13
On December 27, 2013, the Bank acquired approximately 50% of the existing Aeroplan credit card portfolio from the Canadian Imperial Bank of Commerce (CIBC) and on January 1, 2014, the Bank became the primary issuer of Aeroplan Visa credit cards. The Bank incurred program set-up, conversion, and other one-time costs related to the acquisition of the portfolio and related affinity agreement, consisting of information technology, external professional consulting, marketing, training, and program management, as well as a commercial subsidy payment of $127 million ($94 million after tax) payable to CIBC. These costs were included as an item of note in the Canadian Retail segment. The third quarter of 2014 was the last quarter Canadian Retail included any set-up, conversion, or other one-time costs related to the acquired Aeroplan credit card portfolio as an item of note.
14
In the third quarter of 2014, the Bank released the remaining provision of $25 million ($19 million after tax) for residential loan losses from Alberta flooding that was initially recognized in 2013. The release of the remaining provision reflects low levels of delinquency and impairments to date, as well as a low likelihood of future material losses within the portfolio. These amounts were included as an item of note in the Corporate segment.
15
On November 12, 2013, TD Waterhouse Canada Inc., a subsidiary of the Bank, completed the sale of the Bank’s institutional services business, known as TD Waterhouse Institutional Services, to a subsidiary of National Bank of Canada. The transaction price was $250 million in cash, subject to certain price adjustment mechanisms which were settled in the third and fourth quarters of 2014. On the transaction date, a gain of $196 million after tax was recorded in the Corporate segment in other income. The gain is not considered to be in the normal course of business for the Bank.
T ABLE 3 (Canadian dollars)
Basic earnings per share – reported Adjustments for items of note2
Basic earnings per share – adjusted Diluted earnings per share – reported
Adjustments for items of note2
Diluted earnings per share – adjusted 1
EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding during the period.
2 RECONCILIATION OF REPORTED TO ADJUSTED EARNINGS PER SHARE (EPS)1 2016
$ 4.68 0.20
$ 4.88 $ 4.67
0.20 $ 4.87 2015
$ 4.22 0.40
$ 4.62 $ 4.21
0.40 $ 4.61 2014
$ 4.15 0.13
$ 4.28 $ 4.14
0.13 $ 4.27
For explanations of items of note, refer to the “Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income” table in the “Financial Results Overview” section of this document.
T ABLE 4 AMORTIZATION OF INTANGIBLES, NET OF INCOME TAXES1 (millions of Canadian dollars)
TD Bank, National Association (TD Bank, N.A.) TD Ameritrade Holding Corporation (TD Ameritrade)2 MBNA Canada Aeroplan Other
Software and asset servicing rights
Amortization of intangibles, net of income taxes 1
Amortization of intangibles, with the exception of software and asset servicing rights, are included as items of note. For explanations of items of note, refer to the “Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income” table in the “Financial Results Overview” section of this document.
RETURN ON COMMON EQUITY
The Bank’s methodology for allocating capital to its business segments is aligned with the common equity capital requirements under Basel III. The capital allocated to the business segments is based on 9% Common Equity Tier 1 (CET1) Capital.
Adjusted return on common equity (ROE) is adjusted net income avail- able to common shareholders as a percentage of average common equity.
T ABLE 5 RETURN ON COMMON EQUITY
(millions of Canadian dollars, except as noted) Average common equity
Net income available to common shareholders – reported Items of note, net of income taxes1
Net income available to common shareholders – adjusted Return on common equity – reported
Return on common equity – adjusted 1
For explanations of items of note, refer to the “Non-GAAP Financial Measures – Reconciliation of Adjusted to Reported Net Income” table in the “Financial Results Overview” section of this document.
2016
$ 65,121 8,680
356 9,036
13.3% 13.9
2015
$ 58,178 7,813
730 8,543
13.4% 14.7
2014
$ 49,495 7,633
244 7,877
15.4% 15.9
2016
$ 108 65 36 17 20
246 340
$ 586 2015
$ 116 61 37 17 24
255 289
$ 544 2 Included in equity in net income of an investment in TD Ameritrade. 2014
$ 115 53 37 14 27
246 236
$ 482
Adjusted ROE is a non-GAAP financial measure as it 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.
14 TD BANK GROUP ANNUAL REPORT 2016 MANAGEMENT’S DISCUSSION AND ANALYSIS
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