1

TERM PROJECT

GROUP
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Table of Contents

Introduction..........................................................................................................................3

Chapter 1: Industry Overview.............................................................................................4

Banking Regulations in Canada.......................................................................................4

Chapter 2: Toronto-Dominion Bank (TD Bank)..................................................................5

Financial Analysis............................................................................................................6

Ratio Analysis..................................................................................................................7

Competitors Analysis.....................................................................................................10

Key Ratios of RBC........................................................................................................10

Comparison....................................................................................................................10

Chapter 3: Risk Management:...........................................................................................14

Credit risk:.....................................................................................................................15

Market risk.....................................................................................................................16

Liquidity risk:................................................................................................................16

Operational risk.............................................................................................................17

Prices Changes...................................................................................................................17

Conclusion.....................................................................................................................18

Bibliography......................................................................................................................19
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Introduction

The report aims to analyze a Toronto-Dominion Bank (TD Bank) functioning under Canada's

principles and framework. The first chapter comprises an industrial overview that evaluates the

size, market share, trends, and briefly outlines Canada's banking regulation. In the second

chapter, Financial statements are analyzed particularly over five years period (from 2015 to

2019) through Horizontal and Ratio analysis. Moreover, the Royal Bank of Canada is compared

to various dimensions with TD Bank for five years to measure profitability and risk. The third

chapter is comprised of risk management. This chapter aims to analyze the bank risk appetite,

exposure, and different type of risk associated with it. In chapter third, the pieces changes are

compared and evaluated for Royal Bank of Canada, Toronto-Dominion Bank (TD Bank), and

Bank of Nova Scotia (Scotiabank).

Chapter 1: Industry Overview

Banking serves as the backbone of any economy. Canadian banking hold assets of more than
trillions of dollars. Five banks dominate the Canadian banking industry. Royal Bank of Canada
(RBS) and Toronto-Dominion Bank (TD Bank) are two of the most dominant banks in terms of
Assets. The other three banks are Bank of Nova Scotia (Scotiabank), Bank of Montreal
(BMO) and the Canadian Imperial Bank of Commerce (CIBC) in size and revenues. Canadian
bank possesses one of the highest market capitalizations in the world. In 2018, the Royal Bank of
Canada (RBC) had the highest market capitalization of Canadian banks at 114.9 billion U.S.
dollars. With 104.1 billion, Toronto-Dominion Bank led, just above third-place Scotiabank.
[ CITATION MSz20 \l 1033 ].
Canada is the world's second-largest economy. Branch banking is critical for many sparsely-
populated areas. There are fewer people per branch in the provinces further north, but still the
smallest bank branches. The number of bank branches has decreased in recent years because of
online banking and other mobile alternatives.
Canadian Banking Association (2020) has stated facts regarding size, changes, and new banking
industry trends: A total of 88 banks operate in Canada, and branches were counted at 5,890. As of
 4

May 2020, only 2.26% of bank mortgages are in arrears. That indicates the careful borrowing of
the Canadian. $ 12.7 billion paid as tax liability by Canadian banks. The banking sector
contributed 3.3% to Canada’s GDP and boosted the workforce of 275,825 Canadians and
109,094 foreigners. The banking sector is serving the three million sole praetorship and small
and medium business. In the last decade, the six largest banks have spent 100 billion on IT. 91%
of the people have felt that technology has improved banking efficiency and effectiveness. 76%
of people prefer to use digital banking through online and mobile banking. 23% use mobile
technology as their prime banking method[ CITATION Can20 \l 1033 ].
Banking Regulations in Canada

Canada has a centrally supervised banking structure emphasizing the financial system's
macroprudential supervision and stabilization. The primary aim of the Bank Act, the main federal
law regulating all facets of banking, is to encourage a productive and robust banking sector
comprising competitive and vital institutions, to protect the interests of depositors and customers,
and to preserve the integrity and public confidence of the financial system. The primary law
regulating Canada's financial industry is the Bank Act, a statutory statute passed by the
Parliament of Canada. Through schedule I, the Bank Act regulates domestic banks, subsidiaries
of foreign banks under the supervision of foreign institutions through Schedule II; Foreign banks'
subsidiaries, and bank branches through Schedule III.
Banks' critical regulatory bodies are the Financial Consumer Agency of Canada (FCAC)
and OSFI; OSFI is responsible for prudential supervision and performs annual banking
assessments regarding compliance with the funding, reporting, and corporate practices standards.
FCAC is responsible for customer safety and regulates banks' compliance with such rules of
ethics that are voluntary. According to Section 485(1) of the Bank Act, banks shall retain
sufficient resources and adequate and suitable liquidity forms. The resources and liquidity
comply with the Capital Adequacy Criteria Guideline of the Office of the Superintendent of
Financial Institutions (OSFI). Banks must retain a capital ratio that is at least equal to (subject to
adjustments) Tier 1 capital. For some important financial institutions in Canada, however,
minimum capital ratios are higher. OSFI evaluates the number of metrics such as assets size,
intra-financial claims and obligations, and banks' positions in domestic financial markets and
financial infrastructures. OSFI designates banks that are domestic systemically relevant banks
(D-SIBs) that are of domestic systemic significance. Common Equity Tier 1 capital (CET1)
 5

additional charges equal to 1 percent of risk-weighted assets (RWA) would apply to D-SIBs. In
terms of national and foreign trends, the 1 percent capital surcharge is annually reviewed.
Pervious is consistent with the levels and timing gave for in the D-SIB system of the Basel
Committee on Banking Supervision (BCBS).
The OSFI Corporate Governance Guidance allows banks to create an enterprise-wide risk
appetite policy accepted by the board that defines the bank's risk-taking practices and the
benchmarks and limitations for the amount of risk that the bank can tolerate. It is meant to be
forward-thinking and, in addition to its reputation, consider the bank's material threats. The
bank's strategies, practices, and operations should all help the structure of risk appetite.
Chapter 2: Toronto-Dominion Bank (TD Bank)

Toronto-Dominion Bank (TD Bank) is a Canadian bank that provides a variety of

financial services. It is incorporated on February 1, 1955, and headquartered in Toronto-
Dominion Centre Toronto, Ontario, Canada. It was ranked biggest bank in Canada in terms of
total assets, second largest by market capitalization, 26th biggest bank globally, and the top 10
banks in North America by Standard & Poor’s. In 2019, it was designated a global systemically
important bank by the Financial Stability Board. In 2019, the Financial Stability Board named it
a globally systemically significant bank. It reported a net income of CAD 41billion, total assets
of CAD 1.41 trillion in FY 2019. It boasts more than 89,000 people and over 26 million clients
worldwide[ CITATION Tor20 \l 1033 ].
Financial Analysis

Statement of the Financial Position

Statement of Financial Position is attached in Annexure1. Horizontal analysis is used to

understand percentage changes in the main account. Total Assets were 1.1 trillion CAD $ in

2015. The assets saw an increasing trend, a slight increase of 7% in 2016 and 9% in 2017, 4% in

2018, and 6% in 2019. Total Assets were 1.33 trillion CAD in 2019. Like the Total Assets, Total

liabilities saw a slight increase in the five years that indicates the company has financed most of

its assets through debt financing. The liabilities saw an increasing trend, a slight increase of 6%

in 2016 and 9% in 2017, 4% in 2018, and 6% in 2019. Total liabilities were 1.03 trillion $ CAD
 6

in 2015 and 1.25 trillion in 2019. Total Equity account saw a fluctuating trend as it saw a rise of

11% in 2016, 1% in 2017, 6% in 2018, and 10% in 2019.

Statement of Financial Position

Statement of Financial Performance is attached in Annexure 2. Total revenue saw a rising trend

as 9% in 2016, 5% in 2017, 7% in 2018 and 6% in 2019. Total revenue was 31 billion$ in 2015

and 41 billion $CAD in 2016. Net income followed a random trend as it saw a rise of 11% in

2016, 18% in 2017,8% in 2018, and 3% in 2019. Net income was 8 billion in 2015 and 11 billion

in 2019.
 7

Ratio Analysis

Ratio Analysis of 5 years is attached in Annexure3.

Ratio Tool Result and Analysis

Basic Basic EPS indicates how much earnings Basic earnings per share were 6.26 in
earnings per are attributed to each shareholder. 2019, 6.02 in 2018, 5.51 in 2017,
share 4.68 in 2016, and 4.22 in 2015. The
company has shown profitability in
all five years.

Diluted Diluted EPS indicates how much Diluted earnings per share were 6.25
earnings per earnings are attributed to each in 2019, 6.01 in 2018, 5.5 in 2017,
share shareholder if all convertible securities 4.67 in 2016, and 4.21 in 2015. There
are converted. is not much difference that indicates
the company holds a nominal
amount of convertible securities.
Dividends It indicates how much dividends are Dividends per share were 2.89 in
per share attributed to the shareholders. 2019, 2.61 in 2018, 2.35 in 2017,
2.16 in 2016, and 2.00 in 2015. The
company has paid dividends overall
five years that would enhance the
company's perception in the eyes of
potential investors.

Book value It indicates net assets available per Book value per share was 45.2 in
per share share. 2019, 40.5 in 2018, 37.76 in 2017,
36.71 in 2016, and 33.81 in 2015.
The company possesses the second
 8

biggest market cap in Canada. As

book value per share is positive, it
would give positive indicators to
depositors.
Closing It serves as a standard to track the Closing market price per share was
market price performance of the shares over time. 75.21 in 2019, 73.03 in 2018, 73.34
per share in 2017, 60.86 in 2016, and 53.68 in
2015. The ratio has improved over
the time horizon, indicating strong
financial performance and value
maximization.
Closing Its attributes closing market Closing market price appreciation
market price benchmark to numbers of shares per share was in -0.4 % in 2019,
to book outstanding 20.5% in 2018 in 2017 13.4% in 2016
value per and -3.2% in 2015. The ratio has
share been subject to various fluctuations
and has shown mixed performance
over time.
Total Net shareholder return is the financial Total shareholder return per share
shareholder benefit arising from a change in the was 7.1 in 2019, 3.1 in 2018, 24.8 in
return per stock price plus any dividends received 2017, 17.9 in 2016, and 0.4 in 2015.
share by the firm over the calculated interval It has seen an extraordinary rise in
separated by the stock's original 2016 and 2017.
buying price.
Efficiency It measures the ability of a company Efficiency ratio was 53.6 2019, 51.9
ratio to generate income. in 2018, 53.6 in 2017, 55 in 2016,
and 57.5 in 2015. The ability of the
company remained in the 50s with
some fluctuations.
Net interest It indicates the ability of banks to earn Net interest margin was 1.96 in
margin interest on loans. 2019, 1.95 in 2018, 1.96 in 2017,
2.01 in 2016, and 2.05 in 2015.
Common It indicates companies’ ability to pay a The common dividend payout ratio
dividend dividend with proportion to was 46.1 in 2019, 43.3 in 2018, 42.6
payout ratio investment and retained earnings. in 2017, 46.1 in 2016, and 47.4 in
2015.

Dividend It indicates the percentage of a The dividend yield was 3.9 in 2019,
yield company's share price that it pays out 3.5 in 2018, 3.6 in 2017, 3.9 in 2016,
 9

in dividends each year. and 3.7 in 2015.

Price- It portrays to gain one dollar of its Price-earnings ratio was 12 in 2019,
earnings profits; an investor may expect to 12.2 in 2018, 13.3 in 2017, 13 in
ratio invest a particular amount in a 2016, 12.8 in 2015
company.

Tier 1 It is the ratio of bank tier 1 Capital to Tier 1 Capital ratio was 13.5 in 2019,
Capital ratio overall risk-weighted assets. 13.7 in 2018, 12.3 in 2017, 12.2 in
2016, and 11.3 in 2015.
Total Capital This ratio compares the total It was 16.3 in 2019, 16.2 in 2018,
ratio obligations to the total capitalization. 14.9 in 2017, 15.2 in 2016 and 14.0
It portrays the risk. in 2015. The ratio saw a slight
increase. Banks carry a larger
amount of deposits (liabilities) for
this reason, this ratio.

Capital Ratios
18.0
16.3 16.2
16.0 14.9 15.2
13.5 13.7 14.0
14.0
12.3 12.2
12.0 11.3
10.0
8.0
6.0
4.0
2.0
0.0
2019 2018 2017 2016 2015

Tier 1 Capital ratio Total Capital ratio

Competitors Analysis

Banking serves as the backbone of any economy. Canadian banking hold assets of more than
trillions of dollars. Five banks dominate the Canadian banking industry. Royal Bank of Canada
(RBS) and Toronto-Dominion Bank (TD Bank) are two of the most dominant banks in terms of
Assets. Therefore, it is preferred to take the Royal Bank of Canada to make a reasonable
comparison. Royal Bank of Canada has 7.2 million active digital users. It was named Canada’s
 10

most valuable brand by Brand Finance in 2019. It possesses a workforce of more than 13,000
employees.
Key Ratios of RBC

RBC ratios are attached in Annexure4.

Comparison

Basic EPS: It is an indicator of profitability. Basic EPS indicates how much earnings are
attributed to each shareholder. RBC is the biggest bank in Canada, and it has shown better
earnings per share due to higher income than TD bank in respective years.

BASIC EPS
8.78

8.39

7.59

6.80

6.75
6.26

6.02

5.51

4.68

4.22

2019 2018 2017 2016 2015

ROE: It indicates the total return in relevance to the total equity. RBC has shown higher returns
than TD bank. However, TD bank has shown a slightly increasing trend, but RBC's return on
equity has declined over the years.
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ROE

2015 13.40%
18.6%

2016 13.30%
16.3%
TD Bank
2017 14.90% RBC
17.0%

2018 15.70%
17.6%

2019 14.50%
16.8%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Return on Risk-Weighted Assets: It measures risk as it divides the total profit by the risk-
weighted assets. Risk assets areas that bank faces the threat of borrower default. In 2015, the
return on risk-weighted assets was higher for RBC bank, and in 2015, RORWA was higher for
TD bank in 2019.

RORWA
2.60% 2.55%
2.52%
2.55% 2.56% 2.49%
2.50% 2.45%
2.46%
2.40%
2.34%
2.30%

2.20%
2.21% 2.20%
2.10%

2.00%
2019 2018 2017 2016 2015

RBC TD Bank

Net Interest margin:

It indicates the ability of the bank to earn interest on loans. Interest is a significant revenue
stream for the business. It has declined for both banks throughout the five years. TD Bank has
shown a slightly higher interest Margin than TD Bank.
 12

Net Interset Margin

2.50%
1.96% 1.95% 1.96% 2.01% 2.05%
2.00%

1.50%
1.61% 1.64% 1.69% 1.70% 1.71%

1.00%

0.50%

0.00%
2019 2018 2017 2016 2015

RBC TD Bank

Tier 1 capital ratio: It is the ratio of bank tier 1 Capital to overall risk-weighted assets. The
primary financing source of capital is Tier 1 capital. It constitutes equity and retained earnings.
It measures bank financial health. As both banks have a tier 1 capital ratio of higher than 4.5 %
(minimum required by Basel III), both are financially healthy. TD bank was slightly lower than
TD bank in 2015, but in 2019, TD bank showed better tier 1 capital ratio and health than RBC
bank.  

Tier 1 Capital Ratios

16.0%
13.2%
14.0% 12.8%
13.7% 12.3% 12.3% 12.2%
13.5%
12.0%
12.3% 12.2%
10.0% 11.3%

8.0%
6.0%
4.0%
2.0%
0.0%
2019 2018 2017 2016 2015

RBC TD Bank

Total capital ratio: This ratio compares the total obligations to the total capitalization. Capital
Ratio is a measure of risk. A higher capital ratio shows better financial health for the bank.
Higher CAR enables the bank to stand firm in a more challenging economic condition. TD Bank
 13

has demonstrated a higher CAR than RBC bank throughout the five years. That shows TD bank
financially more stable than RBC bank.

Total Capital ratio

16.5% 16.3% 16.2%
16.0%
15.5% 15.2% 15.2%
14.9%
15.0%
14.6%
14.4%
14.5% 14.2%
14.0%
14.0%
14.0%
13.5%
13.0%
12.5%
2019 2018 2017 2016 2015

RBC TD Bank

Conclusion: RBC bank has shown higher profitability and market than TD bank. However, TD
bank has shown higher

Chapter 3: Risk Management:

TD Bank takes risks required to build its business, but only if the risks can be understood and
managed and fits the business strategy. Suppose it does not expose the firm to any significant single-
loss events. Do not risk harming the TD brand is applying its risk appetite; TD considers both the
current conditions in which it operates and the impact that emerging risks will have on TD's
strategy and risk profile. Adherence to the enterprise risk appetite is managed and monitored
across TD and is based on a broad collection of principles, policies, processes, and procedures,
including risk appetite statements and related performance measures for significant risk
categories and the business segments[ CITATION TDB20 \l 1033 ].
At the enterprise level, metrics are tracked against key risks like capital adequacy, market risk,
liquidity risk, credit risk, and operational risk. These metrics and compliance with the Risk
Appetite Statement are monitored and reported by risk dashboards on an ongoing basis. To
ensure that TD Bank's Risk Appetite Statement remains current and relevant, TD has established
a Risk Appetite Governance Framework approved annually by the Risk Committee of the Board
(RCoB). This framework describes TD's processes, structure, and responsibilities to develop,
 14

govern, and approve the Risk Appetite Statement and the requirements for monitoring and
escalating exceptions. Specifically, the governance process provides that:
 Risk Appetite Statement and related metrics must be reviewed at least annually.
 Risk Management develops updates and amendments with input from business segments,
corporate functions, the senior executive team, and the RCoB.
 The TD Enterprise Risk Appetite Statement and related metrics must be reviewed and
approved by the RCoB annually.
 Risk Appetite Statement must be recommended by each of the Business Groups heads
and approved by the president and chief executive officer (CEO) and chief risk officer
(CRO) annually.
 Performance against the Enterprise and Segment Risk Appetite Statements must be
monitored and reported daily[ CITATION TDB20 \l 1033 ].

TD Bank Financial Group’s goal is to earn satisfactory returns from our different business
activities at an acceptable risk level. For this, we need to understand the risks involved in the
businesses and make sure that the risks they assume are within prudent limits. Through retail and
wholesale companies, banks are exposed to four significant risks: credit risk, market risk,
liquidity risk, and operational risk.
Risk management involves analyzing each risk's possible effect and setting up policies
and procedures to reduce them. Their guiding principles include trained experts in risk
management, independent of the business units, developing their policy structure, and identifying
risk limits. Risk responsibility and ownership rest with the business units, whose risk
management structure is specified based on business need to meet governance
standards[ CITATION TDB20 \l 1033 ].
TD has an extensive ongoing risk management system that integrates its business
divisions, Company Risk Management, Legal, Audit, Compliance, Finance, Human Resources,
and other organizational functions with expertise and professional knowledge. Governance and
senior management supervision are crucial strategic components of our system, including a
regular review by the Risk Committee of the Board of Directors of significant risk policies. A
systematic analysis by an executive risk oversight committee consisting of our senior executives
of organizational risk, management policies and strategies, and critical initiatives.
Comprehensive internal audit reports assure senior management regarding the internal control
 15

environment's consistency and compliance with defined policies and procedures for risk
management.
Credit risk:

Through their conventional lending activities and transactions that include settlements between
the bank and their counterparties, including other financial institutions, we are exposed to credit
risk[ CITATION TDB20 \l 1033 ].
Managing credit risk

Country risk is the risk that cross-border payments for goods and services, loans, trade-related
financing, and dividends, as well as repatriation of TD's capital from abroad, may be affected by
economic or political changes in a country. They currently have visibility in many nations, with
the most considerable portion in North America. Based on an internal risk rating framework, they
develop country exposure guidance. Country limits cover all facets of credit, exposure through
our different enterprises[ CITATION TDB20 \l 1033 ]. For credit exposure to companies and
governments, they have set industry and community limits. Their loan portfolio uses a structured
approach to develop and communicate risk criteria for each business area.
Their portfolio of financial institutions is split into 15 main categories. Individual businesses
have similar characteristics and common risk factors in each group. Among these categories,
they have established particular exposure guidelines for 24 parts. Group Risk Management
performs continuous segment analysis and exposure guidance for each group
Personal credit: Credit requests are evaluated using automated credit scoring systems or are
directed to regional credit centers operating within clear authority limits. Once retail credits are
funded, they are continually monitored within quantitative account management programs to
identify changes in risk and to provide opportunities that increase risk-adjusted performance
Market risk

Managing market risk is an integral part of their business planning process. The process begins
new trading operations and expands existing ones only if the threat has been thoroughly assessed
and judged within their risk capacity and business expertise. They have the infrastructure in place
to monitor, control, and manage the risk. They work market risk by enforcing trading limits and
stress testing” our trading activities[ CITATION TDB20 \l 1033 ].
 16

Liquidity risk:

TD’s overall liquidity requirement is measured as the amount of liquidity required Support for
expected cash outflows and a proactive reserve of liquidity to fund future cash outflows. Suppose
there was a disruption in the capital markets or other event that could affect their access to
liquidity. TD does not rely on short-term wholesale funding for purposes other than funding
marketable securities or short-term assets. Liquidity requirements are measured under different
stress scenarios with a base case scenario Defining the minimum amount of liquidity to be
maintained at all times. This situation offers coverage for 100% of our unsecured wholesale debt
due for a minimum duration of thirty days and other possible deposit run-off and contingent
liabilities. Additional scenarios can require higher coverage
Operational risk

Group Risk Management works closely with the business units' risk management
functions to facilitate the implementation of the operational risk management framework and the
implementation of leading industry practices. Group Risk Management is responsible for
continually identifying, measuring, and reporting on our businesses' operational risk exposures.
They allocate economic capital based on assessments of operational risk. They oversee the
execution of critical enterprise-wide risk management practices, including an extensive system of
internal controls, trained and competent people, segregating incompatible functions, and clearly
defined operating procedures. They continuously assess TD’s insurable risk exposures,
developing and implementing appropriate risk management solutions. These include managing a
broad portfolio of insurance coverage combined with other risk transfer vehicles that protect TD
from the adverse impact of internal and external events in the course of doing business.
Prices Changes

The three biggest banks (as of market chaptalization) are taken for the comparison. Royal Bank

of Canada (RY) and Toronto-Dominion Bank (TD Bank), and Bank of Nova Scotia (BNS), price

changes are compared monthly. The price changes report is attached in Annexure 5.

Comments:
 17

All stocks have gone through wide fluctuations through different microenvironment and macro-

environment factors. There is a risk factor associated with stocks. There are systematic risk and

nonsystematic risks that cause changes in prices. Systematic risk cannot be controlled and is

related to the whole market. Beta is a measure of systematic risk, as the beta of three stocks less

than one highlights that stocks are fluctuating less than the market. All three stocks are less

volatile than the market as the beta is less than 1. Unsystematic can be controlled associated

with the organization in particular.

PRICES CHANGES
90
80
70
60
50
40
30
20
10
0

TD RY BNS

Royal Bank of Canada has outperformed the TD Bank and Bank of Nova Scotia. Analysis has

shown that the Royal Bank of Canada generated the highest profitability, higher market cap, and

multi-national attracts more investors than the other two banks. TD and BNS went through up

and down throughout the periods. Over five years, RY has shown a 1.18% average increase each

month, TD has delivered a 0.99% average increase each month and BNS has demonstrated an

average increase of 0.93% each month.

 18

Conclusion

Five banks dominate the Canadian banking industry. Royal Bank of Canada (RBS) and Toronto-

Dominion Bank (TD Bank) are two of the most dominant banks in terms of Assets. The primary

law regulating Canada's financial industry is the Bank Act. Toronto-Dominion Bank (TD Bank)

have shown adequate financial performance and usually performed over benchmarks. When

compared with RBC, it has demonstrated better risk handling but less profitability and

marketability. RBC has outperformed both TD and BNS through the period of five months.

References:

Bibliography

Canadian Banking Association. (2020, November 17). Focus: Fast Facts About the Canadian

Banking SystemFocus: Fast Facts About the Canadian Banking System. Retrieved from

Canadian Banking Association: https://cba.ca/fast-facts-the-canadian-banking-system

Last Name, F. M. (Year). Article Title. Journal Title, Pages From - To.

Last Name, F. M. (Year). Book Title. City Name: Publisher Name.

RBC. (2020). Our Company. Retrieved from RBC: https://www.rbc.com/our-

company/index.html

Szmigiera, M. (2020, November 16). Canadian banking industry - Statistics & Facts. Retrieved

from Statista: https://www.statista.com/topics/5659/banking-industry-in-

canada/#:~:text=Five%20firms%20dominate%20the%20Canadian,Bank%20of

%20Commerce%20(CIBC).
 19

TDBank. (2020, October 30). TD Financial Stress Monitor. Retrieved from TD Bank:

https://economics.td.com/ca-financial-market-stress

Toronto-Dominion Bank. (2020). Get to know TD, a top 10 North American bank. Retrieved

from Toronto-Dominion Bank : https://www.td.com/ca/en/about-td/

Yahoo. (2020). Royal Bank of Canada (RY). Retrieved from Yahoo Finance:

https://finance.yahoo.com/quote/RY?p=RY&.tsrc=fin-srch

Yahoo. (2020). The Toronto-Dominion Bank (TD). Retrieved from Yahoo Finance:

https://finance.yahoo.com/quote/TD?p=TD&.tsrc=fin-srch

Yahoo Finance. (2020). The Bank of Nova Scotia (BNS). Retrieved from Yahoo fiannce:

https://finance.yahoo.com/quote/BNS?p=BNS&.tsrc=fin-srch

Appendix

Annexure 1

Toronto-Dominion Bank (TD Bank)

  2019 2018 2017 2016 2015
ASSETS Millions of Canadian Dollars
Cash resources and $ 30,446 $ 35,455 $ 55,156 $ 57,621 $ 45,637
other
Trading loans, 261,144 262,115 254,361 211,111 188,317
securities, and other
Non-trading financial
assets at fair value
6,503 4,015 n/a n/a n/a
through profit or
loss
Derivatives 48,894 56,996 56,195 72,242 69,438
Debt securities at
amortized cost,
net of allowance for 130,497 107,171 n/a n/a n/a
credit losses
 20

Held-to-maturity n/a n/a 71,363 84,395 74,450

securities
Securities purchased
under reverse
165,935 127,379 134,429 86,052 97,364
repurchase
agreements
Loans, net of 684,608 646,393 612,591 585,656 544,341
allowance for loan
losses
Other 87,263 95,379 94,900 79,890 84,826
Total assets $ $ 1,334,903 $ $ 1,176,967 $ 1,104,373
1,415,290 1,278,995
LIABILITIES          
Trading deposits $ 26,885 $ 114,704 $ 79,940 $ 79,786 $ 74,759
Derivatives 50,051 48,270 51,214 65,425 57,218
Financial liabilities
designated at
fair value through 105,131 16 8 190 1,415
profit or loss
Deposits 886,977 851,439 832,824 773,660 695,576
Other 247,820 231,694 230,291 172,801 199,740
Subordinated notes 10,725 8,740 9,528 10,891 8,637
and debentures
Total liabilities 1,327,589 1,254,863 1,203,805 1,102,753 1,037,345
EQUITY          
Shareholders’ Equity          
Common shares 21,713 21,221 20,931 20,711 20,294
Preferred shares 5,800 5,000 4,750 4,400 2,700
Treasury shares (47) (151) (183) (36) (52)
Contributed surplus 157 193 214 203 214
Retained earnings 49,497 46,145 40,489 35,452 32,053
Accumulated other
comprehensive 10,581 6,639 8,006 11,834 10,209
income (loss)
  87,701 79,047 74,207 72,564 65,418
Non-controlling – 993 983 1,650 1,610
interests in
subsidiaries
Total equity 87,701 80,040 75,190 74,214 67,028
Total liabilities and $ $ 1,334,903 $ 1,278,995 $ 1,176,967 $ 1,104,373
equity 1,415,290
 21

Annexure 2

Condensed Consolidated Statement of Income – Reported

(millions of Canadian 2019 2018 2017 2016 2015
dollars)
Net interest income $ 23,931 $ 22,239 $ 20,847 $ 19,923 $ 18,724
Non-interest income 17,134 16,653 15,355 14,392 12,702
Total revenue 41,065 38,892 36,202 34,315 31,426
Provision for credit losses 3,029 2,480 2,216 2,330 1,683

Insurance claims and 2,787 2,444 2,246 2,462 2,500

related expenses
Non-interest expenses 22,020 20,195 19,419 18,877 18,073
Income before income 13,229 13,773 12,321 10,646 9,170
taxes and equity in net
income of an investment
in TD Ameritrade

Provision for (recovery of) 2,735 3,182 2,253 2,143 1,523

income taxes
Equity in net income of an 1,192 743 449 433 377
investment in TD
Ameritrade
Net income 11,686 11,334 10,517 8,936 8,024
Preferred dividends 252 214 193 141 99
Net income available to $ 11,434 $ 11,120 $ 10,324 $ 8,795 $ 7,925
common shareholders and
non-controlling interests in
subsidiaries
Attributable to:
Common shareholders $ 11,416 $ 11,048 $ 10,203 $ 8,680 $ 7,813
Non-controlling interests in 18 72 121 115 112
subsidiaries
Annexure 3

  2019 2018 2017 2016 2015

Per 1 Basic 6.26 $ 6.02 $ 5.51 $ 4.68 $ 4.22

earnings
common
per share
 22

2 Diluted 6.25 6.01 5.50 4.67 4.21

earnings
per share
3 Dividends 2.89 2.61 2.35 2.16 2.00
per share
4 Book value 45.20 40.5 37.7 36.71 33.81
per share 0 6
5 Closing 75.21 73.0 73.3 60.86 53.68
market 3 4
price per
share
6 Closing 1.66 1.80 1.94 1.66 1.59
market
price to
book value
per share
7 Closing 3.0% (0.4) % 20.5% 13.4 (3.2)
market % %
price
appreciatio
n per share
8 Total 7.1 3.1 24.8 17.9 0.4
shareholder
return per
share
Performanc 9 Return on 14.5% 15.7% 14.9% 13.3% 13.4%
common
e ratio
equity
1 Return on 2.55 2.56 2.46 2.21 2.20
Common
0
Equity Tier
1
Capital risk-
weighted
assets
1 Efficiency 53.6 51.9 53.6 55.0 57.5
ratio
1
1 Net interest 1.96 1.95 1.96 2.01 2.05
margin
2
1 Common 46.1 43.3 42.6 46.1 47.4
dividend
3
payout ratio
 23

1 Dividend 3.9 3.5 3.6 3.9 3.7

yield
4
1 Price- 12.0 12.2 13.3 13.0 12.8
earnings
5
ratio
Asset 1 Net 0.33% 0.37% 0.38% 0.46% 0.48%
impaired
quality 6
loans as a %
of net loans
1 Net 2.81 3.33 3.45 4.09 4.24
impaired
7
loans as a %
of Net
Assets
of common
equity
1 Provision 0.45 0.39 0.37 0.41 0.34
for credit
8
losses as a
% of net
Assets
average
loans and
acceptance
Capital 1 Common 12.1% 12.0% 10.7% 10.4% 9.9%
9 Equity Tier
ratios
1 Capital
ratio Assets
2 Tier 1 13.5 13.7 12.3 12.2 11.3
0 Capital ratio
2 Total 16.3 16.2 14.9 15.2 14.0
1 Capital ratio
Other 2 Common 5.8 5.5 5.4 5.8 5.7
2 equity to
total assets
2 Number of 1,811. 1,828.3 1,839.6 1,857.2 1,855.1
3 common 9
shares
outstanding
(millions)
Annexure 4

ROYAL BANK OF CANADA (Millions of Canadian dollars, except percentages and per share
 24

amounts)
  2019 2018 2017 2016 2015
Earnings per shares –
$ 8.78 $ 8.39 $ 7.59 $ 6.80 $ 6.75
basic
Earnings per shares – $ 8.75 $ 8.36 $ 7.56 $ 6.78 $ 6.73
diluted
ROE 16.8% 17.6% 17.0% 16.3% 18.6%
Return on risk 2.52% 2.55% 2.49% 2.34% 2.45%
weighted average
assets
Efficiency Ratio 52.5% 53.6% 53.6% 52.9% 53.3%
PCL on impaired loans
as a % of average net 0.27% 0.20% 0.21% 0.28% 0.24%
loans and acceptances
Net interest margin 1.61% 1.64% 1.69% 1.70% 1.71%
Common shares
1,430,096 1,438,794 1,452,535 1,484,235 1,443,955
outstanding (000s)
Dividends declared per $ 4.07 $ 3.77 $ 3.48 $ 3.24 $ 3.08
common share
Dividend yield 4.1% 3.7% 3.8% 4.3% 4.1%
Dividend payout ratio 46% 45% 46% 48% 46%
Book value per share $ 54.41 $ 51.12 $ 46.41 $ 43.32 $ 39.51
Common share price $ 106.24 $ 95.92 $ 100.87 $ 83.80 $ 74.77
Market capitalization 151,933 138,009 146,554 124,476 107,925
Market price to book 1.95 1.88 2.17 1.93 1.89
value
Common Equity Tier 1 12.1% 11.5% 10.9% 10.8% 10.6%
capital ratio
Tier 1 capital ratio 13.2% 12.8% 12.3% 12.3% 12.2%
Total capital ratio 15.2% 14.6% 14.2% 14.4% 14.0%
Leverage Ratio 4.3% 4.4% 4.4% 4.4% 4.3%
Annexure 5

Date TD % RY % BNS % changes

changes changes In BNS
In TD In RY
 25

12/1/2015 32.15115 43.150478 31.451565

1/1/2016 31.05946 -3.40% 41.265972 -4% 32.152763 2%
2/1/2016 32.03733 3.15% 41.540581 1% 31.491444 -2%
3/1/2016 35.7416 11.56% 46.911434 13% 38.466801 22%
4/1/2016 36.8769 3.18% 50.627831 8% 41.293152 7%
5/1/2016 36.49066 -1.05% 49.581097 -2% 38.963711 -6%
6/1/2016 35.92991 -1.54% 48.658813 -2% 39.027401 0%
7/1/2016 36.46556 1.49% 50.198692 3% 40.886604 5%
8/1/2016 37.69908 3.38% 51.674534 3% 43.498688 6%
9/1/2016 37.53003 -0.45% 51.541431 0% 43.310696 0%
10/1/2016 38.3584 2.21% 51.973995 1% 44.405949 3%
11/1/2016 40.43829 5.42% 54.455551 5% 45.636703 3%
12/1/2016 42.10224 4.11% 56.883453 4% 45.991879 1%
1/1/2017 44.17579 4.93% 60.378281 6% 49.862747 8%
2/1/2017 44.39126 0.49% 61.59491 2% 48.53653 -3%
3/1/2017 43.09222 -2.93% 61.798355 0% 48.853493 1%
4/1/2017 40.51133 -5.99% 58.043491 -6% 46.849663 -4%
5/1/2017 41.40778 2.21% 59.106102 2% 47.573917 2%
6/1/2017 43.73425 5.62% 62.031475 5% 50.639397 6%
7/1/2017 44.74123 2.30% 63.776413 3% 52.981194 5%
8/1/2017 46.96624 4.97% 63.935905 0% 52.836647 0%
9/1/2017 49.29659 4.96% 66.776131 4% 54.630737 3%
10/1/2017 49.80471 1.03% 67.466805 1% 54.860317 0%
11/1/2017 50.30599 1.01% 68.369354 1% 54.315582 -1%
12/1/2017 51.75492 2.88% 71.294479 4% 55.414772 2%
1/1/2018 53.72511 3.81% 74.804619 5% 57.654259 4%
2/1/2018 51.63024 -3.90% 70.217117 -6% 53.726234 -7%
3/1/2018 50.63271 -1.93% 68.792999 -2% 53.500793 0%
4/1/2018 50.00926 -1.23% 67.689323 -2% 53.292683 0%
5/1/2018 52.49666 4.97% 67.93145 0% 52.857708 -1%
6/1/2018 52.02016 -0.91% 67.670822 0% 50.1329 -5%
7/1/2018 53.20692 2.28% 70.070305 4% 52.485474 5%
8/1/2018 54.8784 3.14% 72.126221 3% 51.289593 -2%
9/1/2018 55.15052 0.50% 72.733917 1% 52.822086 3%
10/1/2018 50.30671 -8.78% 66.067322 -9% 47.577965 -10%
11/1/2018 50.6035 0.59% 67.116684 2% 48.709793 2%
12/1/2018 45.49739 -10.09% 62.774151 -6% 44.670048 -8%
1/1/2019 51.52772 13.25% 69.791824 11% 51.641453 16%
2/1/2019 53.03083 2.92% 72.573547 4% 50.38987 -2%
3/1/2019 50.21201 -5.32% 70.132149 -3% 48.322037 -4%
4/1/2019 52.6519 4.86% 73.975258 5% 49.936398 3%
5/1/2019 51.01134 -3.12% 70.427734 -5% 46.551781 -7%
6/1/2019 54.47432 6.79% 74.410675 6% 49.903145 7%
7/1/2019 54.549 0.14% 73.951462 -1% 49.620743 -1%
 26

8/1/2019 51.07003 -6.38% 70.746162 -4% 49.462719 0%

9/1/2019 54.9057 7.51% 76.802559 9% 52.846371 7%
10/1/2019 53.78422 -2.04% 76.329399 -1% 54.041618 2%
11/1/2019 55.02879 2.31% 78.125633 2% 52.790516 -2%
12/1/2019 53.43886 -2.89% 75.688675 -3% 53.138573 1%
1/1/2020 52.61057 -1.55% 75.45932 0% 51.379513 -3%
2/1/2020 49.63304 -5.66% 71.871895 -5% 49.853157 -3%
3/1/2020 40.76622 -17.86% 59.402645 -17% 38.663578 -22%
4/1/2020 40.16997 -1.46% 59.441254 0% 38.225517 -1%
5/1/2020 41.71166 3.84% 63.402569 7% 38.747669 1%
6/1/2020 43.47564 4.23% 66.286736 5% 39.928886 3%
7/1/2020 43.15403 -0.74% 67.547935 2% 39.812695 0%
8/1/2020 49.23753 14.10% 75.275597 11% 42.525356 7%
9/1/2020 45.66273 -7.26% 69.361923 -8% 40.842838 -4%
10/1/2020 43.67782 -4.35% 69.213593 0% 40.892036 0%
11/1/2020 52.62 20.47% 79.739998 15% 48.509998 19%
11/20/2020 52.62 0.00% 79.739998 0% 48.509998 0%
Average Change 0.997% 1.18% 0.93%
Standard Deviation 5.89% 5.44% 6.41%
Beta (5 years monthly) 0.74 0.74 0.82