparison – Q4 2020 vs. Q4 2019
Corporate segment's reported net income for the quarter was $1,984 million, compared with a reported net loss of $240 million in the fourth quarter last year. The year-over-year increase was primarily attributable to a net gain on sale of the Bank's investment in TD Ameritrade of $1,421 million ($2,250 million after-tax), as well as higher revenue from treasury and balance sheet management activities, which are reflected in Other, partially offset by higher net corporate expenses. Net corporate expenses increased largely reflecting the impact of corporate real estate optimization costs of $163 million in the current quarter, partially offset by restructuring charges of $51 million in the same quarter last year. The adjusted net loss for the quarter was $213 million, compared with an adjusted net loss of $178 million in the fourth quarter last year.

Quarterly comparison – Q4 2020 vs. Q3 2020
Corporate segment's reported net income for the quarter was $1,984 million, compared with a reported net loss of $130 million in the prior quarter. The quarter-over-quarter increase in reported net income was primarily attributable to a net gain on sale of the Bank's investment in TD Ameritrade of $1,421 million ($2,250 million after-tax), as well as higher revenue from treasury and balance sheet management activities, which are reflected in Other, partially offset by higher net corporate expenses. Net corporate expenses increased largely reflecting the impact of corporate real estate optimization costs of $163 million in the current quarter and lower employee-related benefits claims in the prior quarter. The adjusted net loss for the quarter was $213 million, compared with an adjusted net loss of $76 million in the prior quarter.

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET1

(millions of Canadian dollars)




As at



October 31

October 31




2020


2019

ASSETS



Cash and due from banks

$

6,445

$

4,863

Interest-bearing deposits with banks


164,149


25,583




170,594


30,446

Trading loans, securities, and other


148,318


146,000

Non-trading financial assets at fair value through profit or loss


8,548


6,503

Derivatives


54,242


48,894

Financial assets designated at fair value through profit or loss


4,739


4,040

Financial assets at fair value through other comprehensive income


103,285


111,104




319,132


316,541

Debt securities at amortized cost, net of allowance for credit losses


227,679


130,497

Securities purchased under reverse repurchase agreements


169,162


165,935

Loans





Residential mortgages


252,219


235,640

Consumer instalment and other personal


185,460


180,334

Credit card


32,334


36,564

Business and government


255,799


236,517




725,812


689,055

Allowance for loan losses


(8,289)


(4,447)

Loans, net of allowance for loan losses


717,523


684,608

Other





Customers' liability under acceptances


14,941


13,494

Investment in Schwab and TD Ameritrade


12,174


9,316

Goodwill


17,148


16,976

Other intangibles


2,125


2,503

Land, buildings, equipment, and other depreciable assets


10,136


5,513

Deferred tax assets


2,444


1,799

Amounts receivable from brokers, dealers, and clients


33,951


20,575

Other assets


18,856


17,087




111,775


87,263

Total assets

$

1,715,865

$

1,415,290

LIABILITIES





Trading deposits

$

19,177

$

26,885

Derivatives


53,203


50,051

Securitization liabilities at fair value


13,718


13,058

Financial liabilities designated at fair value through profit or loss


59,665


105,131




145,763


195,125

Deposits





Personal


625,200


503,430

Banks


28,969


16,751

Business and government


481,164


366,796




1,135,333


886,977

Other





Acceptances


14,941


13,494

Obligations related to securities sold short


34,999


29,656

Obligations related to securities sold under repurchase agreements


188,876


125,856

Securitization liabilities at amortized cost


15,768


14,086

Amounts payable to brokers, dealers, and clients


35,143


23,746

Insurance-related liabilities


7,590


6,920

Other liabilities


30,476


21,004




327,793


234,762

Subordinated notes and debentures


11,477


10,725

Total liabilities


1,620,366


1,327,589

EQUITY





Shareholders' Equity





Common shares


22,487


21,713

Preferred shares


5,650


5,800

Treasury shares – common


(37)


(41)

Treasury shares – preferred


(4)


(6)

Contributed surplus


121


157

Retained earnings


53,845


49,497

Accumulated other comprehensive income (loss)


13,437


10,581

Total equity


95,499


87,701

Total liabilities and equity

$

1,715,865

$

1,415,290

1 The amounts as at October 31, 2020 and October 31, 2019, have been derived from the audited financial statements.

CONSOLIDATED STATEMENT OF INCOME1

(millions of Canadian dollars, except as noted)

For the three months ended

For the twelve months ended



October 31

October 31

October 31

October 31


2020

2019

2020

2019

Interest income2









Loans

$

6,278

$

8,117

$

28,151

$

31,925

Securities










Interest


1,012


1,848


5,432


7,843


Dividends


404


447


1,714


1,548

Deposits with banks


70


126


350


683



7,764


10,538


35,647


41,999

Interest expense









Deposits


891


3,313


7,163


13,675

Securitization liabilities


69


121


363


524

Subordinated notes and debentures


100


107


426


395

Other


337


822


2,084


3,474



1,397


4,363


10,036


18,068

Net interest income


6,367


6,175


25,611


23,931

Non-interest income









Investment and securities services


1,341


1,246


5,341


4,872

Credit fees


354


322


1,400


1,289

Net securities gain (loss)


32


31


40


78

Trading income (loss)


246


237


1,404


1,047

Income (loss) from non-trading financial instruments at fair value through profit or loss


11


6


14


121

Income (loss) from financial instruments designated at fair value through profit or loss


(27)


(89)


55


8

Service charges


633


743


2,593


2,885

Card services


566


578


2,154


2,465

Insurance revenue


1,130


1,124


4,565


4,282

Other income (loss)


1,191


(33)


469


87



5,477


4,165


18,035


17,134

Total revenue


11,844


10,340


43,646


41,065

Provision for credit losses


917


891


7,242


3,029

Insurance claims and related expenses


630


705


2,886


2,787

Non-interest expenses









Salaries and employee benefits


2,881


2,744


11,891


11,244

Occupancy, including depreciation


640


475


1,990


1,835

Equipment, including depreciation


362


318


1,287


1,165

Amortization of other intangibles


207


211


817


800

Marketing and business development


224


206


740


769

Restructuring charges (recovery)


(8)


154


(16)


175

Brokerage-related and sub-advisory fees


94


86


362


336

Professional and advisory services


347


379


1,144


1,322

Other


962


970


3,389


4,374



5,709


5,543


21,604


22,020

Income before income taxes and equity in net income of an investment in TD Ameritrade


4,588


3,201


11,914


13,229

Provision for (recovery of) income taxes


(202)


646


1,152


2,735

Equity in net income of an investment in TD Ameritrade


353


301


1,133


1,192

Net income


5,143


2,856


11,895


11,686

Preferred dividends


64


68


267


252

Net income available to common shareholders and non-controlling interests










in subsidiaries

$

5,079

$

2,788

$

11,628

$

11,434

Attributable to:










Common shareholders

$

5,079

$

2,788

$

11,628

$

11,416


Non-controlling interests in subsidiaries





18

Earnings per share (Canadian dollars)









Basic

$

2.80

$

1.54

$

6.43

$

6.26

Diluted


2.80


1.54


6.43


6.25

Dividends per common share (Canadian dollars)


0.79


0.74


3.11


2.89

1

The amounts for the three months ended October 31, 2020, and October 31, 2019, have been derived from unaudited financial statements. The amounts for the twelve months ended October 31, 2020 and October 31, 2019, have been derived from the audited financial statements.

2

Includes $8,814 million and $32,524 million, for the three and twelve months ended October 31, 2020, respectively (three and twelve months ended October 31, 2019 – $8,751 million and $34,828 million, respectively) which has been calculated based on the effective interest rate method.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME1,2









(millions of Canadian dollars)

For the three months ended

For the twelve months ended




October 31

October 31

October 31

October 31




2020

2019

2020

2019

Net income

$

5,143

$

2,856

$

11,895

$

11,686

Other comprehensive income (loss), net of income taxes









Items that will be subsequently reclassified to net income










Net change in unrealized gains (losses) on financial assets at fair value through











other comprehensive income










Change in unrealized gains (losses) on debt securities at fair value through other











comprehensive income


66


(20)


312


110


Reclassification to earnings of net losses (gains) in respect of debt securities at fair value











through other comprehensive income


(90)


(23)


(94)


(31)


Reclassification to earnings of changes in allowance for credit losses on debt securities at fair











value through other comprehensive income


1


1


2


(1)





(23)


(42)


220


78


Net change in unrealized foreign currency translation gains (losses) on











Investments in foreign operations, net of hedging activities










Unrealized gains (losses) on investments in foreign operations


(441)


(103)


855


(165)


Reclassification to earnings of net losses (gains) on investment in foreign operations


(1,531)



(1,531)



Net gains (losses) on hedges of investments in foreign operations


140


(1)


(291)


132


Reclassification to earnings of net losses (gains) on hedges of investments in foreign operations


1,531



1,531






(301)


(104)


564


(33)


Net change in gains (losses) on derivatives designated as cash flow hedges










Change in gains (losses) on derivatives designated as cash flow hedges


(379)


834


3,565


3,459


Reclassification to earnings of losses (gains) on cash flow hedges


(163)


(47)


(1,230)


519





(542)


787


2,335


3,978

Items that will not be subsequently reclassified to net income









Actuarial gains (losses) on employee benefit plans


278


(233)


(390)


(921)

Change in net unrealized gains (losses) on equity securities designated at fair value through










other comprehensive income


(22)


(5)


(212)


(95)

Gains (losses) from changes in fair value due to credit risk on financial liabilities designated










at fair value through profit or loss


18


12


(51)


14





274


(226)


(653)


(1,002)

Total other comprehensive income (loss), net of income taxes


(592)


415


2,466


3,021

Total comprehensive income (loss), net of income taxes

$

4,551

$

3,271

$

14,361

$

14,707

Attributable to:










Common shareholders

$

4,487

$

3,203

$

14,094

$

14,437


Preferred shareholders


64


68


267


252


Non-controlling interests in subsidiaries





18

1

The amounts for the three months ended October 31, 2020, and October 31, 2019, have been derived from unaudited financial statements. The amounts for the twelve months ended October 31, 2020 and October 31, 2019, have been derived from the audited financial statements.

2

The amounts are net of income tax provisions (recoveries) presented in the following table.

Income Tax Provisions (Recoveries) in the Consolidated Statement of Comprehensive Income

(millions of Canadian dollars)

For the three months ended

For the twelve months ended



October 31

October 31

October 31

October 31




2020


2019


2020


2019

Change in unrealized gains (losses) on debt securities at fair value through










other comprehensive income

$

(6)

$

(11)

$

78

$

21

Less: Reclassification to earnings of net losses (gains) in respect of debt securities at fair value










through other comprehensive income


1


4


1


(1)

Reclassification to earnings of changes in allowance for credit losses on debt securities at










fair value through other comprehensive income




1


Unrealized gains (losses) on investments in foreign operations





Less: Reclassification to earnings of net losses (gains) on investment in foreign operations





Net gains (losses) on hedges of investments in foreign operations


52



(102)


48

Less: Reclassification to earnings of net losses (gains) on hedges of investments in foreign










operations


(545)



(545)


Change in gains (losses) on derivatives designated as cash flow hedges


(540)


305


947


1,235

Less: Reclassification to earnings of losses (gains) on cash flow hedges


(368)


36


121


(157)

Actuarial gains (losses) on employee benefit plans


98


(80)


(140)


(324)

Change in net unrealized gains (losses) on equity securities designated at fair value










through other comprehensive income


(8)


(2)


(78)


(35)

Gains (losses) from changes in fair value due to credit risk on financial liabilities designated










at fair value through profit or loss


7


4


(18)


4

Total income taxes

$

515

$

176

$

1,111

$

1,107

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY1









(millions of Canadian dollars)

For the three months ended

For the twelve months ended


October 31

October 31

October 31

October 31


2020

2019

2020

2019

Common shares









Balance at beginning of period

$

22,361

$

21,722

$

21,713

$

21,221

Proceeds from shares issued on exercise of stock options


14


27


79


124

Shares issued as a result of dividend reinvestment plan


112


68


838


357

Shares issued in connection with acquisitions





366

Purchase of shares for cancellation and other



(104)


(143)


(355)

Balance at end of period


22,487


21,713


22,487


21,713

Preferred shares









Balance at beginning of period


5,800


5,800


5,800


5,000

Issue of shares





800

Redemption of shares


(150)



(150)


Balance at end of period


5,650


5,800


5,650


5,800

Treasury shares – common









Balance at beginning of period


(59)


(44)


(41)


(144)

Purchase of shares


(1,965)


(2,254)


(8,752)


(9,782)

Sale of shares


1,987


2,257


8,756


9,885

Balance at end of period


(37)


(41)


(37)


(41)

Treasury shares – preferred









Balance at beginning of period


(5)


(4)


(6)


(7)

Purchase of shares


(24)


(40)


(122)


(151)

Sale of shares


25


38


124


152

Balance at end of period


(4)


(6)


(4)


(6)

Contributed surplus









Balance at beginning of period


128


157


157


193

Net premium (discount) on sale of treasury shares



3


(31)


(22)

Issuance of stock options, net of options exercised



(2)



(8)

Other


(7)


(1)


(5)


(6)

Balance at end of period


121


157


121


157

Retained earnings









Balance at beginning of period


49,934


48,818


49,497


46,145

Impact on adoption of IFRS 16, Leases (IFRS 16)


n/a2


n/a


(553)


n/a

Impact on adoption of IFRS 15, Revenue from Contracts with Customers (IFRS 15)


n/a


n/a


n/a


(41)

Net income attributable to shareholders


5,143


2,856


11,895


11,668

Common dividends


(1,431)


(1,338)


(5,614)


(5,262)

Preferred dividends


(64)


(68)


(267)


(252)

Share issue expenses and other





(9)

Net premium on repurchase of common shares and redemption of preferred shares, and other


(6)


(538)


(710)


(1,880)

Actuarial gains (losses) on employee benefit plans


278


(233)


(390)


(921)

Realized gains (losses) on equity securities designated at fair value through other comprehensive income


(9)



(13)


49

Balance at end of period


53,845


49,497


53,845


49,497

Accumulated other comprehensive income (loss)









Net unrealized gain (loss) on debt securities at fair value through other comprehensive income:









Balance at beginning of period


566


365


323


245

Other comprehensive income (loss)


(24)


(43)


218


79

Allowance for credit losses


1


1


2


(1)

Balance at end of period


543


323


543


323

Net unrealized gain (loss) on equity securities designated at fair value through other comprehensive income:









Balance at beginning of period


(230)


(35)


(40)


55

Other comprehensive income (loss)


(31)


(5)


(225)


(46)

Reclassification of loss (gain) to retained earnings


9



13


(49)

Balance at end of period


(252)


(40)


(252)


(40)

Gains (losses) from changes in fair value due to credit risk on financial liabilities designated at fair value through










profit or loss:









Balance at beginning of period


(55)


2


14


Other comprehensive income (loss)


18


12


(51)


14

Balance at end of period


(37)


14


(37)


14

Net unrealized foreign currency translation gain (loss) on investments in foreign operations, net of hedging activities:









Balance at beginning of period


9,658


8,897


8,793


8,826

Other comprehensive income (loss)


(301)


(104)


564


(33)

Balance at end of period


9,357


8,793


9,357


8,793

Net gain (loss) on derivatives designated as cash flow hedges:









Balance at beginning of period


4,368


704


1,491


(2,487)

Other comprehensive income (loss)


(542)


787


2,335


3,978

Balance at end of period


3,826


1,491


3,826


1,491

Total accumulated other comprehensive income


13,437


10,581


13,437


10,581

Total shareholders' equity


95,499


87,701


95,499


87,701

Non-controlling interests in subsidiaries









Balance at beginning of period





993

Net income attributable to non-controlling interests in subsidiaries





18

Redemption of non-controlling interests in subsidiaries





(1,000)

Other





(11)

Balance at end of period





Total equity

$

95,499

$

87,701

$

95,499

$

87,701










1

The amounts for the three months ended October 31, 2020, and October 31, 2019, have been derived from unaudited financial statements. The amounts for the twelve months ended October 31, 2020 and October 31, 2019, have been derived from the audited financial statements.

2

Not applicable.

CONSOLIDATED STATEMENT OF CASH FLOWS1









(millions of Canadian dollars)

For the three months ended

For the twelve months ended



October 31

October 31

October 31

October 31



2020

2019

2020

2019

Cash flows from (used in) operating activities









Net income before income taxes, including equity in net income of an investment in TD Ameritrade

$

4,941

$

3,502

$

13,047

$

14,421

Adjustments to determine net cash flows from (used in) operating activities










Provision for credit losses


917


891


7,242


3,029


Depreciation


429


166


1,324


605


Amortization of other intangibles


207


211


817


800


Net securities losses (gains)


(32)


(31)


(40)


(78)


Equity in net income of an investment in TD Ameritrade


(353)


(301)


(1,133)


(1,192)


Net gain on sale of the investment in TD Ameritrade


(1,491)



(1,491)



Deferred taxes


(435)


(80)


(1,065)


(33)

Changes in operating assets and liabilities










Interest receivable and payable


27


33


(108)


(26)


Securities sold under repurchase agreements


16,995


2,648


63,020


32,467


Securities purchased under reverse repurchase agreements


(9,490)


(3,291)


(3,227)


(38,556)


Securities sold short


1,216


(5,643)


5,343


(9,822)


Trading loans and securities


(3,547)


(3,839)


(2,318)


(18,103)


Loans net of securitization and sales


3,012


(10,069)


(39,641)


(41,693)


Deposits


41,114


5,740


240,648


(52,281)


Derivatives


(4,404)


143


(2,196)


9,883


Non-trading financial assets at fair value through profit or loss


2,127


(470)


(2,045)


(2,397)


Financial assets and liabilities designated at fair value through profit or loss


(39,028)


9,335


(46,165)


104,693


Securitization liabilities


991


216


2,342


(157)


Current taxes


82


(83)


280


(771)


Brokers, dealers and clients amounts receivable and payable


3,745


2,474


(1,979)


1,726


Other


5,778


(755)


(869)


(2,244)

Net cash from (used in) operating activities


22,801


797


231,786


271

Cash flows from (used in) financing activities









Issuance of subordinated notes and debentures




3,000


1,749

Redemption or repurchase of subordinated notes and debentures


(968)


106


(2,530)


24

Common shares issued


12


23


68


105

Preferred shares issued





791

Repurchase of common shares



(642)


(847)


(2,235)

Redemption of preferred shares


(156)



(156)


Redemption of non-controlling interests in subsidiaries





(1,000)

Sale of treasury shares


2,012


2,298


8,849


10,015

Purchase of treasury shares


(1,989)


(2,294)


(8,874)


(9,933)

Dividends paid


(1,383)


(1,338)


(5,043)


(5,157)

Distributions to non-controlling interests in subsidiaries





(11)

Repayment of lease liabilities2


(155)


n/a


(596)


n/a

Net cash from (used in) financing activities


(2,627)


(1,847)


(6,129)


(5,652)

Cash flows from (used in) investing activities









Interest-bearing deposits with banks


(2,630)


9,114


(138,566)


5,137

Activities in financial assets at fair value through other comprehensive income










Purchases


(4,927)


(7,606)


(50,569)


(24,898)


Proceeds from maturities


16,165


9,623


49,684


37,835


Proceeds from sales


2,252


3,805


11,005


10,158

Activities in debt securities at amortized cost










Purchases


(53,552)


(23,811)


(146,703)


(51,202)


Proceeds from maturities


23,530


9,712


51,400


28,392


Proceeds from sales


981


285


1,391


1,418

Net purchases of land, buildings, equipment, and other depreciable assets


(940)


(216)


(1,757)


(794)

Net cash acquired from (paid for) divestitures and acquisitions





(540)

Net cash from (used in) investing activities


(19,121)


906


(224,115)


5,506

Effect of exchange rate changes on cash and due from banks


(18)


(5)


40


3

Net increase (decrease) in cash and due from banks


1,035


(149)


1,582


128

Cash and due from banks at beginning of period


5,410


5,012


4,863


4,735

Cash and due from banks at end of period

$

6,445

$

4,863

$

6,445

$

4,863

Supplementary disclosure of cash flows from operating activities









Amount of income taxes paid (refunded) during the period

$

743

$

791

$

2,285

$

3,589

Amount of interest paid during the period


1,309


4,314


10,287


17,958

Amount of interest received during the period


7,299


10,075


34,076


40,315

Amount of dividends received during the period


380


485


1,675


1,584

1

The amounts for the three months ended October 31, 2020, and October 31, 2019, have been derived from unaudited financial statements. The amounts for the twelve months ended October 31, 2020 and October 31, 2019, have been derived from the audited financial statements.

2

Prior to the adoption of IFRS 16, repayments of finance lease liabilities were included in "Net cash from (used in) operating activities".

Appendix A – Segmented Information
For management reporting purposes, the Bank reports its results under three key business segments: Canadian Retail, which includes the results of the Canadian personal and commercial banking businesses, Canadian credit cards, TD Auto Finance Canada and Canadian wealth and insurance businesses; U.S. Retail, which includes the results of the U.S. personal and commercial banking businesses, U.S. credit cards, TD Auto Finance U.S., U.S. wealth business, and the Bank's investment in TD Ameritrade (Schwab as of October 6, 2020); and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results for these segments for the three and twelve months ended October 31, 2020 and October 31, 2019 are presented in the following tables.

Results by Business Segment1,2

















(millions of Canadian dollars)





For the three months ended



Canadian Retail

U.S. Retail

Wholesale Banking3

Corporate3

Total



Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31




2020


2019


2020


2019


2020


2019


2020


2019


2020


2019

Net interest income (loss)

$

2,982

$

3,173

$

2,071

$

2,232

$

609

$

278

$

705

$

492

$

6,367

$

6,175

Non-interest income (loss)


3,047


2,960


646


717


645


570


1,139


(82)


5,477


4,165

Total revenue


6,029


6,133


2,717


2,949


1,254


848


1,844


410


11,844


10,340

Provision for (recovery of) credit losses


251


400


572


295


(6)


41


100


155


917


891

Insurance claims and related expenses


630


705








630


705

Non-interest expenses


2,684


2,637


1,660


1,669


581


600


784


637


5,709


5,543

Income (loss) before income taxes


2,464


2,391


485


985


679


207


960


(382)


4,588


3,201

Provision for (recovery of) income taxes


662


646


(47)


85


193


47


(1,010)


(132)


(202)


646

Equity in net income of an investment in






















TD Ameritrade4




339


291




14


10


353


301

Net income (loss)

$

1,802

$

1,745

$

871

$

1,191

$

486

$

160

$

1,984

$

(240)

$

5,143

$

2,856





























For the twelve months ended



Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31

Oct. 31




2020


2019


2020


2019


2020


2019


2020


2019


2020


2019

Net interest income (loss)

$

12,061

$

12,349

$

8,834

$

8,951

$

1,990

$

911

$

2,726

$

1,720

$

25,611

$

23,931

Non-interest income (loss)


12,272


11,877


2,438


2,840


2,968


2,320


357


97


18,035


17,134

Total revenue


24,333


24,226


11,272


11,791


4,958


3,231


3,083


1,817


43,646


41,065

Provision for (recovery of) credit losses


2,746


1,306


2,925


1,082


508


44


1,063


597


7,242


3,029

Insurance claims and related expenses


2,886


2,787








2,886


2,787

Non-interest expenses


10,441


10,735


6,579


6,411


2,518


2,393


2,066


2,481


21,604


22,020

Income (loss) before income taxes


8,260


9,398


1,768


4,298


1,932


794


(46)


(1,261)


11,914


13,229

Provision for (recovery of) income taxes


2,234


2,535


(167)


471


514


186


(1,429)


(457)


1,152


2,735

Equity in net income of an investment in






















TD Ameritrade4




1,091


1,154




42


38


1,133


1,192

Net income (loss)

$

6,026

$

6,863

$

3,026

$

4,981

$

1,418

$

608

$

1,425

$

(766)

$

11,895

$

11,686










































As at




Oct. 31


Oct. 31


Oct. 31


Oct. 31


Oct. 31


Oct. 31


Oct. 31


Oct. 31


Oct. 31


Oct. 31




2020


2019


2020


2019


2020


2019


2020


2019


2020


2019

Total assets5

$

472,370

$

452,163

$

566,629

$

436,086

$

512,886

$

458,420

$

163,980

$

68,621

$

1,715,865

$

1,415,290

1

The amounts for the three months ended October 31, 2020 and October 31, 2019 have been derived from the unaudited financial statements. The amounts for the twelve months ended October 31, 2020 and October 31, 2019 have been derived from the audited financial statements.

2

The retailer program partners' share of revenues and credit losses is presented in the Corporate segment, with an offsetting amount (representing the partners' net share) recorded in Non-interest expenses, resulting in no impact to Corporate reported Net income (loss). The Net income (loss) included in the U.S. Retail segment includes only the portion of revenue and credit losses attributable to the Bank under the agreements.

3

Net interest income within Wholesale Banking is calculated on a TEB. The TEB adjustment reflected in Wholesale Banking is reversed in the Corporate segment.

4

The Bank's share of TD Ameritrade's earnings is reported with a one-month lag. The same convention is being followed for Schwab, and the Bank will begin recording its share of Schwab's earnings on this basis in the first quarter of fiscal 2021. Refer to "Significant Events" in the "How We Performed" section of this document.

5

Total assets as at October 31, 2020 and October 31, 2019 have been derived from the audited financial statements.

SHAREHOLDER AND INVESTOR INFORMATION

Shareholder Services

If you:

And your inquiry relates to:

Please contact:

Are a registered shareholder (your name appears on your TD share certificate)

Missing dividends, lost share certificates, estate questions, address changes to the share register, dividend bank account changes, the dividend reinvestment plan, eliminating duplicate mailings of shareholder materials, or stopping (or resuming) receiving annual and quarterly reports

Transfer Agent:

AST Trust Company (Canada)
P.O. Box 700, Station B

Montréal, Québec H3B 3K3

1-800-387-0825 (Canada and U.S. only)

or 416-682-3860

Facsimile: 1-888-249-6189

inquiries@astfinancial.com or www.astfinancial.com/ca-en

Hold your TD shares through the

Direct Registration System

in the United States

Missing dividends, lost share certificates, estate questions, address changes to the share register, eliminating duplicate mailings of shareholder materials or stopping (or resuming) receiving annual and quarterly reports

Co-Transfer Agent and Registrar:

Computershare
P.O. Box 505000

Louisville, KY 40233

or

Computershare

462 South 4th Street, Suite 1600

Louisville, KY 40202

1-866-233-4836

TDD for hearing impaired: 1-800-231-5469

Shareholders outside of U.S.: 201-680-6578

TDD shareholders outside of U.S.: 201-680-6610
www.computershare.com/investor

Beneficially own TD shares that are held in the name of an intermediary, such as a bank, a trust company, a securities broker, or other nominee

Your TD shares, including questions regarding the dividend reinvestment plan and mailings of shareholder materials

Your intermediary

For all other shareholder inquiries, please contact TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or email tdshinfo@td.com.

Please note that by leaving us an e-mail or voicemail message, you are providing your consent for us to forward your inquiry to the appropriate party for response.

Annual Report on Form 40-F (U.S.)
A copy of the Bank's Annual Report on Form 40-F for fiscal 2020 will be filed with the Securities and Exchange Commission later today and will be available at http://www.td.com. You may obtain a printed copy of the Bank's Annual Report on Form 40-F for fiscal 2020 free of charge upon request to TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or e-mail tdshinfo@td.com.

Access to Quarterly Results Materials
Interested investors, the media, and others may view this fourth quarter earnings news release, results slides, supplementary financial information, supplemental regulatory disclosure, and the 2020 Consolidated Financial Statements and MD&A documents on the TD website at www.td.com/investor/.

General Information
Products and services: Contact TD Canada Trust, 24 hours a day, seven days a week: 1-866-567-8888 French: 1-866-233-2323
Cantonese/Mandarin: 1-800-328-3698
Telephone device for the hearing impaired (TTY): 1-800-361-1180

Website: www.td.com
Email: customer.service@td.com

Media contacts: https://newsroom.td.com/media-contacts

Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on December 3, 2020. The call will be available live via TD's website at 1:30 p.m. ET. The call and audio webcast will feature presentations by TD executives on the Bank's financial results for the fourth quarter, followed by a question-and-answer period with analysts. The presentation material referenced during the call will be available on the TD website at www.td.com/investor on December 3, 2020, by approximately 12 p.m. ET. A listen-only telephone line is available at 416-641-6150 or 1-866-696-5894 (toll free) and the passcode is 2727354#.

The audio webcast and presentations will be archived at www.td.com/investor. Replay of the teleconference will be available from 5:00 p.m. ET on December 3, 2020, until 11:59 p.m. ET on December 11, 2020 by calling 905-694-9451 or 1-800-408-3053 (toll free). The passcode is 7300743#.

Annual Meeting
Thursday, April 1, 2021

About TD Bank Group

The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the sixth largest bank in North America by branches and serves over 26 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 14 million active online and mobile customers. TD had CDN$1.7 trillion in assets on October 31, 2020. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

SOURCE TD Bank Group

Cision
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