T ABLE 13


RESULTS BY SEGMENT1 (millions of Canadian dollars) 2016


Net interest income (loss) Non-interest income (loss)


Total revenue


Provision for (recovery of) credit losses Insurance claims and related expenses Non-interest expenses


Income (loss) before provision for income taxes


Provision for (recovery of) income taxes


Equity in net income of an investment in TD Ameritrade


Net income (loss) – reported


Adjustments for items of note, net of income taxes2 Amortization of intangibles


Fair value of derivatives hedging the reclassified available-for-sale securities portfolio


Impairment of goodwill, non-financial assets, and other charges


Restructuring charges


Charge related to the acquisition in U.S. strategic cards portfolio and related integration costs


Litigation and litigation-related charge(s)/reserve(s)


Total adjustments for items of note Net income (loss) – adjusted


Average common equity


CET1 Capital risk-weighted assets3 1


20,209 1,011


2,462 8,557


8,179 2,191


– 5,988


– – –


–


– –


–


Canadian Retail


2015 9,904


19,685 887


2,500 8,407


7,891 1,953


– 5,938


– – –


–


– –


– 2016


2,366 9,459 744


U.S. Retail 2015


2,098 8,229 535


Wholesale Banking


2016


1,345 3,030 74


2015 631


2,926 18


– 5,693


3,022 498


435 2,959


– – –


–


– –


– – 5,188


2,506 394


376 2,488


– – –


–


51 8


59 $ 5,988 $ 5,938 $ 2,959 $ 2,547 $ – 1,739


1,217 297


– 920


– – –


–


– –


– 920 $ 67,416 – 1,701


1,207 334


– 873


– – –


–


– –


– 2016 451


1,617 501


– 2,888


(1,772) (843)


(2) (931) 246 (6)


116 –


– –


356


Corporate 2015


$ 9,979 $ 9,781 $ 7,093 $ 6,131 $ 1,685 $ 2,295 $ 1,166 $ 10,230


69


586 243


– 2,777


(2,434) (1,158)


1 (1,275) 255


(55) –


471


– –


671 2016


34,315 2,330


2,462 18,877


10,646 2,143


433 8,936 246 (6)


116 –


– –


356


Total 2015


517 $ 19,923 $ 18,724 14,392


12,702 31,426 1,683


2,500 18,073


9,170 1,523


377 8,024 255


(55) –


471


51 8


730 873 $ (575) $ (604) $ 9,292 $ 8,754


$ 14,291 $ 13,880 $ 33,687 $ 31,066 $ 5,952 $ 5,755 $ 11,191 $ 7,477 $ 65,121 $ 58,178 99,025 106,392 222,995 200,067


64,950


Certain comparative amounts have been recast to conform with the revised presentation for the U.S. strategic cards portfolio adopted in the first quarter of 2016. For further details, refer to the “Business Focus” section of this document.


2


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.


ECONOMIC SUMMARY AND OUTLOOK


Wildfires in the Fort McMurray, Alberta area and weak international trade figures resulted in a 1.6% contraction of Canadian economic output (quarter-on-quarter, at annual rates) in the second calendar quarter of 2016. The resumption of activity in the oil and gas sector post-wildfire, alongside a modest improvement in the international trade balance is expected to have resulted in a healthy rebound of economic growth to around 3% in the third quarter. Nevertheless, Canada’s overall growth rate for 2016 as a whole is forecast to be a sub-par 1.1%. Beneath the national figures lie diverging regional performances, with healthy growth of close to 3% expected in British Columbia and Ontario. Conversely, although the worst of the downturn appears likely to be over, the oil-producing regions such as Newfoundland and Labrador and Alberta continue to deal with the aftermath of low oil prices – made worse for Alberta by this year’s wildfires.


3 16,408 10,951 405,844 382,360


Each capital ratio has its own risk weighted assets (RWA) measure due to the Office of the Superintendent of Financial Institutions Canada’s (OSFI)-prescribed scalar for inclusion of the Credit Valuation Adjustment (CVA). The scalar for inclusion of CVA for CET1, Tier 1 and Total Capital RWA are 64%, 71%, and 77%, respectively.


After falling below a 3% rate over the previous year, global growth has been showing signs of firming comfortably within the 3-3.5% range since mid-2016. Nevertheless, there are numerous headwinds at play that should limit any further acceleration in the near term. Economic uncertainty in Europe remains elevated post-Brexit, particularly as the timing of the start of negotiations and the type of trading relationship the United Kingdom will have with the European Union remain highly fluid. Both the Bank of England and the European Central Bank appear likely to maintain their aggressive monetary easing policies over the coming months, with little further stimulus anticipated by year end. The Bank of Japan continues its pursuit of reflation, shifting its focus to targeting the level of 10-year bond yields while attempting to engineer an overshoot of its inflation target. Overall, the easy stance of monetary policy globally should continue to support financial markets and risk appetite. While China remains a key source of world growth, the pace of economic expansion should continue to decelerate into next year, with negative implications for countries within its supply chain such as South Korea, Vietnam, and others.


TD BANK GROUP ANNUAL REPORT 2016 MANAGEMENT’S DISCUSSION AND ANALYSIS


25


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