Corporate segment results include unallocated revenue and expenses, the impact of treasury and balance sheet management activities, provisions for incurred but not identified losses related to the Canadian Retail and Wholesale loan portfolios, tax items at an enterprise level, and intercompany adjustments such as elimination of taxable equivalent basis and the retailer program partners’ share relating to the U.S. strategic cards portfolio.


The Corporate segment reported net loss for the year was $931 million, compared with a reported net loss of $1,275 million last year. The year- over-year decrease in reported net loss was attributable to restructuring charges of $471 million after tax in the prior year and higher contribution from Other items in the current year, partially offset by impairment of goodwill, non-financial assets, and other charges of $116 million after tax, an increase in net corporate expenses, and lower gain due to change in fair value of derivatives hedging the reclassified available-for-sale securities portfolio in the current year. Higher contribution from Other items was primarily due to higher revenue from treasury and balance sheet management activities and favourable impact of tax items, partially


offset by higher provisions for incurred but not identified credit losses. Net corporate expenses increased primarily due to ongoing investments in enterprise and regulatory projects. The adjusted net loss for the year was $575 million, compared with an adjusted net loss of $604 million last year.


BUSINESS OUTLOOK AND FOCUS FOR 2017 As part of Corporate segment’s mandate, we will continue to focus on enterprise and regulatory initiatives and effectively manage the Bank’s capital and investment positions, interest rate, liquidity, funding and the market risks of TD’s non-trading banking activities. We continue to address the complexities and challenges from changing demands and expectations of our customers, shareholders, employees, governments, regulators, and the community at large. We maintain constant focus on the design, development, and implementation of processes, systems, and technologies to ensure that the Bank’s key businesses operate efficiently, reliably, and in compliance with all applicable regulatory requirements.


2015 FINANCIAL RESULTS OVERVIEW Summary of 2015 Performance T ABLE 21 REVIEW OF 2015 FINANCIAL PERFORMANCE1 (millions of Canadian dollars)


Net interest income Non-interest income


Total revenue


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


Net 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 taxes Net income (loss) – adjusted


1


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


NET INTEREST INCOME


Net interest income for the year was $18,724 million, an increase of $1,140 million, or 6%, compared with last year. The increase in net interest income was primarily driven by increases in the U.S. Retail, Canadian Retail, and Wholesale Banking segments, partially offset by a decline in the Corporate segment. U.S. Retail net interest income increased primarily due to strong organic loan and deposit growth, higher fee revenue, the benefit of an acquisition in the strategic cards portfolio, and the impact of foreign currency translation, partially offset by net margin compression and lower accretion. Canadian Retail net interest income increased primarily due to good loan and deposit volume growth and the full year impact of Aeroplan, partially offset by lower margins. Wholesale Banking net interest income increased primarily due to higher trading-related revenue and strong corporate lending growth. Corporate segment net interest income decreased primarily due to lower revenue from treasury and balance sheet management activities, partially offset by the contribution from an acquisition in the strategic cards portfolio.


NON-INTEREST INCOME


Non-interest income for the year on a reported basis was $12,702 million, an increase of $325 million, or 3%, compared with last year. The increase in reported non-interest income was primarily driven by increases in the Canadian Retail, Wholesale Banking, and U.S. Retail segments, partially offset by a decline in the Corporate segment. Canadian Retail non-interest income increased primarily due to wealth asset growth, higher personal and business banking fee-based revenue, and insurance premiums, partially offset by the impact of a change in mix of reinsurance contracts. Wholesale Banking non-interest income increased primarily due to strong debt underwriting fees and corporate lending growth. U.S. Retail non-interest income increased primarily due to higher fee revenue, the benefit of an acquisition in the strategic cards portfolio, and the impact of foreign currency translation, partially offset by lower gains on sales of securities. Corporate segment non-interest income decreased primarily due to the gains on sales of TD Ameritrade shares in the prior year, partially offset by the contribution from an acquisition in the strategic cards portfolio. Adjusted non-interest income for the year was $12,713 million, an increase of $616 million, or 5%, compared with last year.


Canadian Retail


$ 9,781 9,904


19,685 887


2,500 8,407


7,891 1,953


–


5,938 –


$ 5,938 U.S. Retail


$ 6,131 2,098


8,229 535


–


5,188 2,506 394


376


2,488 59


$ 2,547


Wholesale Banking


$ 2,295 631


2,926 18


–


1,701 1,207 334


–


873 –


$ 873


Corporate $ 517


69


586 243


– 2,777


(2,434) (1,158)


1


(1,275) 671


$ (604) Total


$ 18,724 12,702


31,426 1,683


2,500


18,073 9,170 1,523


377


8,024 730


$ 8,754


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


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