T ABLE 15


CANADIAN RETAIL


(millions of Canadian dollars, except as noted) Net interest income


Non-interest income Total revenue


Provision for credit losses


Insurance claims and related expenses Non-interest expenses – reported Non-interest expenses – adjusted


Net income – reported


Adjustments for items of note, net of income taxes1 Integration charges and direct transaction costs relating to the acquisition of the credit card portfolio of MBNA Canada


Set-up, conversion and other one-time costs related to affinity relationship with Aimia and acquisition of Aeroplan Visa credit card accounts


Net income – adjusted


Selected volumes and ratios Return on common equity – reported2 Return on common equity – adjusted2


Margin on average earning assets (including securitized assets) Efficiency ratio – reported Efficiency ratio – adjusted


Assets under administration (billions of Canadian dollars) Assets under management (billions of Canadian dollars)


Number of Canadian retail branches


Average number of full-time equivalent staff 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.


REVIEW OF FINANCIAL PERFORMANCE


Canadian Retail net income for the year was $5,988 million, an increase of $50 million, or 1%, compared with last year. The increase in earnings reflected revenue growth and lower insurance claims, partially offset by the impact of a higher effective tax rate, higher non-interest expenses, and higher PCL. The ROE for the year was 41.9%, compared with 42.8% last year.


Canadian Retail revenue is derived from the Canadian personal


and commercial banking, wealth and insurance businesses. Revenue for the year was $20,209 million, an increase of $524 million, or 3%, compared with last year. Net interest income increased $198 million, or 2%, reflecting loan and deposit volume growth, partially offset by lower margins. Non-interest income increased $326 million, or 3%, reflecting wealth asset growth and higher personal and business banking fee-based revenue. Margin on average earning assets was 2.78%, a 9 bps decrease, reflecting the low rate environment and competitive pricing.


Average loan volumes increased $19 billion, or 5%, compared with last year, comprised of 4% growth in personal loan volumes and 10% growth in business loan volumes. Average deposit volumes increased $19 billion, or 7%, compared with last year, comprised of 6% growth in personal deposit volumes, 7% growth in business deposit volumes and 14% growth in wealth deposit volumes.


2 $ 2016


$ 9,979 10,230


20,209 1,011 2,462 8,557 8,557


5,988


– –


$ 5,988


41.9% 41.9 2.78 42.3 42.3


345 268


1,156 38,575 $ 2015


$ 9,781 9,904


19,685 887


2,500 8,407 8,407


5,938


– –


$ 5,938


42.8% 42.8 2.87 42.7 42.7


310 245


1,165 39,218 2014


$ 9,538 9,623


19,161 946


2,833 8,438 8,091


5,234


125 131


$ 5,490


41.7% 43.7 2.95 44.0 42.2


$ 293 227


1,165 39,389


Capital allocated to the business segments was based on 8% CET1 Capital in fiscal 2014 and 9% in fiscal 2015 and 2016.


Assets under administration (AUA) were $345 billion as at


October 31, 2016, an increase of $35 billion, or 11%, and assets under management (AUM) were $268 billion as at October 31, 2016, an increase of $23 billion, or 9%, compared with last year, both reflecting new asset growth and increases in market value. PCL for the year was $1,011 million, an increase of $124 million, or 14% compared with last year. Personal banking PCL was $970 million, an increase of $115 million, or 13%, reflecting higher provisions in the auto lending portfolio. Business banking PCL was $41 million, an increase of $9 million. Annualized PCL as a percentage of credit volume was 0.28%, or an increase of 2 bps, compared with last year. Net impaired loans were $705 million, a decrease of $10 million, or 1%, compared with last year.


Insurance claims and related expenses for the year were


$2,462 million, a decrease of $38 million, or 2%, compared with last year, reflecting more favourable prior years’ claims development, partially offset by more severe weather conditions and a change in mix of reinsurance contracts.


Non-interest expenses for the year were $8,557 million, an increase of $150 million, or 2%, compared with last year. The increase reflected business growth, higher employee-related expenses including revenue- based variable expenses in the wealth business, and higher investment in technology, partially offset by productivity savings. The efficiency ratio was 42.3%, compared with 42.7% last year.


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


29


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