Toronto Dominion Bank (The) (TD)

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The Toronto-Dominion Bank (TD)

Q3 2013 Earnings Call

August 29, 2013 3:00 pm ET

Executives

Rudy J. Sankovic - Senior Vice President of Investor Relations

W. Edmund Clark - Chief Executive Officer, President and Non-Independent Director

Colleen M. Johnston - Chief Financial Officer and Group Head of Finance, Sourcing & Corporate Communications

Mark R. Chauvin - Chief Risk Officer and Group Head of Risk Management - Corporate Office

Michael B. Pedersen - Group Head U.S. Banking, Chief Executive Officer of TD Bank and President of TD Bank

Riaz E. Ahmed - Group Head of Insurance, Credit Cards and Enterprise Strategy

Timothy D. Hockey - Group Head of Canadian Banking, Auto Finance & Wealth Management, Chief Executive Officer of TD Canada Trust and President of TD Canada Trust

Analysts

Michael Goldberg - Desjardins Securities Inc., Research Division

John Reucassel - BMO Capital Markets Canada

Robert Sedran - CIBC World Markets Inc., Research Division

Gabriel Dechaine - Crédit Suisse AG, Research Division

Peter D. Routledge - National Bank Financial, Inc., Research Division

J. Bradley Smith - Stonecap Securities Inc., Research Division

John Aiken - Barclays Capital, Research Division

Sumit Malhotra - Macquarie Research

Darko Mihelic - Cormark Securities Inc., Research Division

Presentation

Rudy J. Sankovic

Good afternoon, and welcome to TD Bank Group's Third Quarter 2013 Investor Presentation. My name is Rudy Sankovic, and I'm the head of Investor Relations of the bank. We will begin today's presentation with remarks from Ed Clark, the bank's CEO; after which, Colleen Johnston, the bank's CFO, will present our third quarter operating results. Mark Chauvin, Chief Risk Officer, will then offer comments on credit quality; after which, we will entertain questions from those present and from prequalified analysts and investors on the phone.

Also present today to answer your questions are Tim Hockey, Group Head, Canadian Banking, Auto Finance and Wealth; Mike Pedersen, Group Head, U.S. P&C Banking; Bharat Masrani, Chief Operating Officer; Bob Dorrance, Group Head, Wholesale Banking; and Riaz Ahmed, Group Head, Insurance, Credit Cards and Enterprise Strategy.

As you know, we shifted executive responsibility for some of our businesses effective July 1. It might be helpful to provide guidance on who will answer your questions this quarter. For Canadian P&C, it continues to be Tim; Wealth Management, Mike Pedersen; U.S. P&C will be a combination of Mike and Bharat; and Bob will cover Wholesale. Riaz is also available to answer questions with respect to insurance and credit cards.

We recognize it's been a long day for the analyst community, so we'd like to keep the call to a crisp 45 minutes, if we can.

If we turn to Slide 2, please. At this time, I'd like to caution our listeners that this presentation contains forward-looking statements. There are risks that actual results could differ materially from what is discussed, and that certain material factors or assumptions were applied in making these forward-looking statements. Any forward-looking statements contained in this presentation represent the views of management and are presented for the purpose of assisting the bank's shareholders and analysts in understanding the bank's financial position, objectives and priorities and anticipated financial performance. Forward-looking statements may not be appropriate for other purposes.

I'd also like to remind the listeners that the bank uses non-GAAP financial measures to arrive at adjusted results to assess each of its businesses and to measure overall bank performance. The bank believes that adjusted results provide the reader with a better understanding of how management use the bank's performance. Ed will be referring to adjusted results in his remarks. Additional information on items of note, the bank's reported results and factors and assumptions related to forward-looking information are all available in our Q3 2013 report to shareholders.

With that, let me turn the presentation over to Ed.

W. Edmund Clark

Thank you, Rudy, and welcome, everyone. Thank you for joining us this afternoon and recognize it's been a busy time for a lot of you. Colleen is going to be up shortly to review our results in detail, but let me start by sharing my perspective, both on the quarter and the rest of the year.

Our third quarter results reflect very strong performances in our Canadian banking, Wealth and U.S. banking businesses, offset by losses previously announced in our Insurance business. Earnings, including $418 million after tax in insurance charges, were down 13% year-over-year, and earnings per share were down 14% to $1.65. Excluding these charges, earnings per share would have been $2.10 or $0.45 higher.

We are pleased to declare a $0.04 dividend increase today, our second increase this year as we continue to progress towards the midpoint of our 40% to 50% target payout range. This means that our dividends paid would've grown by 12% this year, great news for our investors.

I'm also happy to report that our share buyback scheme, which we announced last quarter, is well under the way. We allocated approximately $1 billion to repurchase 12 million of our common shares. And as of August 23, we'd already acquired more than 7 million shares. And despite the buyback, our Basel III cap remained very strong at 8.9%.

Let me take a minute now to talk about each of our businesses. Canadian Personal and Commercial Banking had a very strong quarter, generating just under $1 billion in earnings. Personal lending was solid, but continues to grow at a moderate pace, while business lending expanded at double-digit rates. We held the line in expenses, which resulted in solid operating leverage. And we got some help from credit, with surprise on the upside again.

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