Impact of Foreign Exchange Rate on U.S. Retail Segment Translated Earnings
U.S. Retail segment earnings, including the contribution from the Bank’s investment in TD Ameritrade, reflect fluctuations in the U.S. dollar to Canadian dollar exchange rate compared with last year. Depreciation of the Canadian dollar had a favourable impact on U.S. Retail segment earnings for the year ended October 31, 2016, compared with last year, as shown in the following table.
T ABLE 6
IMPACT OF FOREIGN EXCHANGE RATE ON U.S. RETAIL SEGMENT TRANSLATED EARNINGS1
(millions of Canadian dollars, except as noted) U.S. Retail Bank
Increased total revenue – reported Increased total revenue – adjusted
Increased non-interest expenses – reported Increased non-interest expenses – adjusted
Increased net income – reported, after tax Increased net income – adjusted, after tax
Increased equity in net income of an investment in TD Ameritrade
U.S. Retail segment increased net income – reported, after tax
U.S. Retail segment increased net income – adjusted, after tax
Earnings per share (dollars) Increase in basic – reported Increase in basic – adjusted Increase in diluted – reported Increase in diluted – adjusted
1
$ 581 581 344 344
157 157
33 190 190
$ 0.10 0.10 0.10 0.10
$ 997 1,002 628 626
252 260
45 297 304
$ 0.16 0.16 0.16 0.16
Certain comparative amounts have been restated to conform with the presentation adopted in the current period.
On a trailing twelve month basis, a one cent appreciation/depreciation in the U.S. dollar to Canadian dollar average exchange rate will increase/ decrease U.S. Retail segment net income by approximately $40 million.
2016 vs. 2015 2015 vs. 2014
FINANCIAL RESULTS OVERVIEW Revenue
Reported revenue was $34,315 million, an increase of $2,889 million, or 9%, compared with last year. Adjusted revenue was $34,308 million, an increase of $2,871 million, or 9%, compared with last year.
NET INTEREST INCOME
Net interest income for the year was $19,923 million, an increase of $1,199 million, or 6%, compared with last year. Net interest income increased in the U.S. Retail, Corporate, and Canadian Retail segments, partially offset by a decline in the Wholesale Banking segment. U.S. Retail net interest income increased primarily due to higher loan and deposit volumes, the benefit of the December 2015 Fed rate increase (the “rate increase”), higher deposit margins, the benefit of an acquisition in the strategic cards portfolio, and the favourable impact of foreign currency translation, partially offset by lower loan margins. Corporate segment net interest income increased primarily due to the contribution from an acquisition in the strategic cards portfolio. Canadian Retail net interest income increased reflecting loan and deposit volume growth, partially offset by lower margins. Wholesale Banking net interest income decreased due to higher funding costs and lower dividend income.
NET INTEREST MARGIN
Net interest margin declined by 4 basis points (bps) during the year to 2.01%, compared with 2.05% last year, primarily due to lower margins in the Canadian Retail segment. U.S. Retail segment margins were flat compared with last year.
$21,000
15,000 18,000
12,000
9,000 6,000 3,000
0 14 15 Reported Adjusted 16
NET INTEREST INCOME (millions of Canadian dollars)
16 TD BANK GROUP ANNUAL REPORT 2016 MANAGEMENT’S DISCUSSION AND ANALYSIS
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