UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F/A
Amendment No. 1
[Check one]
 
☐
 
REGISTRATIO
 
N
 
STATEMENT
 
PURSUANT TO SECTION 12 OF THE
 
 
SECURITIES EXCHANGE ACT OF 1934
 
OR
 
☒
 
ANNUAL REPORT PURSUANT
 
TO SECTION 13(a) OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended
October 31, 2024
Commission File Number
1-14446
THE TORONTO-DOMINION BANK
(Exact name of Registrant as specified in its charter)
Canada
(Province or other jurisdiction of incorporation or organization)
6029
(Primary Standard Industrial Classification Code Number (if applicable))
13-5640479
(I.R.S. Employer Identification Number (if applicable))
c/o General Counsel’s Office
P.O.
 
Box 1
Toronto
 
-Dominion Centre
Toronto,
 
Ontario M5K 1A2
(416) 308-6963
(Address and telephone number of Registrant’s
 
principal executive offices)
Glenn Gibson, The Toronto
 
-Dominion Bank
One Vanderbilt
 
Avenue
New York,
 
NY
10017
(212) 827-7000
(Name, address (including zip code) and telephone number (including
 
area code)
of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of
 
the Act.
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Shares
TD
New York
 
Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of
 
the Act.
Not Applicable
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of
 
the Act.
 
Not Applicable
(Title of Class)
For annual reports, indicate by check mark the information filed with this form:
☒
Annual information form
☒
Audited annual financial statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital
 
or common stock as of the close of the period
covered by the annual report.
 
Common Shares
1,750,271,719
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 1
(Non-Viability Contingent Capital)
20,000,000
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 5
(Non-Viability Contingent Capital)
20,000,000
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 7
(Non-Viability Contingent Capital)
14,000,000
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 9
(Non-Viability Contingent Capital)
 
8,000,000
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 16
(Non-Viability Contingent Capital)
14,000,000
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 18
 
(Non-Viability Contingent Capital)
14,000,000
Class A First Preferred Shares, Series 26
 
1,750,000
(Non-Viability Contingent Capital)*
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 27
850,000
Non-Cumulative 5-Year
 
Rate Reset Preferred Shares, Series 28
800,000
Class A First Preferred Shares, Series 29
 
(Non-Viability Contingent Capital)*
1,500,000
Class A First Preferred Shares, Series 30
 
(Non-Viability Contingent Capital)*
1,750,000
Class A First Preferred Shares, Series 31
 
(Non-Viability Contingent Capital)*
750,000
* In connection with
 
the issuance of: (i)
 
Limited Recourse Capital Notes NVCC,
 
Series 1, the Registrant issued
 
CAD$1,750
million of
 
Class A
 
First Preferred
 
Shares, Series
 
26 (Series
 
26 Preferred
 
Shares) at
 
a price
 
of CAD$1,000
 
per Series
 
26
Preferred Share; (ii) Limited Recourse Capital Notes NVCC, Series 2, the Registrant issued CAD$1,500 million of
 
Class A
First Preferred Shares,
 
Series 29 (Series
 
29 Preferred Shares)
 
at a price of
 
CAD$1,000 per Series
 
29 Preferred Share;
 
(iii)
Limited
 
Recourse
 
Capital
 
Notes
 
NVCC,
 
Series
 
3,
 
the
 
Registrant
 
issued
 
USD$1,750
 
million
 
of
 
Class
 
A
 
First
 
Preferred
Shares, Series
 
30 (Series
 
30 Preferred
 
Shares) at
 
a price
 
of USD$1,000
 
per Series
 
30 Preferred
 
Share; and
 
(iv) Limited
Recourse Capital Notes NVCC,
 
Series 4, the Registrant
 
issued USD$750 million
 
of Class A First Preferred
 
Shares, Series
31 (Series
 
31 Preferred
 
Shares) at
 
a price
 
of USD$1,000
 
per Series
 
31 Preferred
 
Share. The
 
Series 26
 
Preferred
 
Shares,
Series 29
 
Preferred Shares,
 
Series 30 Preferred
 
Shares and Series
 
31 Preferred
 
Shares were
 
issued to
 
a trust to
 
be held as
limited recourse trust
 
assets in
 
connection with the
 
Limited Recourse Capital
 
Note structure.
 
The Series
 
26 Preferred Shares,
Series 29
 
Preferred
 
Shares, Series
 
30 Preferred
 
Shares and
 
Series 31
 
Preferred
 
Shares are
 
eliminated on
 
the Registrant's
consolidated financial statements.
Indicate by check mark
 
whether the Registrant (1)
 
has filed all reports
 
required to be filed by
 
Section 13 or 15(d)
 
of the Exchange Act
during the preceding 12 months (or for such shorter period that the Registrant was
 
required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.
Yes
 
☒
No
 
☐
Indicate by check mark whether the Registrant has submitted electronically
 
every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
 
during the preceding 12 months (or for such shorter period that the
Registrant was required to submit such files).
 
Yes
 
☒
No
 
☐
Indicate by check mark whether the Registrant is an emerging
 
growth company, as defined in
 
Rule 12b-2 of the Exchange Act.
 
Emerging growth company
 
☐
If an emerging growth company that prepares its financial
 
statements in accordance with U.S. GAAP,
 
indicate by check mark if the
registrant has elected not to use the extended transition period for complying
 
with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act.
 
☐
 
† The term "new or revised financial accounting standard" refers to any update
 
issued by the Financial Accounting Standards Board to
its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the Registrant has filed a report on and attestation to
 
its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b)
 
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
 
☒
 
 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check
 
mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously
 
issued financial statements.
 
☒
 
Indicate by check mark whether any of those error corrections are restatements
 
that required a recovery analysis of incentive-based
compensation received by any of the registrant’s
 
executive officers during the relevant recovery period pursuant
 
to §240.10D-1(b).
 
☐
 
Auditor Name:
 
Ernst & Young
 
LLP
 
Auditor Location:
 
Toronto, Canada
 
Auditor Firm ID:
 
1263
 
EXPLANATORY
 
NOTE
This Amendment
 
No. 1
 
(this “Amendment”)
 
amends the
 
Annual Report
 
on Form
 
40-F of
 
The Toronto
 
-Dominion Bank
 
(the “Bank”)
originally filed with the Securities
 
and Exchange Commission
 
(“SEC”) on December 5, 2024
 
(the “Original Annual Report”),
 
in order
to refile Exhibit 99.3: 2024 Annual Financial Statements to insert inadvertently omitted signatures of the Bank’s independent registered
public accounting firm, Ernst & Young
 
LLP.
Additionally, pursuant
 
to the rules of the SEC, this Amendment also contains (i) a new consent from the Bank’s independent registered
public accounting firm, (ii) new certifications required by Rule 13a-14(a) or
 
Rule 15d-14(a) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and (iii) new certifications required by
 
Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act.
Other
 
than
 
as discussed
 
above
 
and
 
expressly
 
set forth
 
herein,
 
no
 
other
 
information
 
in
 
this Amendment
 
has
 
been
 
amended
 
from
 
the
information contained in the Original Annual Report, nor does this Amendment
 
reflect any events that have occurred after the Original
Annual Report was filed.
Disclosure Controls and Procedures
The disclosure
 
provided under
 
the heading
Accounting Standards
 
and Policies –
 
Controls and
 
Procedures
 
– Disclosure
 
Controls and
Procedures
included in Exhibit 99.2:
 
Management’s Discussion and Analysis
 
is incorporated by reference herein.
Management’s Annual Report on Internal
 
Control Over Financial Reporting
The disclosure provided
 
under the heading
Accounting Standards
 
and Policies –
 
Controls and
 
Procedures
 
- Management’s
 
Report on
Internal
 
Control
 
Over
 
Financial
 
Reporting
included
 
in
 
Exhibit
 
99.2:
 
Management’s
 
Discussion
 
and
 
Analysis
 
is
 
incorporated
 
by
reference herein.
Attestation Report of the Registered Public Accounting Firm
The
 
disclosure
 
provided
 
under the
 
heading
Report
 
of
 
Independent
 
Registered
 
Public
 
Accounting
 
Firm To
 
the
 
Shareholders
 
and
 
the
Board of
 
Directors of
 
The Toronto
 
-Dominion Bank –
 
Opinion on Internal
 
Control over
 
Financial Reporting
included in Exhibit
 
99.3:
 
2024 Annual Financial Statements is incorporated by reference herein.
Changes in Internal Control Over Financial Reporting
The disclosure provided under
 
the heading
Accounting Standards
 
and Policies – Controls and
 
Procedures - Changes in Internal Control
Over Financial Reporting
included in Exhibit 99.2:
 
Management’s Discussion and Analysis
 
is incorporated by reference herein.
Audit Committee Financial Expert
The
 
disclosure
 
provided
 
under
 
the
 
heading
Directors
 
and
 
Executive
 
Officers
 
-
 
Audit
 
Committee
included
 
in
 
Exhibit
 
99.1
:
 
Annual
Information Form dated December 4, 2024 is incorporated by reference herein.
 
Code of Ethics
The Registrant has
 
adopted the
Code of Conduct and
 
Ethics for Employees and
 
Directors
(the “Code”) as its
 
code of ethics applicable
to
 
all
 
its
 
employees
 
and
 
directors,
 
including
 
the
 
Registrant’s
 
Group
 
President
 
and
 
Chief
 
Executive
 
Officer,
 
Group
 
Head
 
and
 
Chief
Financial Officer,
 
and Senior Vice
 
President, Finance, Controller
 
and Chief Accountant.
 
The Registrant posts the
 
Code on its website
at www.td.com
 
and also
 
undertakes to
 
provide a
 
copy of
 
the Code
 
to any
 
person without
 
charge upon
 
request.
 
Such request
 
may be
made by mail, telephone or e-mail to:
The Toronto-Dominion
 
Bank
TD Shareholder Relations
P.O.
 
Box 1, Toronto-Dominion
 
Centre
Toronto, Ontario,
 
Canada
 
M5K 1A2
Telephone:
 
1-866-756-8936
E-mail:
 
tdshinfo@td.com
On February
 
6, 2024,
 
an amended
 
version of
 
the Code
 
was filed
 
with the
 
SEC on
 
Form 6-K
 
and made
 
available on
 
the Registrant’s
website.
The key amendments made to
 
the Code at that
 
time included: a) Introduction and
 
Summary section revisions were made
 
to add language
confirming that nothing in the Code
 
is intended to prevent or
 
limit employees from exercising any protected rights
 
under applicable law,
b) Applying the Code, Step 4 Evaluate the Options and Make a Decision was updated to add an additional consideration of escalating a
matter or
 
engaging an
 
appropriate partner,
 
c) 2B
 
Gifts and
 
Entertainment revisions
 
were made
 
to align
 
to the
 
Anti-Bribery and
 
Anti-
Corruption
 
Policy,
 
and additional
 
language added
 
to clarify
 
that all
 
employees, regardless
 
of jurisdiction
 
are strictly
 
prohibited from
accepting any
 
gift card,
 
of any
 
value, at
 
any time,
 
d) 2F
 
Irregular Business
 
Conduct, Anti-Competitive
 
Behaviour,
 
language has
 
been
added
 
to
 
address
 
new
 
competition
 
law
 
requirements
 
regarding
 
terms
 
of
 
employment
 
and
 
solicitation
 
of
 
employees,
 
e)
 
2F
 
Irregular
Business Conduct, Tied Selling, the concept of
 
"taking advantage of" has been
 
added alongside the current prohibitions
 
against coercing
or imposing undue
 
pressure on customers,
 
f) 2K Cooperating
 
with Audits, Reviews,
 
and Investigations added
 
the obligation that
 
such
cooperation extends
 
to authorized external
 
reviews, as well
 
as internal reviews,
 
g) 3A Managing
 
Conflicts of Interest,
 
Introduction of
Conflicts to Interest, language added
 
to clarify to employees they may bring
 
potential conflicts directly to the attention
 
of Compliance,
not
 
just
 
when
 
directed
 
to
 
do
 
so
 
by
 
a
 
Manager.
 
In
 
addition
 
to
 
these
 
changes,
 
certain
 
other
 
editorial,
 
technical,
 
organizational,
administrative and non-substantive amendments were made to the Code.
No waivers from the provisions of the Code were granted in the fiscal year ended October 31, 2024 to the Registrant’s Group President
and
 
Chief
 
Executive
 
Officer,
 
Group
 
Head
 
and
 
Chief
 
Financial
 
Officer,
 
and
 
Senior
 
Vice
 
President,
 
Finance,
 
Controller
 
and
 
Chief
Accountant.
Principal Accountant Fees and Services
The
 
disclosure
 
regarding
 
Audit
 
Fees,
 
Audit-Related
 
Fees,
 
Tax
 
Fees
 
and
 
All
 
Other
 
Fees
 
provided
 
under
 
the
 
heading
Directors
 
and
Executive Officers - Pre-Approval Policies and Shareholders’ Auditor Service Fees
included in Exhibit 99.1:
 
Annual Information Form
dated December 4, 2024 is incorporated by reference herein.
Pre-Approval
 
Policy for Audit and Non-Audit Services
The disclosure provided under the
 
heading
Directors and Executive Officers - Pre-Approval Policies and Shareholders’ Auditor Service
Fees
included in Exhibit 99.1:
 
Annual Information Form dated December 4, 2024 is incorporated by reference
 
herein.
 
During the fiscal
 
year ended October
 
31, 2024, the waiver
 
of pre-approval provisions
 
set forth in the
 
applicable rules of the
 
SEC were
not utilized
 
for any services
 
related to Audit
 
-Related Fees,
 
Tax
 
Fees or All
 
Other Fees
 
and the Audit
 
Committee did
 
not approve
 
any
such fees subject to the waiver of pre-approval provisions.
 
Hours Expended on Audit Attributed to Persons Other than the Principal
 
Accountant’s
 
Employees
Not Applicable
Off-balance Sheet Arrangements
The disclosure provided under the
 
heading
Group Financial Condition
 
– Securitization and Off-Balance
 
Sheet Arrangements
included
in Exhibit 99.2:
 
Management’s Discussion and Analysis is incorporated
 
by reference herein.
Contractual and Other Obligations
The disclosure provided in
 
Table 58:
Remaining Contractual Maturity
 
included in Exhibit 99.2:
 
Management's Discussion and Analysis
is incorporated by reference herein.
 
Identification of the Audit Committee
The
 
disclosure
 
provided
 
under
 
the
 
heading
Directors
 
and
 
Executive
 
Officers
 
-
 
Audit
 
Committee
included
 
in
 
Exhibit
 
99.1:
 
Annual
Information Form dated December 4, 2024 identifying the Registrant’s
 
Audit Committee is incorporated by reference herein.
Mine Safety Disclosure
Not Applicable
Disclosure Regarding Foreign Jurisdictions that
 
Prevent Inspections.
Not Applicable
Recovery of Erroneously Awarded
 
Compensation.
 
Not Applicable
Undertaking
Registrant undertakes
 
to make
 
available, in
 
person or
 
by telephone,
 
representatives to
 
respond to
 
inquiries made
 
by the
 
Commission
staff, and to
 
furnish promptly, when requested
 
to do so
 
by the
 
Commission staff, information
 
relating to: the
 
securities registered pursuant
to
 
Form
 
40-F;
 
the
 
securities in
 
relation
 
to which
 
the obligation
 
to file
 
an annual
 
report
 
on Form
 
40-F
 
arises; or
 
transactions
 
in
 
said
securities.
Comparison of New York
 
Stock Exchange Corporate Governance Rules
A
 
comparison
 
of
 
NYSE
 
Corporate
 
Governance
 
Rules
 
required
 
to
 
be
 
followed
 
by
 
U.S.
 
Domestic
 
Issuers
 
under
 
the
 
NYSE's
 
listing
standards and the
 
Corporate Governance practices
 
of The Toronto-Dominion Bank (disclosure
 
required by section
 
303A.11 of the NYSE
Listed Company Manual) is available on the Corporate Governance
 
section of the Registrant’s website at www.td.com/governance
 
.
Signatures
Pursuant to the requirements
 
of the Exchange
 
Act, the Registrant certifies
 
that it meets all
 
of the requirements
 
for filing on Form
 
40-F
and has duly caused this Amendment No. 1 to the annual report to be signed on
 
its behalf by the undersigned, thereto duly authorized.
Registrant:
THE TORONTO-DOMINION BANK
By:
/s/ Kelvin Tran
Name:
Kelvin Tran
Title:
Group Head and Chief Financial Officer
Date:
December 9, 2024
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F/A
ANNUAL REPORT PURSUANT TO
SECTION 13(a) or 15(d) OF
THE SECURITIES EXCHANGE ACT OF
 
1934
________________________________
THE TORONTO-DOMINION BANK
________________________________
EXHIBITS
________________________________
INDEX TO EXHIBITS
No.
Exhibits
97
99.1
99.2
99.3
99.4
99.5
99.6
99.7
99.8
101
The following financial information from
 
The Toronto-Dominion Bank’s Annual Report on Form 40-F/A for the year ended
 
October 31, 2024 formatted in
Inline XBRL: (i) Consolidated Balance
 
Sheet as at October 31, 2024 and 2023; (ii)
 
Consolidated Statements of Income, Comprehensive
 
Income, Changes in
Equity, and Cash Flows for the years then ended October
 
31, 2024; and (iii) Notes to Consolidated
 
Financial Statements.
104
Cover Page Interactive Data File (formatted
 
as Inline XBRL and contained in Exhibit
 
101)
ex991p1i0
The Toronto
 
-Dominion Bank
ANNUAL INFORMATION
 
FORM
December 4, 2024
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Documents Incorporated by Reference
Portions
 
of
 
this
 
Annual
 
Information
 
Form
 
(“AIF”)
 
are
 
disclosed
 
in
 
the
 
annual
 
consolidated
 
financial
statements (the
 
“Annual
 
Financial
 
Statements”)
 
and management’s
 
discussion
 
and analysis
 
of the
 
Bank
(as
 
defined
 
below)
 
for
 
the
 
year
 
ended
 
October
 
31,
 
2024
 
(the
 
"2024
 
MD&A")
 
and
 
are
 
incorporated
 
by
reference into this AIF.
Page
Reference in
AIF
Page / Incorporated by
Reference from Annual
Financial Statements
Page / Incorporated by
Reference From 2024
MD&A
CORPORATE STRUCTURE
Name, Address and Incorporation
4
-
-
Intercorporate Relationships
4
-
-
GENERAL DEVELOPMENT OF THE BUSINESS
Three Year History
4
-
4-14, 21-39
DESCRIPTION OF THE BUSINESS
Review of Business, including Foreign Operations
6
11-15
4-11, 21-39
Investment in The Charles Schwab Corporation
6
64
10, 11, 21, 27-31, 60
Competition
-
-
67
Intangible Properties
-
25, 29, 65-66
-
Average Number of Employees
6
-
-
Lending
-
-
42-51, 76-81
Social and Environmental Policies
6
-
102-104
Risk Factors
6
-
61-104
DIVIDENDS
Dividends per Share for the Bank (October 31
st
 
year-end)
7
-
-
Dividend Restrictions
8
72
55
CAPITAL STRUCTURE
Common Shares
8
70-73
58
Preferred Shares
9
70-72
58
Limited Recourse Capital Notes
10
70-72
58
Perpetual Notes
10
Constraints
11
-
-
Ratings
12
-
93
MARKET FOR SECURITIES OF THE BANK
Market Listings
14
-
-
Trading Price and Volume
14
-
-
Prior Sales
15
-
-
ESCROWED SECURITIES AND SECURITIES SUBJECT TO
CONTRACTUAL RESTRICTIONS ON TRANSFER
15
-
-
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Board Committees of the Bank
16
-
-
Audit Committee
20
-
-
Additional Information Regarding the Audit Committee
 
and
Shareholders' Auditor
21
-
-
Executive Officers of the Bank
22
-
-
Shareholdings of Directors and Executive Officers
24
-
-
Additional Disclosure for Directors and Executive Officers
24
-
-
Pre-Approval Policies and Shareholders’ Auditor Service Fees
25
-
-
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
26
86-87
-
INTEREST OF MANAGEMENT AND OTHERS IN
MATERIAL TRANSACTIONS
26
89
-
TRANSFER AGENTS AND REGISTRARS
Transfer Agent
26
-
-
Co-transfer Agent and Registrar
27
-
-
INTERESTS OF EXPERTS
27
-
-
MATERIAL CONTRACTS
27
ADDITIONAL INFORMATION
28
-
-
APPENDIX "A" – Intercorporate Relationships
APPENDIX "B" – Description of Ratings
APPENDIX "C" – Audit Committee Charter
Unless otherwise specified, this AIF presents
 
information as at October 31, 2024.
 
Caution Regarding Forward-Looking Statements
 
From
 
time
 
to
 
time,
 
the
 
Bank
 
(as
 
defined
 
in
 
this
 
document)
 
makes
 
written
 
and/or
 
oral
 
forward-looking
statements,
 
including
 
in
 
this
 
document,
 
in
 
other
 
filings
 
with
 
Canadian
 
regulators
 
or
 
the
 
United
 
States
(U.S.)
 
Securities
 
and
 
Exchange
 
Commission
 
(SEC),
 
and
 
in
 
other
 
communications.
 
In
 
addition,
representatives
 
of
 
the
 
Bank
 
may
 
make
 
forward-looking
 
statements
 
orally
 
to
 
analysts,
 
investors,
 
the
media,
 
and
 
others.
 
All
 
such
 
statements
 
are
 
made
 
pursuant
 
to
 
the
 
“safe
 
harbour”
 
provisions
 
of,
 
and
 
are
intended
 
to
 
be
 
forward-looking
 
statements
 
under,
 
applicable
 
Canadian
 
and
 
U.S.
 
securities
 
legislation,
including the
 
U.S.
 
Private
 
Securities
 
Litigation
 
Reform
 
Act of
 
1995.
 
Forward-looking
 
statements
 
include,
but
 
are
 
not
 
limited
 
to,
 
statements
 
made
 
in
 
this
 
document,
 
the
 
Management’s
 
Discussion
 
and
 
Analysis
(“2024 MD&A”)
 
in the
 
Bank’s 2024
 
Annual Report
 
under the
 
heading “Economic
 
Summary and
 
Outlook”,
under the
 
headings “Key
 
Priorities for
 
2025” and
 
“Operating Environment
 
and Outlook”
 
for the
 
Canadian
Personal
 
and
 
Commercial
 
Banking,
 
U.S.
 
Retail,
 
Wealth
 
Management
 
and
 
Insurance,
 
and
 
Wholesale
Banking
 
segments,
 
and
 
under
 
the
 
heading
 
“2024
 
Accomplishments
 
and
 
Focus
 
for
 
2025”
 
for
 
the
Corporate segment,
 
and in
 
other statements
 
regarding
 
the Bank’s
 
objectives
 
and priorities
 
for 2025
 
and
beyond and
 
strategies to
 
achieve them,
 
the regulatory
 
environment in
 
which the
 
Bank operates,
 
and the
Bank’s anticipated financial performance.
 
Forward-looking
 
statements
 
are
 
typically
 
identified
 
by
 
words
 
such
 
as
 
“will”,
 
“would”,
 
“should”,
 
“believe”,
“expect”, “anticipate”,
 
“intend”, “estimate”,
 
“plan”, “goal”,
 
“target”, “may”,
 
and “could”.
 
By their very
 
nature,
these forward-looking statements
 
require the Bank to
 
make assumptions and are
 
subject to inherent risks
and
 
uncertainties,
 
general
 
and
 
specific.
 
Especially
 
in
 
light
 
of
 
the
 
uncertainty
 
related
 
to
 
the
 
physical,
financial, economic,
 
political, and
 
regulatory environments,
 
such risks
 
and uncertainties
 
– many
 
of which
are
 
beyond
 
the
 
Bank’s
 
control
 
and
 
the
 
effects
 
of
 
which
 
can
 
be
 
difficult
 
to
 
predict
 
–
 
may
 
cause
 
actual
results to differ materially from the expectations expressed
 
in the forward-looking statements.
 
Risk factors
 
that could
 
cause, individually
 
or in
 
the aggregate,
 
such differences
 
include: strategic,
 
credit,
market
 
(including
 
equity,
 
commodity,
 
foreign
 
exchange,
 
interest
 
rate,
 
and
 
credit
 
spreads),
 
operational
(including
 
technology,
 
cyber
 
security,
 
process,
 
systems,
 
data,
 
third-party,
 
fraud,
 
infrastructure,
 
insider
and
 
conduct),
 
model,
 
insurance,
 
liquidity,
 
capital
 
adequacy,
 
legal
 
and
 
regulatory
 
compliance
 
(including
financial crime), reputational, environmental and social, and
 
other risks.
 
Examples of
 
such risk
 
factors include
 
general business
 
and economic
 
conditions
 
in the
 
regions in
 
which
the Bank
 
operates (including
 
the economic,
 
financial,
 
and other
 
impacts of
 
pandemics); geopolitical
 
risk;
inflation,
 
interest
 
rates
 
and
 
recession
 
uncertainty;
 
regulatory
 
oversight
 
and
 
compliance
 
risk;
 
risks
associated
 
with
 
the
 
Bank's
 
ability
 
to
 
satisfy
 
the
 
terms
 
of
 
the
 
global
 
resolution
 
of
 
the
 
civil
 
and
 
criminal
investigations into
 
the Bank's
 
U.S. BSA/AML
 
program; the
 
impact of
 
the global
 
resolution of
 
the civil
 
and
criminal
 
investigations
 
into
 
the
 
Bank's
 
U.S.
 
BSA/AML
 
program
 
on
 
the
 
Bank's
 
businesses,
 
operations,
financial condition, and
 
reputation; the ability
 
of the Bank
 
to execute on
 
long-term strategies, shorter
 
-term
key
 
strategic
 
priorities,
 
including
 
the
 
successful
 
completion
 
of
 
acquisitions
 
and
 
dispositions
 
and
integration
 
of
 
acquisitions,
 
the
 
ability
 
of
 
the
 
Bank
 
to
 
achieve
 
its
 
financial
 
or
 
strategic
 
objectives
 
with
respect to its investments,
 
business retention plans, and
 
other strategic plans; the
 
risk of large declines
 
in
the
 
value
 
of
 
Bank's
 
Schwab
 
equity
 
investment
 
and
 
corresponding
 
impact
 
on
 
TD's
 
market
 
value;
technology and cyber security
 
risk (including cyber-attacks,
 
data security breaches or
 
technology failures)
on
 
the
 
Bank’s
 
technologies,
 
systems
 
and
 
networks,
 
those
 
of
 
the
 
Bank’s
 
customers
 
(including
 
their
 
own
devices), and third
 
parties providing services
 
to the Bank;
 
data risk; model
 
risk; fraud activity;
 
insider risk;
conduct
 
risk;
 
the
 
failure
 
of
 
third
 
parties
 
to
 
comply
 
with
 
their
 
obligations
 
to
 
the
 
Bank
 
or
 
its
 
affiliates,
including
 
relating
 
to
 
the
 
care
 
and
 
control
 
of
 
information,
 
and
 
other
 
risks
 
arising
 
from
 
the
 
Bank’s
 
use
 
of
third-parties;
 
the
 
impact
 
of
 
new
 
and
 
changes
 
to,
 
or
 
application
 
of,
 
current
 
laws,
 
rules
 
and
 
regulations,
including
 
without
 
limitation
 
consumer
 
protection
 
laws
 
and
 
regulations,
 
tax
 
laws,
 
capital
 
guidelines
 
and
liquidity
 
regulatory
 
guidance;
 
increased
 
competition
 
from
 
incumbents
 
and
 
new
 
entrants
 
(including
Fintechs
 
and
 
big
 
technology
 
competitors);
 
shifts
 
in
 
consumer
 
attitudes
 
and
 
disruptive
 
technology;
environmental and
 
social risk
 
(including climate-related
 
risk); exposure
 
related to
 
litigation and
 
regulatory
matters; ability
 
of the
 
Bank to
 
attract, develop,
 
and retain
 
key talent;
 
changes in
 
foreign exchange
 
rates,
interest rates, credit
 
spreads and equity
 
prices; downgrade,
 
suspension or withdrawal
 
of ratings assigned
by any rating
 
agency,
 
the value and
 
market price of
 
the Bank's common
 
shares and other
 
securities may
 
 
be impacted by market conditions and other
 
factors; the interconnectivity of Financial Institutions
 
including
existing
 
and
 
potential
 
international
 
debt
 
crises;
 
increased
 
funding
 
costs
 
and
 
market
 
volatility
 
due
 
to
market
 
illiquidity
 
and
 
competition
 
for
 
funding;
 
critical
 
accounting
 
estimates
 
and
 
changes
 
to
 
accounting
standards,
 
policies,
 
and
 
methods
 
used
 
by
 
the
 
Bank;
 
and
 
the
 
occurrence
 
of
 
natural
 
and
 
unnatural
catastrophic events and claims resulting from such events.
 
The
 
Bank
 
cautions
 
that
 
the
 
preceding
 
list
 
is
 
not
 
exhaustive
 
of
 
all
 
possible
 
risk
 
factors
 
and
 
other
 
factors
could
 
also
 
adversely
 
affect
 
the
 
Bank’s
 
results.
 
For
 
more
 
detailed
 
information,
 
please
 
refer
 
to
 
the
 
“Risk
Factors and Management”
 
section of the
 
2024 MD&A,
 
as may be
 
updated in subsequently
 
filed quarterly
reports
 
to
 
shareholders
 
and
 
news
 
releases
 
(as
 
applicable)
 
related
 
to
 
any
 
events
 
or
 
transactions
discussed under
 
the heading
 
“Significant Events”
 
or "Significant
 
and Subsequent
 
Events" in
 
the relevant
MD&A, which applicable releases may be found on www.td.com.
 
All
 
such
 
factors,
 
as
 
well
 
as
 
other
 
uncertainties
 
and
 
potential
 
events,
 
and
 
the
 
inherent
 
uncertainty
 
of
forward-looking
 
statements,
 
should
 
be
 
considered
 
carefully
 
when
 
making
 
decisions
 
with
 
respect
 
to
 
the
Bank. The
 
Bank cautions
 
readers not
 
to place
 
undue reliance
 
on the
 
Bank’s forward
 
-looking statements.
Material economic assumptions underlying the forward
 
-looking statements contained in this document
 
are
set out in the 2024 MD&A under the heading
 
“Economic Summary and Outlook”, under the
 
headings “Key
Priorities for
 
2025”
 
and
 
“Operating
 
Environment
 
and
 
Outlook”
 
and "Significant
 
Events"
 
for the
 
Canadian
Personal
 
and
 
Commercial
 
Banking,
 
U.S.
 
Retail,
 
Wealth
 
Management
 
and
 
Insurance,
 
and
 
Wholesale
Banking
 
segments,
 
and
 
under
 
the
 
heading
 
“2024
 
Accomplishments
 
and
 
Focus
 
for
 
2025”
 
for
 
the
Corporate segment, each as may be updated in subsequently
 
filed quarterly reports to shareholders.
 
Any forward-looking
 
statements
 
contained
 
in this
 
document represent
 
the views
 
of management
 
only as
of the date hereof 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
 
as
 
at
 
and
 
for
 
the
 
periods
 
ended
 
on
 
the
 
dates
 
presented,
 
and
 
may
 
not
 
be
 
appropriate
 
for
other purposes. The
 
Bank does not
 
undertake to update
 
any forward-looking
 
statements, whether
 
written
or
 
oral,
 
that
 
may
 
be
 
made
 
from
 
time
 
to
 
time
 
by
 
or
 
on
 
its
 
behalf,
 
except
 
as
 
required
 
under
 
applicable
securities legislation.
CORPORATE STRUCTURE
 
Name, Address and Incorporation
The Toronto
 
-Dominion
 
Bank
 
and its
 
subsidiaries
 
are collectively
 
known as
 
TD
 
Bank
 
Group ("TD"
 
or the
"Bank"). The
 
Toronto
 
-Dominion Bank,
 
a Schedule
 
1 chartered
 
bank subject
 
to the
 
provisions of
 
the
Bank
Act
 
(Canada) (the
 
“Bank Act”),
 
was formed
 
on February
 
1, 1955
 
through the
 
amalgamation
 
of The
 
Bank
of
 
Toronto
 
(chartered
 
in
 
1855)
 
and
 
The
 
Dominion
 
Bank
 
(chartered
 
in
 
1869).
 
The
 
Bank’s
 
head
 
office
 
is
located at Toronto
 
-Dominion Centre, P.O.
 
Box 1, King Street West
 
and Bay Street, Toronto,
 
Ontario, M5K
1A2.
Intercorporate Relationships
Information
 
about
 
the
 
intercorporate
 
relationships
 
among
 
the
 
Bank
 
and
 
its
 
principal
 
subsidiaries
 
is
provided in Appendix “A” to this AIF.
 
GENERAL DEVELOPMENT OF THE BUSINESS
Three Year History
 
On
 
October
 
6,
 
2020,
 
The
 
Charles
 
Schwab
 
Corporation
 
("Schwab")
 
completed
 
its
 
acquisition
 
of
 
TD
Ameritrade
 
Holding
 
Corporation
 
("TD
 
Ameritrade"),
 
of
 
which
 
the
 
Bank
 
was
 
a
 
major
 
shareholder
 
(the
"Schwab
 
transaction").
 
Upon
 
closing,
 
the
 
Bank
 
exchanged
 
its
 
approximate
 
43%
 
ownership
 
in
 
TD
Ameritrade
 
for
 
an
 
approximate
 
13.5%
 
stake
 
in
 
Schwab,
 
consisting
 
of
 
9.9%
 
voting
 
common
 
shares
 
and
the
 
remainder
 
in
 
non-voting
 
common
 
shares,
 
convertible
 
into
 
voting
 
common
 
shares
 
upon
 
transfer
 
to
 
a
third party.
 
On August
 
1, 2022,
 
the Bank
 
sold 28.4
 
million non-voting
 
common shares
 
of Schwab,
 
which
reduced the Bank’s
 
ownership interest in Schwab
 
to approximately 12.0%.
 
On August 21, 2024,
 
the Bank
sold
 
40,500,000
 
voting
 
common
 
shares
 
of
 
Schwab,
 
which
 
reduced
 
the
 
Bank's
 
ownership
 
interest
 
in
Schwab to approximately 10.1%.
 
In
 
addition,
 
on
 
November
 
25,
 
2019,
 
the
 
Bank
 
and
 
Schwab
 
entered
 
into
 
an
 
insured
 
deposit
 
account
agreement
 
(the
 
"2019
 
Schwab
 
IDA
 
Agreement"),
 
which
 
became
 
effective
 
upon
 
closing
 
of
 
the
 
Schwab
transaction
 
and
 
had
 
an
 
initial
 
expiration
 
date
 
of
 
July
 
1,
 
2031.
 
On
 
May
 
4,
 
2023,
 
the
 
Bank
 
and
 
Schwab
entered
 
into
 
an
 
amended
 
insured
 
deposit
 
account
 
agreement,
 
which
 
replaces
 
the
 
2019
 
Schwab
 
IDA
Agreement and extends the initial expiration date by
 
three years to July 1, 2034.
On
 
February
 
28,
 
2022,
 
the
 
Bank
 
and
 
First
 
Horizon
 
Corporation
 
("First
 
Horizon")
 
announced
 
a
 
definitive
agreement
 
(the
 
"Merger
 
Agreement")
 
for
 
the
 
Bank
 
to
 
acquire
 
First
 
Horizon.
 
On
 
May
 
4,
 
2023,
 
the
 
Bank
and
 
First
 
Horizon
 
announced
 
their
 
mutual
 
decision
 
to
 
terminate
 
the
 
Merger
 
Agreement
 
and
 
the
 
Bank
made a $306 million (US$225 million) cash payment to First
 
Horizon in connection with such termination.
 
On March 1, 2023, the
 
Bank completed its acquisition
 
of Cowen Inc. ("Cowen"),
 
advancing the Wholesale
Banking
 
segment’s
 
long-term
 
growth
 
strategy
 
in
 
the
 
U.S.
 
and
 
adding
 
complementary
 
products
 
and
services to the Bank’s existing businesses.
 
On October
 
10,
 
2024, following
 
active
 
cooperation
 
and
 
engagement
 
with
 
authorities
 
and
 
regulators,
 
the
Bank
 
reached
 
a
 
resolution
 
with
 
respect
 
to
 
previously
 
disclosed
 
investigations
 
related
 
to
 
its
 
U.S.
 
Bank
Secrecy Act ("BSA")
 
and Anti-Money
 
Laundering ("AML")
 
compliance programs.
 
The Bank and
 
certain of
its U.S.
 
subsidiaries
 
consented to
 
orders with
 
the Office
 
of the
 
Comptroller of
 
the Currency
 
("OCC"), the
Federal
 
Reserve
 
Board
 
("FRB"),
 
and
 
the
 
Financial
 
Crimes
 
Enforcement
 
Network
 
(FinCEN)
 
and
 
entered
into plea
 
agreements
 
with
 
the Department
 
of
 
Justice
 
("DOJ"),
 
Criminal
 
Division,
 
Money
 
Laundering
 
and
Asset
 
Recovery
 
Section
 
and
 
the
 
United
 
States
 
Attorney’s
 
Office
 
for
 
the
 
District
 
of
 
New
 
Jersey
(collectively,
 
the
 
"Global
 
Resolution").
 
Details
 
of
 
the
 
Global
 
Resolution
 
include:
 
(i)
 
a
 
total
 
payment
 
of
US$3.088
 
billion
 
(C$4.233
 
billion),
 
all
 
which
 
was
 
provisioned
 
during
 
the
 
2024
 
fiscal
 
year;
 
(ii)
 
TD
 
Bank,
N.A. ("TDBNA")
 
pleading guilty
 
to one
 
count of
 
conspiring to
 
fail to
 
maintain an
 
adequate AML
 
program,
fail
 
to
 
file
 
accurate
 
currency
 
transaction
 
reports
 
("CTRs")
 
and
 
launder
 
money
 
and
 
TD
 
Bank
 
US
 
Holding
Company ("TDBUSH")
 
pleading guilty
 
to two counts
 
of failing to
 
maintain an adequate
 
AML program and
failing to
 
file accurate
 
CTRs;
 
(iii) requirements
 
to remediate
 
the Bank’s
 
U.S. BSA/AML
 
program,
 
broadly
aligned
 
to
 
its
 
existing
 
remediation
 
program,
 
which
 
requirements
 
the
 
Bank
 
has
 
begun
 
to
 
address;
 
(iv)
 
a
requirement to prioritize the funding and staffing
 
of the remediation, which includes Board
 
certifications for
dividend distributions
 
from certain
 
of the
 
Bank's U.S.
 
subsidiaries to
 
the Bank;
 
(v) formal
 
oversight of
 
the
U.S. BSA/AML remediation
 
through an independent compliance
 
monitorship; (vi) a
 
prohibition against the
average combined
 
total assets
 
of TD’s
 
two U.S. banking
 
subsidiaries (TD
 
Bank, N.A.
 
and TD
 
Bank USA,
N.A.) (collectively,
 
the “U.S.
 
Bank”) exceeding
 
US$434 billion
 
(representing the
 
combined total
 
assets of
the
 
U.S.
 
Bank
 
as
 
at
 
September
 
30,
 
2024),
 
and
 
if
 
the
 
U.S.
 
Bank
 
does
 
not
 
achieve
 
compliance
 
with
 
all
actionable articles
 
in the
 
OCC consent
 
orders (and
 
for each
 
successive year
 
that the
 
U.S. Bank
 
remains
non-compliant), the
 
OCC may
 
require the
 
U.S. Bank
 
to further
 
reduce total
 
consolidated assets
 
by up
 
to
7%;
 
(vii)
 
the
 
U.S.
 
Bank
 
being
 
subject
 
to
 
OCC
 
supervisory
 
approval
 
processes
 
for
 
any
 
additions
 
of
 
new
bank products,
 
services, markets,
 
and stores
 
prior to
 
the OCC's
 
acceptance of
 
the U.S.
 
Bank's improved
AML policies
 
and
 
procedures,
 
to
 
ensure
 
the
 
AML
 
risk
 
of
 
new
 
initiatives
 
is
 
appropriately
 
considered
 
and
mitigated;
 
(viii)
 
requirements
 
for
 
the
 
Bank
 
and
 
TD
 
Group
 
U.S.
 
Holdings,
 
LLC
 
to
 
retain
 
a
 
third
 
party
 
to
assess
 
the effectiveness
 
of
 
the corporate
 
governance
 
and U.S.
 
management
 
structure
 
and
 
composition
to
 
adequately
 
oversee
 
U.S.
 
operations;
 
and
 
(ix)
 
requirements
 
to
 
comply
 
with
 
the
 
terms
 
of
 
the
 
plea
agreements with the DOJ
 
during a five-year term
 
of probation (which could
 
be extended as a
 
result of the
Bank failing to complete the
 
compliance undertakings, failing to
 
cooperate or to report alleged
 
misconduct
as
 
required,
 
or
 
committing
 
additional
 
crimes);
 
(x)
 
an
 
ongoing
 
obligation
 
to
 
cooperate
 
with
 
DOJ
investigations; and
 
(xi) an
 
ongoing obligation
 
to report
 
evidence or
 
allegations of
 
violations by
 
the Bank,
its
 
affiliates,
 
or
 
their
 
employees
 
that
 
may
 
be
 
a
 
violation
 
of
 
U.S.
 
federal
 
law.
 
The
 
Bank
 
is
 
focused
 
on
remediating
 
its
 
U.S.
 
BSA/AML
 
program
 
to
 
meet
 
the
 
requirements
 
of
 
the
 
Global
 
Resolution.
 
Additional
information
 
about
 
the
 
Global
 
Resolution
 
can
 
be
 
found
 
under
 
"Significant
 
Events
 
–
 
Global
 
Resolution
 
of
the Investigations
 
into the
 
Bank's U.S.
 
BSA/AML Program"
 
on pages
 
4 to
 
9 of
 
the 2024
 
MD&A, which
 
is
incorporated by reference.
 
DESCRIPTION OF THE BUSINESS
The Toronto
 
-Dominion
 
Bank
 
and its
 
subsidiaries
 
are collectively
 
known as
 
TD
 
Bank
 
Group
 
("TD"
 
or the
"Bank"). TD
 
is the
 
sixth largest
 
bank in
 
North America
 
by assets
 
and serves
 
over 27.9
 
million customers
in four key businesses
 
operating in a number
 
of locations in
 
financial centres around
 
the globe: Canadian
Personal
 
and
 
Commercial
 
Banking,
 
including
 
TD
 
Canada
 
Trust
 
and
 
TD
 
Auto
 
Finance
 
Canada;
 
U.S.
Retail, including
 
TD Bank,
 
America's Most
 
Convenient Bank®,
 
TD Auto
 
Finance U.S.,
 
TD Wealth
 
(U.S.),
and
 
an
 
investment
 
in
 
The
 
Charles
 
Schwab
 
Corporation;
 
Wealth
 
Management
 
and
 
Insurance,
 
including
TD
 
Wealth
 
(Canada),
 
TD
 
Direct
 
Investing,
 
and
 
TD
 
Insurance;
 
and
 
Wholesale
 
Banking,
 
including
 
TD
Securities and
 
TD Cowen.
 
TD also
 
ranks
 
among the
 
world's leading
 
online financial
 
services
 
firms, with
more than
 
17 million
 
active online
 
and mobile
 
customers. TD
 
had $2.06
 
trillion in
 
assets on
 
October 31,
2024.
 
The
 
Toronto
 
-Dominion
 
Bank
 
trades
 
under
 
the
 
symbol
 
"TD"
 
on
 
the
 
Toronto
 
and
 
New
 
York
 
Stock
Exchanges.
 
Descriptions of
 
TD’s
 
significant business
 
segments and
 
related information
 
are provided
 
on pages
 
14 to
15 and 21 to 39 of the 2024 MD&A, which are incorporated
 
by reference.
Investment in The Charles Schwab Corporation
See
 
"General
 
Development
 
of
 
the
 
Business"
 
above
 
for
 
additional
 
information
 
regarding
 
the
 
Bank's
ownership in Schwab.
 
T
he
 
Bank
 
owned
an
 
approximate
 
10.1%
 
stake
 
in
 
Schwab
 
as
 
at
 
October
 
31,
 
2024
 
consisting
 
of
approximately
 
7.5%
 
in
 
voting
 
common
 
shares
 
and
 
the
 
remainder
 
in
 
non-voting
 
common
 
shares
 
of
Schwab.
Schwab is a
 
leading provider
 
of financial services.
 
Through its subsidiaries,
 
Schwab provides
 
a full range
of
 
wealth
 
management,
 
securities
 
brokerage,
 
banking,
 
asset
 
management,
 
custody,
 
and
 
financial
advisory services to
 
individual investors and
 
independent investment
 
advisors. Schwab is
 
a U.S. publicly-
traded company and its common stock is listed on The New
 
York Stock
 
Exchange.
The
 
Bank
 
and
 
Schwab
 
are
 
party
 
to
 
a
 
stockholder
 
agreement
 
(the
 
"Stockholder
 
Agreement"),
 
which
became effective
 
upon closing
 
of the
 
Schwab transaction.
 
Under the
 
Stockholder
 
Agreement: (i)
 
subject
to meeting
 
certain
 
conditions,
 
the
 
Bank has
 
two seats
 
on Schwab's
 
Board of
 
Directors,
 
which seats
 
are
currently held
 
by Mr.
 
Bharat Masrani
 
and Mr.
 
Brian Levitt,
 
(ii) the
 
TD Bank
 
Group is
 
not permitted
 
to own
more
 
than
 
9.9%
 
voting
 
common
 
shares
 
of
 
Schwab,
 
and
 
(iii)
 
the
 
Bank
 
is
 
subject
 
to
 
customary
 
standstill
restrictions and, subject to certain exceptions, transfer
 
restrictions.
Average Number of Employees
TD had an average of 101,759 full-time equivalent employees
 
for fiscal 2024.
 
Social and Environmental Policies
 
The
 
Bank
 
publishes
 
a
 
Sustainability
 
Report
 
outlining
 
the
 
Bank's
 
social
 
and
 
environmental
 
policies
 
and
strategies.
 
This
 
report
 
and
 
other
 
related
 
information
 
is
 
available
 
on
 
the
 
Bank's
 
website.
 
Additional
information
 
about
 
the
 
Bank's
 
social
 
and
 
environmental
 
policies
 
can
 
be
 
found
 
under
 
"Environmental
 
and
Social Risk” on pages 102 to 104 of the 2024 MD&A, which
 
is incorporated by reference.
 
Risk Factors
The
 
Bank
 
considers
 
it
 
critical
 
to
 
regularly
 
assess
 
its
 
operating
 
environment
 
and
 
highlight
 
top
 
and
emerging
 
risks,
 
which
 
are
 
risks
 
with
 
a
 
potential
 
to
 
have
 
a
 
material
 
effect
 
on
 
the
 
Bank
 
and
 
where
 
the
attention
 
of
 
senior
 
leaders
 
is
 
focused
 
due
 
to
 
the
 
potential
 
magnitude
 
or
 
immediacy
 
of
 
their
 
impact.
 
An
explanation
 
of
 
the
 
types
 
of
 
risks
 
facing
 
the
 
Bank
 
and
 
its
 
businesses
 
and
 
the
 
ways
 
in
 
which
 
the
 
Bank
manages them
 
can be
 
found under
 
the heading
 
“Risk Factors
 
and Management”
 
on pages
 
61 to
 
104 of
the 2024 MD&A, which is incorporated by reference.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIVIDENDS
 
Dividends per Share for the Bank (October 31
st
 
year-end)
1
 
Type of Shares
2024
2023
2022
Common Shares
4.08
3.84
$3.56
Class A First Preferred Shares (Non-Viability
 
Contingent Capital)
1
Series 1
2
 
$1.24
 
$0.92
$0.92
Series 3
3
-
 
$0.92
$0.92
Series 5
$0.97
$0.97
$0.97
Series 7
$0.80
 
$0.80
$0.80
Series 9
$0.81
 
$0.81
$0.81
Series 16
$1.58
 
$1.58
$1.13
 
Series 18
4
 
 
$1.44
$1.31
$1.18
Series 20
5
 
-
 
$1.19
$1.19
Series 22
6
 
 
-
$1.30
$1.30
Series 24
7
 
-
 
$1.28
$1.28
Series 26
8
-
-
-
Series 27
9
 
$57.50
$57.50
$32.85
Series 28
9
$72.32
 
$72.32
$19.42
Series 29
10
-
-
-
Series 30
11
-
-
-
Series 31
12
 
-
-
-
Notes:
1
 
Except as noted, dividends are payable quarterly on last day of January, April, July and October in each year, in an amount
per
 
share
 
per
 
annum
 
determined
 
by
 
multiplying
 
the
 
Annual
 
Fixed
 
Dividend
 
Rate
 
(as
 
defined
 
within
 
each
 
Prospectus
Supplement) applicable to such Subsequent Fixed
 
Rate Period by $25.00.
2
 
On October
 
16, 2024,
 
the Bank
 
announced that
 
none of
 
its 20
 
million Non-Cumulative
 
5-Year
 
Rate Reset
 
Class A
 
First
Preferred Shares, Series 1 (Non-Viability Contingent Capital
 
(NVCC)) (the "Series 1 Shares") will be
 
converted on October
31, 2024
 
into Non-Cumulative
 
Floating Rate
 
Class A
 
First Preferred
 
Shares, Series
 
2 (NVCC)
 
(the "Series
 
2 Shares")
 
of
TD. As had been previously announced on October 1, 2024, the dividend
 
rate for the Series 1 Shares for the 5-year period
from
 
and including
 
October 31,
 
2024 to
 
but excluding
 
October 31,
 
2029, if
 
declared, is
 
payable at
 
a
 
per
 
annum rate
 
of
4.97%.
3
 
On July
 
31, 2024,
 
the Bank
 
redeemed all
 
of its
 
20,000,000 outstanding
 
Non-Cumulative Class
 
A First
 
Preferred Shares,
Series 3 (NVCC).
4
 
On April
 
18, 2023,
 
the Bank
 
announced that
 
none of
 
its 14
 
million Non-Cumulative
 
5-Year
 
Rate Reset
 
Preferred Shares
NVCC, Series 18 (“Series
 
18 Shares”) would be
 
converted on April 30,
 
2023 into Non-Cumulative Floating
 
Rate Preferred
Shares
 
NVCC,
 
Series
 
19.
 
As
 
had
 
been
 
previously
 
announced
 
on
 
March
 
31,
 
2023,
 
the
 
dividend
 
rate
 
for
 
the
 
Series
 
18
Shares for the
 
5-year period from
 
and including April
 
30, 2023 to
 
but excluding April
 
30, 2028, if
 
declared, is payable
 
at a
per annum rate of 5.747%.
5
 
On
 
October
 
31,
 
2023,
 
the
 
Bank
 
redeemed
 
all
 
of
 
its
 
16,000,000
 
outstanding
 
Non-Cumulative
 
Class
 
A
 
First
 
Preferred
Shares, Series 20 (NVCC).
6
 
On April
 
30, 2024,
 
the Bank
 
redeemed all
 
of its
 
14,000,000 outstanding Non-Cumulative
 
Class A
 
First Preferred
 
Shares,
Series 22 (NVCC).
 
7
 
On July
 
31, 2024,
 
the Bank
 
redeemed all
 
of its
 
18,000,000 outstanding
 
Non-Cumulative Class
 
A First
 
Preferred Shares,
Series 24 (NVCC)
 
8
 
The
 
Class
 
A
 
First
 
Preferred
 
Shares,
 
Series
 
26
 
(NVCC)
 
(the
 
"Series
 
26
 
Shares")
 
were
 
issued
 
on
 
July
 
29,
 
2021
 
to
 
the
Limited Recourse Trust,
 
in connection with
 
the issuance of
 
limited recourse capital
 
notes. Until revoked, the
 
trustee of the
Limited Recourse Trust has
 
waived its right to receive any
 
and all dividends on the
 
Series 26 Shares.
 
Until such waiver is
revoked by
 
the trustee
 
of the
 
Limited Recourse Trust,
 
no dividends are
 
expected to
 
be declared or
 
paid on the
 
Series 26
Shares.
 
9
 
Dividends
 
are
 
payable
 
semi-annually
 
on
 
April
 
30
 
and
 
October
 
31
 
in
 
each
 
year,
 
in
 
an
 
amount
 
per
 
share
 
per
 
annum
determined by
 
multiplying the
 
Annual Fixed
 
Dividend Rate
 
(as defined
 
within the
 
Prospectus Supplement)
 
applicable to
such Subsequent Fixed Rate Period by $1,000.00.
10
 
The Class A
 
First Preferred Shares, Series
 
29 (NVCC) (the
 
"Series 29 Shares")
 
were issued on
 
September 14, 2022
 
to a
Limited Recourse Trust,
 
in connection with
 
the issuance of
 
limited recourse capital
 
notes. Until revoked, the
 
trustee of the
Limited Recourse Trust
 
has waived its
 
right to receive any
 
and all dividends on
 
the Series 29
 
Shares. Until such waiver
 
is
revoked by
 
the trustee
 
of the
 
Limited Recourse Trust,
 
no dividends are
 
expected to
 
be declared or
 
paid on the
 
Series 29
Shares.
 
11
 
The Class
 
A First
 
Preferred Shares,
 
Series
 
30 (NVCC)
 
(the "Series
 
30 Shares")
 
were issued
 
on October
 
17, 2022
 
to a
Limited Recourse Trust,
 
in connection with
 
the issuance of
 
limited recourse capital
 
notes. Until revoked, the
 
trustee of the
Limited Recourse Trust has
 
waived its right to receive any
 
and all dividends on the
 
Series 30 Shares.
 
Until such waiver is
revoked by
 
the trustee
 
of the
 
Limited Recourse Trust,
 
no dividends are
 
expected to
 
be declared or
 
paid on the
 
Series 30
Shares.
 
12
 
The Class A First Preferred Shares, Series 31 (NVCC) (the "Series 31 Shares") were issued on June 28, 2024 to a
 
Limited
Recourse Trust (defined below), in connection with the issuance of limited recourse capital notes. Until revoked, the trustee
of the
 
Limited Recourse
 
Trust has
 
waived its
 
right to
 
receive any
 
and all
 
dividends on
 
the Series
 
31 Shares.
 
Until such
waiver is
 
revoked by
 
the trustee
 
of the
 
Limited Recourse
 
Trust, no
 
dividends are
 
expected to
 
be declared
 
or paid
 
on the
Series 31 Shares.
Dividend Restrictions
 
The
 
Bank
 
is
 
prohibited
 
by
 
the
 
Bank
 
Act
 
from
 
declaring
 
dividends
 
on
 
its
 
preferred
 
or
 
common
 
shares
 
if
there are reasonable
 
grounds for
 
believing that the
 
Bank is,
 
or the payment
 
would cause
 
the Bank to
 
be,
in contravention of
 
the capital adequacy
 
and liquidity regulations
 
of the Bank
 
Act or directions
 
of OSFI. In
addition,
 
the
 
ability
 
to
 
pay
 
dividends
 
on
 
common
 
shares
 
without
 
the
 
approval
 
of
 
the
 
holders
 
of
 
the
outstanding
 
preferred
 
shares
 
is
 
restricted
 
unless
 
all
 
dividends
 
on
 
the
 
preferred
 
shares
 
have
 
been
declared and paid or set apart for payment.
CAPITAL STRUCTURE
 
The
 
following
 
summarizes
 
certain
 
provisions
 
of
 
the
 
Bank's
 
common
 
shares,
 
preferred
 
shares
 
and
 
other
capital
 
instruments
 
qualifying
 
as
 
Additional
 
Tier
 
1
 
Capital
 
("AT1")
 
under
 
OSFI's
 
Capital
 
Adequacy
Requirements
 
guideline,
 
including
 
limited
 
recourse
 
capital
 
notes
 
and
 
perpetual
 
notes.
 
This
 
summary
 
is
qualified in
 
its entirety
 
by the
 
Bank’s by-laws
 
and the
 
actual terms
 
and conditions
 
of such
 
securities. For
more
 
information
 
on
 
the
 
Bank's
 
capital
 
structure,
 
see
 
pages
 
52
 
to
 
59
 
of
 
the
 
2024
 
MD&A
 
and
 
Notes
 
19
and
 
20
 
of
 
the
 
2024
 
Annual
 
Financial
 
Statements.
 
The
 
Bank
 
incorporates
 
those
 
pages
 
and
 
Notes
 
by
reference.
In
 
accordance
 
with
 
capital
 
adequacy
 
requirements
 
adopted
 
by
 
the
 
Office
 
of
 
the
 
Superintendent
 
of
Financial Institutions (Canada) ("OSFI"),
 
in order to qualify as
 
Tier 1 or Tier
 
2 Capital under Basel III,
 
non-
common
 
capital
 
instruments
 
issued
 
by
 
the
 
Bank
 
after
 
January
 
1,
 
2013,
 
including
 
Preferred
 
Shares
 
(as
defined
 
below)
 
and
 
Perpetual
 
Notes
 
(defined
 
below),
 
must
 
include
 
a
 
non-viability
 
contingent
 
capital
feature (the "NVCC
 
Provisions"), under which
 
they could be
 
converted into a
 
variable number of
 
common
shares of the Bank upon
 
the occurrence of a
 
Trigger Event.
 
A Trigger Event
 
is currently defined in
 
OSFI's
Capital
 
Adequacy
 
Requirements
 
Guideline
 
as
 
an
 
event
 
where
 
OSFI
 
determines
 
that
 
the
 
Bank
 
is,
 
or
 
is
about
 
to
 
become,
 
non-viable
 
and
 
that
 
after
 
conversion
 
of
 
all
 
non-common
 
capital
 
instruments
 
and
consideration
 
of
 
any
 
other
 
relevant
 
factors
 
or
 
circumstances,
 
the
 
viability
 
of
 
the
 
Bank
 
is
 
expected
 
to
 
be
restored, or
 
if the
 
Bank has
 
accepted or
 
agreed to
 
accept a
 
capital injection
 
or equivalent
 
support from
 
a
federal or provincial government of Canada without
 
which the Bank would have been determined
 
by OSFI
to be non-viable.
Common Shares
The
 
authorized
 
common
 
share
 
capital
 
of
 
the
 
Bank
 
consists
 
of
 
an
 
unlimited
 
number
 
of
 
common
 
shares
without nominal or par value.
Voting Rights
Subject
 
to
 
the
 
restrictions
 
set
 
out
 
under
 
“Constraints”
 
below,
 
holders
 
of
 
common
 
shares
 
are
 
entitled
 
to
vote at all meetings
 
of the shareholders
 
of the Bank, except
 
meetings at which only
 
holders of a specified
class or series of shares are entitled to vote.
Dividend Rights
The
 
holders
 
of
 
common
 
shares
 
are
 
entitled
 
to
 
receive
 
dividends
 
as
 
and
 
when
 
declared
 
by
 
the
 
Board,
subject to the preference of the holders of the Preferred Shares
 
of the Bank.
Rights on Liquidation
After payment to the
 
holders of the Preferred
 
Shares of the Bank
 
of the amount or
 
amounts to which
 
they
may be entitled,
 
and after payment
 
of all outstanding
 
debts, the holders
 
of common shares
 
are entitled to
receive the remaining property of the Bank upon the liquidation,
 
dissolution or winding-up thereof.
Preferred Shares
The
 
Bank
 
is
 
authorized
 
to
 
issue
 
an
 
unlimited
 
number
 
of
 
Class
 
A
 
First
 
Preferred
 
Shares
 
(the
 
"Preferred
Shares"), without nominal or par value.
The
 
Preferred
 
Shares
 
of
 
the
 
Bank
 
may
 
be
 
issued
 
from
 
time
 
to
 
time,
 
in
 
one
 
or
 
more
 
series,
 
with
 
such
rights, privileges, restrictions and conditions as the Board
 
may determine.
Priority
The Preferred
 
Shares of each
 
series rank on
 
a parity
 
with every other
 
series of
 
Preferred Shares,
 
and all
Preferred Shares
 
rank prior
 
to the
 
common shares
 
and to
 
any other
 
shares of
 
the Bank
 
ranking junior
 
to
the Preferred
 
Shares with
 
respect to
 
the payment
 
of dividends
 
and the
 
distribution of
 
assets in
 
the event
of the liquidation, dissolution or winding-up
 
of the Bank, provided that a Trigger
 
Event has not occurred as
contemplated
 
under
 
the
 
NVCC
 
Provisions
 
applicable
 
to
 
a
 
series
 
of
 
Preferred
 
Shares.
 
In
 
the
 
event
 
of
 
a
Trigger
 
Event
 
occurring
 
under
 
the
 
NVCC
 
Provisions,
 
the
 
existing
 
priority
 
of
 
the
 
Preferred
 
Shares
 
of
 
the
affected series
 
will not
 
be relevant
 
as all
 
Preferred Shares
 
of such
 
series will
 
be converted
 
into common
shares of the Bank and, upon conversion, will rank on a parity
 
with all other common shares of the Bank.
Voting Rights
There are no voting
 
rights attached to
 
the Preferred Shares
 
except to the extent
 
provided in any series
 
or
by
 
the
Bank
 
Act
.
 
The
 
Bank
 
may
 
not,
 
without
 
the
 
prior
 
approval
 
of
 
the
 
holders
 
of
 
the
 
Preferred
 
Shares,
create
 
or
 
issue
 
(i)
 
any
 
shares
 
ranking
 
in
 
priority
 
to
 
or
 
on
 
a
 
parity
 
with
 
the
 
Preferred
 
Shares,
 
or
 
(ii)
 
any
additional
 
series
 
of
 
Preferred
 
Shares,
 
unless
 
at
 
the
 
date
 
of
 
such
 
creation
 
or
 
issuance
 
all
 
cumulative
dividends
 
and
 
any
 
declared
 
and
 
unpaid
 
non-cumulative
 
dividends
 
have
 
been
 
paid
 
or
 
set
 
apart
 
for
payment in respect of each series of Preferred Shares
 
then issued and outstanding.
Approval of
 
amendments to
 
the provisions
 
of the
 
Preferred Shares
 
as a
 
class may
 
be given
 
in writing
 
by
the holders
 
of all
 
the outstanding
 
Preferred Shares
 
or by
 
a resolution
 
carried by
 
an affirmative
 
vote of
 
at
least two-thirds
 
of the
 
votes cast
 
at a
 
meeting at
 
which the
 
holders of
 
a majority
 
of the
 
then outstanding
Preferred Shares
 
are present
 
or represented
 
by proxy
 
or,
 
if no
 
quorum is
 
present at
 
such meeting,
 
at an
adjourned
 
meeting
 
at
 
which
 
the
 
shareholders
 
then
 
present
 
or
 
represented
 
by
 
proxy
 
may
 
transact
 
the
business for which the meeting was originally called.
Rights on Liquidation
In the event of the liquidation, dissoluti
 
on or winding-up of the Bank, provided
 
that a Trigger Event
 
has not
occurred as
 
contemplated under
 
the NVCC
 
Provisions applicable
 
to a
 
series of
 
Preferred Shares,
 
before
any amounts are
 
paid to or
 
any assets distributed
 
among the holders
 
of the common
 
shares or
 
shares of
any other
 
class of
 
the Bank
 
ranking junior
 
to the
 
Preferred
 
Shares, the
 
holder of
 
a Preferred
 
Share of
 
a
series will
 
be entitled
 
to receive,
 
to the
 
extent provided
 
for with
 
respect to
 
such
 
Preferred Shares
 
by the
conditions attaching to such series:
 
(i) an amount equal to
 
the amount paid up thereon;
 
(ii) such premium,
if any,
 
as has
 
been provided
 
for with
 
respect
 
to the
 
Preferred
 
Shares of
 
such
 
series;
 
and
 
(iii)
 
all unpaid
cumulative
 
dividends,
 
if
 
any,
 
on
 
such
 
Preferred
 
Shares
 
and,
 
in
 
the
 
case
 
of
 
non-cumulative
 
Preferred
Shares, all
 
declared and
 
unpaid non-cumulative
 
dividends. After
 
payment to
 
the holders
 
of the
 
Preferred
Shares of
 
the amounts
 
so payable
 
to them,
 
they will
 
not be
 
entitled to
 
share in
 
any further
 
distribution of
the property or assets of the Bank.
Limited Recourse Capital Notes
The
 
Bank
 
has
 
issued
 
limited
 
recourse
 
capital
 
notes
 
(“LRCNs”)
 
with
 
recourse
 
limited
 
to
 
assets
 
held
 
in
 
a
trust
 
consolidated
 
by
 
the
 
Bank
 
(the
 
“Limited
 
Recourse
 
Trust”).
 
The
 
Limited
 
Recourse
 
Trust’s
 
assets
consist of Class A First Preferred
 
Shares of the Bank, each series
 
of which is issued concurrently
 
with the
applicable series
 
of LRCNs (the
 
“LRCN Preferred
 
Shares”). In the
 
event of (i)
 
non-payment of
 
interest on
LRCNs
 
following
 
any
 
interest
 
payment
 
date,
 
(ii)
 
non-payment
 
of
 
the
 
redemption
 
price
 
in
 
case
 
of
 
a
redemption of
 
the LRCNs,
 
(iii) non-payment
 
of principal
 
plus accrued
 
and unpaid
 
interest at
 
the maturity
of the
 
LRCNs, (iv)
 
an event
 
of default
 
on the
 
LRCNs, or
 
(v) a
 
Trigger Event,
 
the recourse
 
of each
 
LRCN
holder will be limited to that holder’s pro rata share of the Limited Recourse
 
Trust’s assets.
Voting Rights
The holders
 
of LRCNs
 
are not
 
entitled to
 
any voting
 
rights, nor
 
are they
 
entitled to
 
receive notice
 
of or
 
to
attend any meeting of the shareholders of the Bank.
Rights on Liquidation
The LRCNs,
 
by virtue
 
of the
 
recourse to
 
the LRCN
 
Preferred Shares,
 
include standard
 
NVCC Provisions
necessary for
 
them to
 
qualify as
 
Additional Tier
 
1 Capital
 
under OSFI’s
 
Capital
 
Adequacy Requirements
guideline. NVCC
 
Provisions
 
require the
 
conversion
 
of the
 
instrument
 
into a
 
variable number
 
of common
shares upon the occurrence
 
of a Trigger
 
Event. In such an event,
 
each LRCN Preferred Share
 
held in the
Limited
 
Recourse
 
Trust
 
will
 
automatically
 
and
 
immediately
 
be
 
converted
 
into
 
a
 
variable
 
number
 
of
common
 
shares
 
which
 
will
 
be
 
delivered
 
to
 
LRCN
 
holders
 
in
 
satisfaction
 
of
 
the
 
principal
 
amount
 
of,
 
and
accrued
 
and
 
unpaid
 
interest
 
on,
 
the
 
LRCNs.
 
The
 
number
 
of
 
common
 
shares
 
issued
 
will
 
be
 
determined
based on the
 
conversion formula
 
set out in
 
the terms
 
of the respective
 
series of
 
LRCN Preferred
 
Shares.
The LRCNs are
 
compound instruments
 
with both equity
 
and liability features
 
as payments
 
of interest and
principal
 
in cash
 
are made
 
at the
 
Bank’s
 
discretion.
 
Non-payment
 
of
 
interest
 
and principal
 
in cash
 
does
not constitute an event of default but will trigger the delivery
 
of each LRCN Preferred Shares.
 
Perpetual Notes
The Bank has issued subordinated notes ("Perpetual
 
Notes") that are issued without a scheduled
 
maturity
or
 
redemption
 
date.
 
Interest
 
on
 
the
 
Perpetual
 
Notes
 
is
 
due
 
and
 
payable
 
only
 
if
 
it
 
is
 
not
 
cancelled.
 
The
Bank has
 
the sole
 
and absolute
 
discretion to
 
cancel interest.
 
Such cancelled
 
interest cannot
 
be claimed
against
 
the
 
Bank,
 
will
 
not
 
constitute
 
an
 
event
 
of
 
default
 
and
 
holders
 
have
 
no
 
rights
 
to
 
receive
 
any
additional
 
interest
 
or
 
compensation
 
as
 
a
 
result
 
of
 
such
 
cancellation.
 
In
 
the
 
event
 
of
 
non-payment
 
of
interest in full following such
 
payment date, the Bank will not
 
(a) declare dividends on the common
 
shares
or preferred shares
 
or (b) subject
 
to certain exceptions,
 
redeem any common
 
shares or preferred
 
shares,
in each case until the Bank pays interest in full on the Perpetual
 
Notes.
Voting Rights
The holders of
 
Perpetual Notes are
 
not entitled to any
 
voting rights, nor
 
are they entitled
 
to receive notice
of or to attend any meeting of the shareholders of the
 
Bank.
Rights on Liquidation
The Perpetual Notes include standard NVCC
 
Provisions necessary for them to qualify
 
as Additional Tier 1
Capital under OSFI’s Capital
 
Adequacy Requirements guideline.
 
NVCC Provisions require the
 
conversion
of the
 
instrument
 
into a
 
variable
 
number
 
of
 
common
 
shares
 
upon the
 
occurrence
 
of
 
a Trigger
 
Event.
 
In
such
 
an
 
event,
 
each
 
Perpetual
 
Note
 
will
 
automatically
 
and
 
immediately
 
be
 
converted
 
into
 
a
 
variable
number
 
of
 
common
 
shares
 
which
 
will
 
be
 
delivered
 
to
 
Perpetual
 
Note
 
holders
 
in
 
satisfaction
 
of
 
the
principal
 
amount
 
of,
 
and
 
accrued
 
and
 
unpaid
 
interest
 
on,
 
the
 
Perpetual
 
Notes.
 
The
 
number
 
of
 
common
shares issued
 
will be
 
determined based
 
on the
 
conversion formula
 
set out
 
in the
 
terms of
 
the respective
series
 
of Perpetual
 
Notes.
 
The Perpetual
 
Notes
 
are compound
 
instruments
 
with
 
both equity
 
and liability
features as payments
 
of interest and
 
principal in cash
 
are made at the
 
Bank’s discretion. Non-payment
 
of
interest and
 
principal
 
does not
 
constitute
 
an event
 
of
 
default but
 
the
 
Bank’s
 
failure to
 
pay interest
 
in full
when due will
 
impact the Bank’s
 
ability to pay
 
dividends on, or
 
redeem, its common
 
shares and preferred
shares, as described under “Perpetual Notes” above.
Constraints
There are no
 
constraints imposed
 
on the ownership
 
of securities of
 
a bank, including
 
the Bank, to
 
ensure
that a
 
bank has
 
a required
 
level of
 
Canadian ownership.
 
However,
 
the Bank
 
Act contains
 
restrictions on
the issue,
 
transfer,
 
acquisition, beneficial
 
ownership and
 
voting of
 
all shares
 
of a
 
bank. For
 
example, no
person can
 
be a
 
major shareholder
 
of a
 
bank if
 
the bank
 
has equity
 
of $12
 
billion or
 
more. A
 
person is
 
a
major shareholder of a bank where:
 
(i)
 
the aggregate
 
of the
 
shares
 
of any
 
class of
 
voting
 
shares
 
beneficially
 
owned
 
by that
 
person,
 
by
entities controlled by
 
that person and
 
by any person
 
associated or acting
 
jointly or in
 
concert with
that person is more than 20% of the outstanding shares
 
of that class of voting shares; or
 
(ii)
 
the aggregate
 
of the shares
 
of any class
 
of non-voting
 
shares beneficially
 
owned by
 
that person,
by entities
 
controlled by
 
that person
 
and by
 
any person
 
associated or
 
acting jointly
 
or in
 
concert
with that person is more than 30% of the outstanding
 
shares of that class of non-voting shares.
No person can
 
have a significant
 
interest in any
 
class of shares
 
of a bank,
 
including the Bank,
 
unless the
person first receives the approval of the Minister of Finance
 
(Canada).
For purposes of the
 
Bank Act, a
 
person has a significant
 
interest in a class
 
of shares of a
 
bank where the
aggregate
 
of
 
any
 
shares
 
of
 
the
 
class
 
beneficially
 
owned
 
by
 
that
 
person,
 
by
 
entities
 
controlled
 
by
 
that
person and by any person
 
associated or acting jointly
 
or in concert with that
 
person exceeds 10% of
 
all of
the outstanding shares of that class of shares of such
 
bank.
The
 
Bank
 
Act
 
also
 
prohibits
 
the
 
registration
 
of
 
a
 
transfer
 
or
 
issue
 
of
 
any
 
share
 
of
 
a
 
bank
 
to,
 
and
 
the
exercise
 
in
 
person
 
or
 
by
 
proxy
 
of
 
any
 
voting
 
rights
 
attached
 
to
 
any
 
share
 
of
 
a
 
bank
 
that
 
is
 
beneficially
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
owned by,
 
Her Majesty in right of Canada
 
or of a province or any agent
 
or agency of Her Majesty
 
in either
of those rights,
 
or to the
 
government of a
 
foreign country or
 
any political subdivision
 
thereof, or any
 
agent
or
 
agency
 
of
 
a
 
foreign
 
government.
 
Despite
 
this
 
restriction,
 
the
 
Minister
 
of
 
Finance
 
of
 
Canada
 
may
approve the issue
 
of shares of a
 
bank, including the
 
Bank, to an agent
 
that is an
 
“eligible agent”, which
 
is
defined as an agent or agency
 
of Her Majesty in right of Canada or
 
of a province or an agent or
 
agency of
a government
 
of a
 
foreign
 
country or
 
any political
 
subdivision of
 
a foreign
 
country:
 
(i) whose
 
mandate is
publicly
 
available;
 
(ii)
 
that
 
controls
 
the
 
assets
 
of
 
an
 
investment
 
fund
 
in
 
a
 
manner
 
intended
 
to
 
maximize
long-term risk-adjusted returns
 
and Her Majesty in right
 
of Canada or of a
 
province or an agent
 
or agency
of
 
a
 
government
 
of
 
a
 
foreign
 
country
 
or
 
any
 
political
 
subdivision
 
of
 
a
 
foreign
 
country
 
contributes
 
to
 
the
fund or the fund is established to provide
 
compensation, hospitalization, medical care, annuities,
 
pensions
or
 
similar
 
benefits
 
to
 
natural
 
persons;
 
and
 
(iii)
 
whose
 
decisions
 
with
 
respect
 
to
 
the
 
assets
 
of
 
the
 
fund
referred
 
to
 
in
 
(ii)
 
are
 
not
 
influenced
 
in
 
any
 
significant
 
way
 
by
 
Her
 
Majesty
 
in
 
right
 
of
 
Canada
 
or
 
of
 
the
province
 
or
 
the
 
government
 
of
 
the
 
foreign
 
country
 
or
 
the
 
political
 
subdivision.
 
The
 
application
 
for
 
this
approval would be made jointly by a bank, including the
 
Bank, and the eligible agent.
Ratings
Credit ratings
 
are important
 
to the
 
Bank’s borrowing
 
costs and
 
ability to
 
raise funds.
 
Rating downgrades
could
 
potentially
 
result
 
in
 
higher
 
financing
 
costs
 
and
 
increased
 
collateral
 
pledging
 
requirements
 
for
 
the
Bank
 
and
 
reduced
 
access
 
to
 
capital
 
markets.
 
Rating
 
downgrades
 
may
 
also
 
affect
 
the
 
Bank’s
 
ability
 
to
enter
 
into
 
normal
 
course
 
derivative
 
transactions.
 
The
 
Bank
 
regularly
 
reviews
 
the
 
level
 
of
 
increased
collateral
 
that
 
would
 
be
 
required
 
in
 
the
 
event
 
of
 
rating
 
downgrades
 
and
 
holds
 
liquid
 
assets
 
to
 
cover
additional
 
collateral
 
required
 
in
 
the
 
event
 
of
 
certain
 
downgrades
 
in
 
the
 
Bank's
 
senior
 
long-term
 
credit
ratings.
 
Additional
 
information
 
relating
 
to
 
credit
 
ratings
 
is
 
provided
 
under
 
the
 
heading
 
“Liquidity
 
Risk”
 
in
the “Managing
 
Risk” section
 
starting on
 
page 89
 
of the
 
2024 MD&A
 
and under
 
the heading
 
"Downgrade,
Suspension
 
or
 
Withdrawal
 
of
 
Ratings
 
Assigned
 
by
 
Any
 
Rating
 
Agency"
 
in
 
the
 
"Risk
 
Factors
 
and
Management" section on page 69 of the MD&A.
As at October 31, 2024, TD had the following solicited ratings from
 
the rating agencies listed below:
 
 
 
Rating
Rank*
Moody's Investor Service
Legacy Senior Debt
1
 
Aa3
4 of 21
 
Senior Debt
2
A2
6 of 21
 
Short Term
 
Debt
P-1
1 of 4
 
Legacy Subordinated Debt (non-
NVCC)
A3
7 of 21
 
Tier 2 Subordinated Debt (NVCC)
A3 (hyb)
7 of 21
 
AT1 Perpetual Debt –
 
NVCC
Baa2 (hyb)
9 of 21
 
Limited Recourse Capital Notes –
NVCC
Baa2 (hyb)
9 of 21
 
Preferred Shares – NVCC
Baa2 (hyb)
9 of 21
 
Outlook
Stable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rating
Rank*
Standard & Poor's
Legacy Senior Debt
1
 
A+
5 of 22
 
Senior Debt
2
A-
7 of 22
 
Short Term
 
Debt
A-1
2 of 8
 
Legacy Subordinated Debt (non-
NVCC)
A-
7 of 22
 
Tier 2 Subordinated Debt (NVCC)
BBB+
8 of 22
 
AT1 Perpetual Debt –
 
NVCC
BBB-
10 of 22
 
Limited Recourse Capital Notes –
NVCC
BBB-
10 of 22
 
Preferred Shares – NVCC
BBB-
10 of 22
 
Outlook
Stable
 
 
 
Rating
Rank*
Fitch
 
Legacy Senior Debt
1
 
AA
3 of 23
 
Senior Debt
2
AA-
4 of 23
 
Short Term
 
Debt
F1+
1 of 8
 
Legacy Subordinated Debt (non-
NVCC)
A
6 of 23
 
Tier 2 Subordinated Debt (NVCC)
A
6 of 23
 
AT1 Perpetual Debt –
 
NVCC
 
BBB+
8 of 23
 
Limited Recourse Capital Notes –
NVCC
BBB+
8 of 23
 
Preferred Shares – NVCC
 
BBB+
8 of 23
 
Outlook
Negative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rating
Rank*
DBRS Morningstar
Legacy Senior Debt
1
 
AA (high)
2 of 23
 
Senior Debt
2
AA
3 of 23
 
Short Term
 
Debt
R-1 (high)
1 of 11
 
Legacy Subordinated Debt (non-
NVCC)
AA (low)
4 of 23
 
Tier 2 Subordinated Debt (NVCC)
A
6 of 23
 
AT1 Perpetual Debt –
 
NVCC
 
–
–
 
Limited Recourse Capital Notes –
NVCC
 
A (low)
7 of 23
 
Preferred Shares – NVCC
 
Pfd-2 (high)
4 of 17
 
Outlook
Negative (Long
Term);
Stable (Short
Term)
 
*
Relative
 
rank of each rating within the rating agency's
 
overall classification system.
 
Notes
:
 
1.
 
Includes: (a) Senior
 
debt issued prior
 
to September 23,
 
2018; and (b)
 
Senior debt issued
 
on or after
 
September 23, 2018
which is excluded from the bank recapitalization
 
"bail-in" regime.
 
2.
 
Subject to conversion under the bank recapitalization
 
"bail-in" regime.
Credit ratings are not
 
recommendations to purchase,
 
sell or hold a
 
financial obligation in
 
as much as they
do not
 
comment
 
on market
 
price or
 
suitability for
 
a particular
 
investor.
 
Ratings are
 
subject to
 
revision or
withdrawal at
 
any time
 
by the
 
rating agency.
 
Credit ratings
 
and outlooks
 
provided by
 
the rating
 
agencies
reflect their
 
views
 
and are
 
subject to
 
change from
 
time to
 
time, based
 
on a
 
number
 
of factors,
 
including
the
 
Bank’s
 
financial
 
strength,
 
capital
 
adequacy,
 
competitive
 
position,
 
asset
 
quality,
 
business
 
mix,
corporate governance and
 
risk management, the level
 
and quality of our
 
earnings and liquidity,
 
as well as
factors not entirely within the Bank’s
 
control, including the methodologies
 
used by the rating agencies
 
and
conditions affecting the overall financial services
 
industry.
 
As is common
 
practice, the Bank
 
has made payments
 
in the ordinary
 
course to the
 
rating agencies
 
listed
above
 
in
 
connection
 
with
 
the
 
assignment
 
of
 
ratings
 
on
 
the
 
securities
 
of
 
the
 
Bank.
 
In
 
addition,
 
the
 
Bank
has made customary payments in respect
 
of certain other services provided
 
to the Bank by the applicable
rating agencies during the last two years.
A definition of the categories of each
 
rating as at October 31, 2024
has been obtained from the respective
rating agency’s
 
website and
 
is outlined
 
in Appendix
 
B, and
 
a more
 
detailed explanation
 
may be
 
obtained
from the applicable
 
rating agency.
 
We note
 
that the definition
 
of the ratings
 
categories for
 
the respective
rating agencies are provided
 
solely in order to
 
satisfy requirements of Canadian
 
law and do not
 
constitute
an
 
endorsement
 
by
 
the
 
Bank
 
of
 
the
 
ratings
 
categories
 
or
 
of
 
the
 
application
 
by
 
the
 
respective
 
rating
agencies of their criteria and analyses.
 
MARKET FOR SECURITIES OF THE BANK
The
 
Bank’s
 
common
 
shares
 
are
 
listed
 
on
 
the
 
Toronto
 
Stock
 
Exchange
 
(TSX)
 
and
 
the
 
New
 
York
 
Stock
Exchange
 
under
 
the
 
trading
 
symbol
 
"TD".
 
Except
 
for
 
the
 
Class
 
A
 
First
 
Preferred
 
Shares,
 
Series
 
26
(NVCC),
 
the
 
Class
 
A
 
First
 
Preferred
 
Shares,
 
Series
 
29
 
(NVCC),
 
the
 
Class
 
A
 
First
 
Preferred
 
Shares,
Series
 
30
 
(NVCC),
 
the
 
Class
 
A
 
First
 
Preferred
 
Shares,
 
Series
 
31
 
(NVCC),
 
the
 
Non-Cumulative
 
5-Year
Fixed
 
Rate
 
Reset
 
Preferred
 
Shares,
 
Series
 
27,
 
and
 
the
 
Non-Cumulative
 
5-Year
 
Fixed
 
Rate
 
Reset
Preferred Shares,
 
Series 28
 
which are
 
not listed
 
on an
 
exchange, the
 
Bank’s Preferred
 
Shares are
 
listed
on the TSX.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trading Price and Volume
 
Trading price and volume
 
of the Bank’s outstanding securities
 
on the TSX in the past year is set
 
out in the
tables below:
COMMON SHARES
 
Nov.
2023
Dec.
2023
Jan.
2024
Feb.
2024
Mar.
2024
Apr.
2024
May
2024
Jun.
2024
Jul.
2024
Aug.
2024
Sept.
2024
Oct.
2024
High ($)
Low ($)
 
Vol.('000)
78.17
77.14
6,243
82.74
81.69
4,963
86.07
85.05
21,299
81.83
80.70
3,548
81.82
80.68
3,515
81.86
81.31
12,387
81.59
80.75
5,304
76.60
74.89
4,599
 
75.68
74.71
19,587
81.45
80.22
4,137
80.79
79.90
2,616
86.10
84.67
11,345
 
PREFERRED SHARES
 
Nov.
2023
Dec.
2023
Jan.
2024
Feb.
2024
Mar.
2024
Apr.
2024
May
2024
Jun.
2024
Jul.
2024
Aug.
2024
Sept.
2024
Oct.
2024
Series 1
High ($)
 
Low ($)
Vol.('000)
 
16.44
16.18
21
 
18.42
18.24
7
 
18.14
17.91
15
 
20.20
20.01
6
 
21.86
21.86
-
 
23.07
22.95
13
 
23.69
23.49
57
 
23.39
23.34
42
 
24.06
23.99
95
 
24.24
24.21
40
 
24.32
24.27
21
 
22.70
22.62
14
Series 5
High ($)
 
Low ($)
Vol.('000)
 
16.31
15.74
10
 
17.56
17.52
2
 
17.49
17.41
4
 
19.49
19.31
67
 
20.07
19.83
5
 
21.71
21.61
4
 
23.07
22.96
126
 
22.49
22.36
80
 
23.56
23.51
5
 
23.99
23.90
5
 
23.80
23.75
12
 
22.70
22.56
13
Series 7
High ($)
 
Low ($)
Vol.('000)
 
16.54
16.31
6
 
18.43
18.34
3
 
-
-
-
 
20.03
19.98
16
 
20.55
20.47
3
 
21.90
21.90
-
 
23.35
23.27
23
 
22.86
22.85
1
 
-
-
-
 
23.91
23.50
2
 
23.70
23.70
-
 
23.66
23.64
3
Series 9
High ($)
 
Low ($)
Vol.('000)
 
16.76
16.63
7
 
18.81
18.49
1
 
-
-
-
 
20.22
20.07
59
 
20.60
20.45
3
 
-
-
-
 
23.20
23.06
80
 
-
-
-
 
23.59
23.59
-
 
23.90
23.55
5
 
23.48
23.46
2
 
-
-
-
Series 16
High ($)
 
Low ($)
Vol.('000)
 
22.06
21.23
55
 
22.90
22.80
2
 
23.20
23.15
6
 
29.98
23.79
19
 
23.34
23.31
2
 
23.85
23.76
16
 
24.44
24.14
30
 
24.90
24.77
2
 
24.77
24.51
1
 
25.55
25.47
9
 
-
-
-
 
25.61
25.61
1
Series 18
High ($)
 
Low ($)
Vol.('000)
 
19.19
18.45
6
 
21.09
20.71
12
 
21.13
21.12
3
 
21.31
21.09
215
 
21.37
21.07
3
 
22.29
22.28
4
 
23.09
22.73
32
 
24.08
23.86
4
 
24.01
24.01
-
 
24.62
24.40
29
 
24.95
24.85
3
 
24.81
24.74
5
Prior Sales
 
In the
 
most recently
 
completed financial
 
year,
 
the Bank
 
issued the
 
following shares
 
that are
 
not listed
 
or
quoted on a marketplace:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issue Price
Number of Securities Issued
Date of Issue
Class
 
A
 
First
 
Preferred
Shares, Series 31 (NVCC)
US$1,000
750,000
June 28, 2024
The above preferred shares were
 
issued in connection with the issuance
 
of limited recourse capital notes.
 
For
 
further
 
information
 
on
 
the
 
Bank's
 
issuance
 
of
 
limited
 
recourse
 
capital
 
notes
 
and
 
the
 
associated
preferred shares, please
 
see Note
 
19 of the
 
Annual Financial
 
Statements for the
 
year ended October
 
31,
2024, which notes are incorporated by reference in this
 
AIF.
ESCROWED SECURITIES AND SECURITIES SUBJECT TO
 
CONTRACTUAL RESTRICTIONS ON
TRANSFER
In
 
connection
 
with
 
each
 
issuance
 
of
 
LRCNs,
 
the
 
Bank
 
also
 
concurrently
 
issues
 
Preferred
 
Shares
 
(see
"Limited Resource
 
Capital Notes"
 
for additional
 
information).
 
Each LRCN
 
Preferred Share
 
Series is
 
held
in
 
the
 
Limited
 
Recourse
 
Trust.
 
Pursuant
 
to
 
the
 
Amended
 
and
 
Restated
 
Declaration
 
of
 
Trust
 
for
 
the
Limited Recourse
 
Trust
 
and the
 
share provisions
 
for each
 
LRCN Preferred
 
Share Series,
 
the Trustee
 
of
the
 
Limited
 
Recourse
 
Trust
 
will
 
only
 
deliver
 
the
 
LRCN
 
Preferred
 
Shares
 
to
 
holders
 
of
 
LRCNs
 
under
certain prescribed circumstances.
Securities Subject to Contractual Restriction on Transfer
 
as at October 31, 2024
Designation of Class
Number of Securities that are Subject to
a Contractual Restriction on Transfer
1
Percentage of Class
Class A First Preferred
Shares, Series 26 (NVCC)
1,750,000
100%
Class A First Preferred
Shares, Series 29 (NVCC)
1,500,000
100%
Class A First Preferred
Shares, Series 30 (NVCC)
1,750,000
100%
Class A First Preferred
Shares, Series 31 (NVCC)
750,000
100%
1
 
The contractual restriction on transfer will remain in
 
place for so long as such shares are held
 
in the Limited Recourse Trust.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Board Committees of the Bank
The following
 
table sets
 
forth, as
 
at December
 
4, 2024,
 
the directors
 
of the
 
Bank,
 
their present
 
principal
occupation and business, municipality of residence and the
 
date each became a director of the Bank.
Director Name
Principal Occupation & Municipality of Residence
Director Since
Ayman Antoun
Corporate Director, and former
 
President,
IBM Americas
Oakville, Ontario, Canada
April 2024
Cherie L. Brant
Partner, Borden Ladner Gervais
 
LLP
Tyendinaga Mohawk Territory,
 
Ontario, Canada
August 2021
Amy W. Brinkley
Consultant, AWB Consulting, LLC
Charlotte, North Carolina, U.S.A.
September 2010
Raymond Chun
1
Chief Operating Officer
The Toronto
 
-Dominion Bank
Toronto,
 
Ontario, Canada
November 2024
Brian C. Ferguson
Corporate Director, and former
 
President & Chief Executive Officer,
Cenovus Energy Inc.
Calgary, Alberta, Canada
 
March 2015
Colleen A. Goggins
Corporate Director, and retired
 
Worldwide Chairman,
Consumer Group, Johnson & Johnson
Princeton, New Jersey,
 
U.S.A.
March 2012
Alan N. MacGibbon
Board Chair, The Toronto
 
-Dominion Bank
Mississauga, Ontario, Canada
April 2014
John B. MacIntyre
Corporate Director, and
 
Partner Emeritus, Birch Hill Equity Partners
Toronto,
 
Ontario, Canada
August 2023
Karen E. Maidment
Corporate Director, and former
 
Chief Financial and Administrative Officer,
BMO Financial Group
Cambridge, Ontario, Canada
September 2011
Keith G. Martell
Corporate Director, and former
 
President & Chief Executive Officer,
First Nations Bank of Canada
Eagle Ridge, Saskatchewan, Canada
August 2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bharat B. Masrani
Group President and Chief Executive Officer,
The Toronto
 
-Dominion Bank
Toronto,
 
Ontario, Canada
April 2014
Claude Mongeau
 
Corporate Director, and former
 
President and Chief Executive Officer,
 
Canadian National Railway Company
Montreal, Quebec, Canada
 
March 2015
S. Jane Rowe
Corporate Director, and former
 
Vice Chair, Investments,
 
Ontario Teachers'
 
Pension Plan Board
Toronto,
 
Ontario, Canada
April 2020
Nancy G. Tower
Corporate Director, and former
 
President & Chief Executive Officer,
 
Tampa
 
Electric Company
Halifax, Nova Scotia, Canada
June 2022
Ajay K. Virmani
Executive Chairman, Cargojet Inc.
Oakville, Ontario, Canada
August 2022
Mary A. Winston
Corporate Director, and former
 
public-company Chief Financial Officer
Charlotte, North Carolina, U.S.A.
August 2022
Notes:
1.
 
Mr.
 
Chun will
 
become Group
 
President and
 
Chief Executive
 
Officer of
 
the Bank,
 
on April
 
10, 2025,
 
at
 
the Bank's
 
next
Annual Meeting of Shareholders.
Except as disclosed below,
 
all directors have had the same principal occupation for
 
the past five years.
Prior to
 
commencing
 
his current
 
role as
 
Chief Operating
 
Officer
 
TD Bank
 
Group on
 
November 1,
 
2024,
Mr.
 
Chun
 
was
 
Group
 
Head,
 
Canadian
 
Personal
 
Banking,
 
TD
 
Bank
 
Group
 
from
 
December
 
11,
 
2023
 
to
October 31, 2024, Group
 
Head, Wealth Management
 
and TD Insurance, TD
 
Bank Group from January
 
1,
2022
 
to
 
December
 
10,
 
2023,
 
Executive
 
Vice
 
President,
 
Direct
 
Investing,
 
Business
 
Architecture
 
and
Delivery,
 
TD Wealth
 
from June 14,
 
2021 to December
 
31, 2021, and
 
Executive Vice
 
President, President
and CEO, TD Insurance from May 23, 2019 to June 13,
 
2021.
 
Mr. MacIntyre was a Partner
 
at Birch Hill Equity Partners prior to December
 
1, 2024.
Mr.
 
Martell
 
was
 
former
 
Director,
 
President
 
and
 
Chief
 
Executive
 
Officer
 
of First
 
Nations
 
Bank
 
of
 
Canada
prior to May 2023 and continued in an advisory role until July
 
30, 2023.
Ms.
 
Rowe
 
was
 
Vice
 
Chair,
 
Investments
 
of
 
the
 
Ontario
 
Teachers'
 
Pension
 
Plan
 
Board
 
("Ontario
Teachers")
 
prior to August 1,
 
2023. Ms. Rowe was
 
Executive Managing Director
 
and head of the
 
Equities
department of Ontario Teachers'
 
prior to October 1, 2020.
 
Ms. Tower
 
was President and Chief Executive Officer
 
of Tampa
 
Electric Company prior to May 2021.
Each
 
director
 
will
 
hold
 
office
 
until
 
the
 
next
 
annual
 
meeting
 
of
 
shareholders
 
of
 
the
 
Bank,
 
which
 
is
scheduled for April 10, 2025. More detailed
 
information concerning the nominees
 
proposed for election as
directors, as well
 
as those not
 
standing for
 
re-election, will
 
be provided
 
in the management
 
proxy circular
of the Bank.
 
 
 
 
 
 
 
 
 
The following table sets forth the Committees of the Bank’s
 
Board, the members of each Committee as at
December 4, 2024 and each Committee’s key responsibilities.
 
Committee
Members
Key Responsibilities
Corporate
Governance
Committee
Alan N. MacGibbon
(Chair)
Amy W. Brinkley
Claude Mongeau
Nancy G. Tower
 
Responsibility for corporate governance of the Bank:
 
 
●
 
Identify
 
individuals
 
qualified
 
to
 
become
 
Board
 
members
and
 
recommend
 
to
 
the
 
Board
 
the
 
director
 
nominees
 
for
the
 
next
 
annual
 
meeting
 
of
 
shareholders
 
and
recommend
 
candidates
 
to
 
fill
 
vacancies
 
on
 
the
 
Board
that occur between meetings of the shareholders;
●
 
Develop and recommend
 
to the Board
 
a set of
 
corporate
governance
 
principles,
 
including
 
a
 
code
 
of
 
conduct
 
and
ethics,
 
aimed
 
at
 
fostering
 
a
 
healthy
 
governance
 
culture
at the Bank;
●
 
Satisfy
 
itself
 
that
 
the
 
Bank
 
communicates
 
effectively,
both proactively
 
and responsively,
 
with
 
its shareholders,
other interested parties and the public;
●
 
Oversee
 
the
 
Bank's
 
alignment
 
with
 
its
 
purpose
 
and
 
its
strategy,
 
performance
 
and
 
reporting
 
on
 
corporate
responsibility for sustainability matters;
 
●
 
Oversee subsidiary
 
governance for
 
the Bank
 
enterprise-
wide;
●
 
Provide oversight of enterprise
 
-wide conduct risk and
 
act
as
 
the
 
conduct
 
review
 
committee
 
for
 
the
 
Bank
 
and
certain
 
of
 
its
 
Canadian
 
subsidiaries
 
that
 
are
 
federally-
regulated financial institutions;
●
 
Oversee
 
the
 
establishment
 
and
 
maintenance
 
of
 
policies
in
 
respect
 
of
 
the
 
Bank's
 
compliance
 
with
 
the
 
consumer
protection
 
provisions
 
of
 
the
 
Financial
 
Consumer
Protection Framework (FCPF); and
●
 
Oversee the evaluation
 
of the Board and Committees.
 
 
 
 
 
 
 
Human
Resources
Committee
Claude Mongeau
(Chair)
Amy W. Brinkley
John B. MacIntyre
Alan N. MacGibbon
Karen E. Maidment
 
Responsibility
 
for
 
management’s
 
performance
evaluation, compensation and succession planning:
 
●
 
Discharge,
 
and
 
assist
 
the
 
Board
 
in
 
discharging,
 
the
responsibility of
 
the Board
 
relating to
 
leadership, human
capital management and
 
compensation, as set
 
out in the
Committee’s charter;
●
 
Set
 
corporate
 
goals
 
and
 
objectives
 
for
 
the
 
CEO,
 
and
regularly measure
 
the CEO’s
 
performance against
 
these
goals and objectives;
●
 
Recommend compensation
 
for the CEO
 
to the Board
 
for
approval,
 
and
 
review
 
and
 
approve
 
compensation
 
for
certain senior officers;
●
 
Monitor
 
the
 
Bank's
 
compensation
 
strategy,
 
plans,
policies
 
and
 
practices
 
for
 
alignment
 
to
 
the
 
Financial
Stability
 
Board
 
Principles
 
for
 
Sound
 
Compensation
Practices
 
and
 
Implementation
 
Standards,
 
including
 
the
appropriate consideration of risk;
●
 
Oversee
 
a
 
robust
 
talent
 
planning
 
and
 
development
process, including review and approval of
 
the succession
plans for the senior
 
officer positions and
 
heads of control
functions;
●
 
Review and recommend
 
the CEO succession
 
plan to the
Board for approval;
●
 
Produce a report on
 
compensation, which is
 
published in
the
 
Bank’s
 
annual
 
proxy
 
circular,
 
and
 
review,
 
as
appropriate,
 
any
 
other
 
related
 
major
 
public
 
disclosures
concerning compensation; and
●
 
Oversee
 
the
 
strategy,
 
design
 
and
 
management
 
of
 
the
Bank's
 
employee
 
pension,
 
retirement
 
savings
 
and
benefit plans.
Risk
Committee
Amy W. Brinkley
(Chair)
Ayman Antoun
Cherie L. Brant
Colleen A. Goggins
Karen E. Maidment
Keith G. Martell
Nancy G. Tower
Ajay K. Virmani
 
Supervising the management of risk of the Bank:
 
●
 
Approve
 
the
 
Enterprise
 
Risk
 
Framework
 
("ERF")
 
and
related
 
risk
 
category
 
frameworks
 
and
 
policies
 
that
establish
 
the
 
appropriate
 
approval
 
levels
 
for
 
decisions
and other measures
 
to manage risk
 
to which the
 
Bank is
exposed;
●
 
Review
 
and
 
recommend
 
the
 
Bank’s
 
Enterprise
 
Risk
Appetite
 
Statement
 
for
 
approval
 
by
 
the
 
Board
 
and
oversee the Bank’s major risks as set out in the
 
ERF;
●
 
Review
 
the
 
Bank’s
 
risk
 
profile
 
and
 
performance
 
against
Risk Appetite; and
●
 
Provide a forum for “big-picture” analysis of
 
an enterprise
view of risk including consideration
 
of trends, and current
and emerging risks.
 
 
 
Audit
Committee
Nancy G. Tower*
(Chair)
Ayman Antoun
Brian C. Ferguson*
Keith G. Martell*
S. Jane Rowe*
Mary A. Winston*
 
Supervising
 
the
 
quality
 
and
 
integrity
 
of
 
the
 
Bank’s
financial reporting and compliance requirements:
 
●
 
Oversee
 
reliable,
 
accurate
 
and
 
clear
 
financial
 
reporting
to shareholders;
●
 
Oversee
 
the
 
effectiveness
 
of
 
internal
 
controls,
 
including
internal controls over financial reporting;
●
 
Recommend
 
to
 
the
 
Board
 
the
 
appointment
 
of
 
the
shareholders'
 
auditor
 
for
 
approval
 
by
 
the
 
shareholders
and
 
the
 
compensation
 
and
 
terms
 
of
 
engagement
 
of
 
the
shareholders' auditor for approval by the Board;
●
 
Oversee the
 
work of
 
the shareholders’
 
auditor,
 
including
requiring
 
the
 
shareholders’
 
auditor
 
to
 
report
 
directly
 
to
the Committee;
●
 
Review
 
reports
 
from
 
the
 
shareholders’
 
auditor,
 
chief
financial
 
officer,
 
chief
 
auditor,
 
chief
 
compliance
 
officer,
and chief anti-money laundering
 
officer, and
 
evaluate the
effectiveness and independence of each;
●
 
Oversee
 
the
 
establishment
 
and
 
maintenance
 
of
 
policies
and
 
programs
 
reasonably
 
designed
 
to
 
achieve
 
and
maintain
 
the
 
Bank's
 
compliance
 
with
 
the
 
laws
 
and
regulations that apply to it; and
●
 
Act as the Audit Committee for
 
certain subsidiaries of the
Bank that are federally regulated financial institutions.
 
*Designated Audit Committee Financial Expert
Audit Committee
 
The Audit Committee
 
of the Board
 
of Directors
 
of the Bank
 
operates under
 
a written charter
 
that sets
 
out
its
 
responsibilities
 
and
 
composition
 
requirements.
 
A
 
copy
 
of
 
the
 
charter
 
is
 
attached
 
to
 
this
 
AIF
 
as
Appendix “C”. The
 
Committee charter requires
 
all members to
 
be financially literate
 
or be willing
 
and able
to
 
acquire
 
the
 
necessary
 
knowledge
 
quickly.
 
“Financially
 
literate”
 
means
 
the
 
ability
 
to
 
read
 
and
understand financial
 
statements that
 
present a
 
breadth and
 
level of
 
complexity of
 
accounting issues
 
that
are generally comparable
 
to the breadth
 
and complexity of the
 
issues that can reasonably
 
be expected to
be raised by the Bank’s financial statements.
In addition,
 
the Committee
 
charter contains
 
independence
 
requirements applicable
 
to each
 
member and
each
 
member
 
currently
 
meets
 
those
 
requirements.
 
Specifically,
 
the
 
charter
 
provides
 
that
 
no
 
member
 
of
the Committee may
 
be an officer
 
or retired officer
 
of the Bank
 
and every member
 
shall be independent
 
of
the
 
Bank
 
within
 
the
 
meaning
 
of
 
all
 
applicable
 
laws,
 
rules
 
and
 
regulations,
 
including
 
those
particularly
applicable
 
to
 
Audit
 
Committee
 
members
 
and
 
any
 
other
 
relevant
 
consideration
 
as
 
determined
 
by
 
the
Board,
 
including
 
the
 
Bank’s
 
Director
 
Independence
 
Policy
 
(a
 
copy
 
of
 
which
 
is
 
available
 
on
 
the
 
Bank’s
website at www.td.com).
As
 
indicated
 
in
 
the
 
table
 
above,
 
the
 
members
 
of
 
the
 
Committee
 
are:
 
Nancy
 
G.
 
Tower
 
(Chair),
 
Ayman
Antoun, Brian
 
C. Ferguson,
 
Keith G.
 
Martell,
 
S. Jane
 
Rowe, and
 
Mary A.
 
Winston. The
 
members
 
of the
Audit
 
Committee
 
bring
 
significant
 
skills
 
and
 
experience
 
to
 
their
 
responsibilities,
 
including
 
academic
 
and
professional
 
experience
 
in
 
accounting,
 
business
 
and
 
finance.
 
The
 
Board
 
has
 
determined
 
that
 
each
 
of
Messrs.
 
Ferguson,
 
and
 
Martell
 
and
 
Mses.
 
Rowe,
 
Tower
 
and
 
Winston
 
has
 
the
 
attributes
 
of
 
an
 
Audit
Committee
 
Financial
 
Expert
 
as
 
defined
 
in
 
the
 
U.S.
 
Sarbanes-Oxley
 
Act;
 
all
 
Committee
 
members
 
are
financially
 
literate
 
and
 
independent
 
under
 
the
 
applicable
 
listing
 
standards
 
of
 
the
 
New
 
York
 
Stock
Exchange,
 
the
 
Committee
 
charter,
 
the
 
Bank’s
 
Director
 
Independence
 
Policy
 
and
 
the
 
corporate
governance guidelines of the Canadian Securities Administrators.
The following sets out the
 
education and experience of
 
each director relevant to the
 
performance of his or
her duties as a member of the Committee:
 
Ayman
 
Antoun
 
is
 
a
 
Corporate
 
Director.
 
He
 
is
 
the
 
former
 
President
 
of
 
IBM
 
Americas,
 
a
 
multinational
technology corporation
 
which includes
 
Canada, the
 
United States
 
and Latin
 
America. He
 
is also
 
a Board
member of TD's U.S. Retail Banking
 
subsidiaries. Mr.
 
Antoun also serves on the Board
 
of CAE Inc. and is
a member
 
of their
 
Audit Committee.
 
Mr.
 
Antoun holds
 
a Bachelor
 
of Science,
 
Electrical Engineering
 
with
Computer Science Minor from the University of Waterloo.
Brian
 
C.
 
Ferguson
 
is
 
a
 
Corporate
 
Director.
 
He
 
is
 
the
 
former
 
President
 
&
 
Chief
 
Executive
 
Officer
 
of
Cenovus
 
Energy
 
Inc.
 
Prior
 
to
 
leading
 
Cenovus
 
Energy
 
Inc.,
 
Mr.
 
Ferguson
 
was
 
the
 
Executive
 
Vice-
President
 
and
 
Chief
 
Financial
 
Officer
 
of
 
Encana
 
Corporation.
 
Mr.
 
Ferguson
 
holds
 
an
 
undergraduate
degree in commerce from the
 
University of Alberta and is
 
a Fellow of Chartered Professional
 
Accountants
Alberta. Mr. Ferguson is one
 
of the Bank's Audit Committee Financial Experts.
Keith G. Martell
 
is a Corporate Director.
 
Mr. Martell
 
is the former Director,
 
President and Chief Executive
Officer of
 
First Nations
 
Bank of
 
Canada ("FNBC").
 
Prior to
 
joining FNBC,
 
Mr.
 
Martell spent
 
10 years
 
with
the
 
Chartered
 
Accounting
 
firm
 
KPMG,
 
then
 
served
 
as
 
the
 
Executive
 
Director
 
of
 
Finance
 
and
 
Fiscal
Relations for the Federation of
 
Sovereign Indigenous Nations from
 
1995 to 2000. Mr.
 
Martell currently sits
on
 
the
 
Board
 
of
 
Nutrien
 
Ltd
 
and
 
USask
 
Properties
 
Investment
 
Inc.
 
Mr.
 
Martell
 
holds
 
a
 
Bachelor
 
of
Commerce and
 
an Honorary
 
Doctor of
 
Laws from
 
the University
 
of Saskatchewan
 
and is
 
a Fellow
 
of the
Institute
 
of
 
Chartered
 
Professional
 
Accountants
 
(FCPA,
 
FCA)
 
and
 
a
 
Certified
 
Aboriginal
 
Financial
Manager (CAFM). Mr. Martell
 
is one of the Bank's Audit Committee Financial Experts.
S. Jane Rowe
 
is a Corporate Director.
 
Ms. Rowe is the former Vice Chair,
 
Investments, Ontario Teachers
and
 
was
 
formerly
 
the
 
Executive
 
Managing
 
Director,
 
Equities,
 
Ontario
 
Teachers.
 
Prior
 
to
 
joining
 
Ontario
Teachers
 
in 2010,
 
Ms. Rowe
 
held several
 
senior
 
executive
 
management
 
roles at
 
Scotiabank
 
during her
tenure. Ms. Rowe
 
previously served
 
as Chair of
 
the Audit Committee
 
of Sierra Wireless.
 
Ms. Rowe holds
an
 
undergraduate
 
degree
 
in
 
commerce
 
from
 
the
 
Memorial
 
University
 
of
 
Newfoundland
 
and
 
a
 
master’s
degree
 
in
 
business
 
administration
 
from
 
the
 
Schulich
 
School
 
of
 
Business,
 
York
 
University.
 
Ms.
 
Rowe
 
is
one of the Bank’s Audit Committee Financial
 
Experts.
Nancy G.
 
Tower
is Chair
 
of the
 
Bank's Audit
 
Committee.
 
Ms. Tower
 
is a
 
Corporate Director.
 
She is
 
the
former President
 
and
 
Chief Executive
 
Officer
 
of Tampa
 
Electric Company,
 
which
 
is a
 
U.S.
 
subsidiary
 
of
Emera Inc. Ms. Tower
 
held a number of
 
senior roles at Emera
 
Inc. and its subsidiaries,
 
including as Chief
Corporate
 
Development
 
Officer,
 
Chief
 
Financial
 
Officer,
 
and
 
Chief
 
Executive
 
Officer
 
of
 
Emera
Newfoundland and Labrador.
 
Ms. Tower
 
also serves as a member
 
of the Audit Committee of
 
AltaGas Ltd.
Ms.
 
Tower
 
holds
 
a
 
Bachelor
 
of
 
Commerce
 
from
 
Dalhousie
 
University
 
in
 
Halifax,
 
Nova
 
Scotia
 
and
 
is
 
a
Chartered Professional
 
Accountant, a
 
Chartered Accountant,
 
and a
 
Fellow of
 
the Chartered
 
Professional
Accountants of Nova Scotia. Ms. Tower
 
is one of the Bank’s Audit Committee Financial
 
Experts.
Mary
 
A.
 
Winston
is
 
a
 
Corporate
 
Director
 
and
 
former
 
public-company
 
Chief
 
Financial
 
Officer
 
of
 
Family
Dollar
 
Stores,
 
Inc.,
 
Giant
 
Eagle,
 
Inc.
 
and
 
Scholastic
 
Corp.,
 
and
 
while
 
serving
 
as
 
a
 
board
 
member,
 
was
also interim CEO
 
of Bed Bath
 
and Beyond Inc.
 
Ms. Winston serves
 
as the Chair
 
of the Audit
 
Committees
of TD
 
Group
 
U.S.
 
Holdings
 
LLC, TD
 
Bank
 
U.S.
 
Holding
 
Company,
 
TD
 
Bank,
 
N.A.,
 
TD
 
Bank
 
USA,
 
N.A.
She
 
is
 
the
 
Chair
 
of
 
the
 
Audit
 
Committees
 
of
 
Acuity
 
Brands
 
Inc.
 
(through
 
January
 
2025)
 
and
 
Chipotle
Mexican
 
Grill
 
Inc,
 
and
 
sits
 
on
 
the
 
board
 
of
 
Northrup
 
Grumman.
 
Ms.
 
Winston
 
previously
 
served
 
as
 
the
Chair of the
 
Audit Committee
 
of Dover Corp.
 
from 2008
 
to 2018.
 
Ms. Winston
 
holds a
 
Bachelor's Degree
in Accounting from the University
 
of Wisconsin, an MBA from
 
Northwestern University's Kellogg
 
School of
Management,
 
and
 
is
 
a
 
Certified
 
Public
 
Accountant.
 
Ms.
 
Winston
 
is
 
one
 
of
 
the
 
Bank’s
 
Audit
 
Committee
Financial Experts.
Additional Information Regarding the Audit Committee
 
and Shareholders' Auditor
The
 
Audit
 
Committee
 
oversees
 
the
 
financial
 
reporting
 
process
 
at
 
the
 
Bank,
 
including
 
the
 
work
 
of
 
the
shareholder's
 
independent
 
external
 
auditor,
 
currently
 
Ernst
 
&
 
Young
 
LLP
 
(“EY”).
 
EY
 
is
 
responsible
 
for
planning
 
and
 
carrying
 
out,
 
in
 
accordance
 
with
 
professional
 
standards,
 
an
 
audit
 
of
 
the
 
Bank's
 
annual
financial statements and reviews of the Bank's quarterly
 
financial statements.
The Audit
 
Committee is
 
responsible for
 
the annual
 
recommendation
 
of the
 
appointment and
 
oversight of
the
 
shareholders’
 
independent
 
external
 
auditor.
 
The
 
Audit
 
Committee
 
assesses
 
the
 
performance
 
and
qualification
 
of
 
the
 
shareholders'
 
auditor
 
and
 
submits
 
its
 
recommendation
 
for
 
appointment,
 
or
reappointment,
 
to
 
the
 
Board
 
for
 
recommendation
 
to
 
the
 
shareholders.
 
The
 
shareholders'
 
auditor
 
is then
appointed by the shareholders, who vote on this matter
 
at the Annual General Meeting.
At
 
least
 
annually,
 
the
 
Audit
 
Committee
 
evaluates
 
the
 
performance,
 
qualifications,
 
skills,
 
resources
(amount and
 
type), and
 
independence of
 
the shareholders'
 
auditor,
 
including the
 
lead partner,
 
in order
 
to
support
 
the
 
Board
 
in
 
reaching
 
its
 
recommendation
 
to
 
appoint
 
the
 
shareholders'
 
auditor.
 
This
 
annual
evaluation
 
includes
 
an
 
assessment
 
of
 
audit
 
quality
 
and
 
service
 
considerations
 
such
 
as:
 
auditor
independence, objectivity
 
and professional skepticism;
 
quality of the
 
engagement team;
 
monitoring of the
partner
 
rotation
 
timing;
 
and
 
quality
 
of
 
the
 
communication
 
and
 
service
 
provided
 
by
 
the
 
shareholders'
auditor.
 
In
 
the
 
evaluation,
 
the
 
Audit
 
Committee
 
considers
 
the
 
nature
 
and
 
extent
 
of
 
communications
received from
 
the shareholders'
 
auditor during
 
the year,
 
the responses
 
from management
 
and the
 
Audit
Committee
 
to
 
an
 
annual
 
questionnaire
 
regarding
 
the
 
performance
 
of,
 
and
 
interactions
 
with,
 
the
shareholders' auditor.
EY
 
was
 
appointed
 
as
 
the
 
shareholders'
 
independent
 
external
 
auditor
 
for
 
the
 
year
 
ended
 
October
 
31,
2024, in
 
accordance
 
with
 
the
 
Bank
 
Act and
 
the recommendation
 
by the
 
Audit
 
Committee
 
and
 
has been
the
 
Bank’s
 
sole
 
independent
 
external
 
auditor
 
beginning
 
with
 
the
 
year
 
ended
 
October
 
31,
 
2006.
 
Prior
 
to
2006, EY acted as joint auditors of the Bank.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Executive Officers of the Bank
 
As at December 4, 2024, the following individuals are executive
 
officers of the Bank:
 
Executive Officer
Principal Occupation
Municipality of
Residence
Ajai
K. Bambawale
Group Head and Chief Risk Officer,
 
TD Bank Group
Toronto,
 
Ontario,
Canada
Melanie Burns
Executive Vice President and Chief Human
Resources Officer
Toronto,
 
Ontario,
Canada
Raymond Chun
1
Chief Operating Officer,
 
TD Bank Group
 
Oakville, Ontario,
Canada
Paul Clark
Senior Executive Vice President, Wealth
Management
Toronto,
 
Ontario,
Canada
Barbara Hooper
Group Head, Canadian Business Banking, TD Bank
Group
Etobicoke,
Ontario, Canada
Gregory Keeley
Senior Executive Vice President, Platforms and
Technology
Fairfield,
Connecticut,
U.S.A.
Jane Langford
Executive Vice President and General Counsel
Toronto,
 
Ontario,
Canada
Bharat B. Masrani
2
Group President and Chief Executive Officer,
 
TD
Bank Group
 
Toronto,
 
Ontario,
Canada
Sona Mehta
Group Head, Canadian Personal Banking, TD Bank
Group
Brampton,
Ontario, Canada
M. Christine Morris
Senior Executive Vice President,
Transformation, Enablement and Customer
Experience
Etobicoke,
Ontario, Canada
Anita O'Dell
3
Senior Vice President and Chief Auditor
Anderson, South
Carolina, U.S.A.
Leovigildo Salom
Group Head US Retail, TD Bank Group and
President and CEO, TD Bank, America's Most
Convenient Bank®
Miami, Florida,
U.S.A.
Kelvin Tran
Group Head and Chief Financial Officer,
 
TD
Bank Group
Markham,
Ontario, Canada
Tim Wiggan
Group Head, Wholesale Banking and
President and CEO of TD Securities
Toronto,
 
Ontario,
Canada
Notes:
1.
 
Mr.
 
Chun will
 
become Group
 
President and
 
Chief Executive
 
Officer of
 
the Bank,
 
on April
 
10, 2025,
 
at
 
the Bank's
 
next
Annual Meeting of Shareholders.
2.
 
Mr. Masrani will retire on April 10, 2025.
3.
 
As of December 9, 2024, Ms. O'Dell will move into
 
an advisory role at the Bank and will continue to
 
serve in that role until
she retires on May 31, 2025. Michelle Myers
 
will be appointed as Global Chief Auditor effective
 
December 9, 2024.
 
Except as disclosed
 
below,
 
all executive officers
 
have had the
 
same principal occupation
 
for the past
 
five
years.
Prior to commencing her current
 
role as Executive Vice
 
President and Chief Human Resources
 
Officer on
May 1,
 
2024, Ms.
 
Burns was
 
Executive Vice
 
President and
 
Deputy Chief
 
Human Resources
 
Officer from
June 5, 2023 to April
 
30, 2024, and Senior Vice
 
President, Human Resources, Talent
 
from June 13, 2011
to June 4, 2023.
Prior to
 
commencing
 
his current
 
role as
 
Chief Operating
 
Officer,
 
TD Bank
 
Group on
 
November 1,
 
2024,
Mr.
 
Chun
 
was
 
Group
 
Head,
 
Canadian
 
Personal
 
Banking,
 
TD
 
Bank
 
Group
 
from
 
December
 
11,
 
2023
 
to
October 31, 2024, Group
 
Head, Wealth Management
 
and TD Insurance, TD
 
Bank Group from January
 
1,
2022
 
to
 
December
 
10,
 
2023,
 
Executive
 
Vice
 
President,
 
Direct
 
Investing,
 
Business
 
Architecture
 
and
Delivery,
 
TD Wealth
 
from June 14,
 
2021 to December
 
31, 2021, and
 
Executive Vice
 
President, President
and CEO, TD Insurance from May 23, 2019 to June 13,
 
2021.
Prior
 
to
 
commencing
 
his
 
current
 
role
 
as
 
Senior
 
Executive
 
Vice
 
President,
 
Wealth
 
Management
 
on
November
 
1,
 
2024,
 
Mr.
 
Clark
 
was
 
Executive
 
Vice
 
President,
 
Wealth
 
Advice
 
from
 
June
 
14,
 
2021
 
to
October 31,
 
2024, and
 
Executive Vice
 
President, Direct
 
Investing, TD
 
Wealth from
 
July 1,
 
2019 to
 
June
13, 2021.
 
Prior to
 
commencing
 
her current
 
role
 
as Group
 
Head,
 
Canadian
 
Business Banking,
 
TD Bank
 
Group, on
May
 
1,
 
2023,
 
Ms.
 
Hooper
 
was
 
Senior
 
Executive
 
Vice
 
President,
 
Treasury
 
and
 
Enterprise
 
Strategy
 
from
September
 
1,
 
2021
 
to
 
April
 
30,
 
2023,
 
and
 
Executive
 
Vice
 
President,
 
Treasury
 
and
 
Corporate
Development from January 23, 2017 to August 31, 2021.
 
Prior to
 
commencing
 
his current
 
role
 
as
 
Senior
 
Executive
 
Vice
 
President,
 
Platforms
 
and Technology
 
on
January
 
1,
 
2022,
 
Mr.
 
Keeley
 
was
 
Executive
 
Vice
 
President
 
and
 
Chief
 
Information
 
Officer
 
from
 
April
 
1,
2021 to
 
December
 
31,
 
2021
 
and
 
Senior
 
Vice
 
President
 
and
 
Head
 
of
 
Enterprise
 
Operational
 
Excellence
from August 1, 2018 to March 31, 2021.
 
Prior to commencing
 
her current
 
role as
 
Executive Vice
 
President and
 
General Counsel
 
on May
 
1, 2022,
Ms. Langford was Senior Vice President, Legal, Corporate
 
from March 1, 2018 to April 30, 2022.
 
Prior to commencing her current role as
Group
 
Head,
 
Canadian
 
Personal
 
Banking,
 
TD
 
Bank
 
Group
 
on
November
 
1,
 
2024,
 
Ms.
 
Mehta
 
was
 
Executive
 
Vice
 
President,
 
Real
 
Estate
 
Secured
 
Lending,
 
Everyday
Banking,
 
Savings
 
and
 
Investing,
 
Canadian
 
Personal
 
Banking
 
from
 
November
 
20,
 
2023
 
to
 
October
 
31,
2024,
 
Senior
 
Vice
 
President,
 
Everyday
 
Banking,
 
Savings
 
and
 
Investing
 
from
 
May
 
9, 2022
 
to
 
November
19, 2023,
 
Senior Vice
 
President, Claims,
 
Fraud, Litigation
 
and Vendor
 
Management,
 
TD Insurance
 
from
February
 
10,
 
2020
 
to
 
May
 
8,
 
2022,
 
and
 
Vice
 
President,
 
Risk
 
Management
 
from
 
September
 
5,
 
2017
 
to
February 9, 2020.
 
Prior
 
to
 
starting
 
her
 
current
 
role
 
as
 
Senior
 
Executive
 
Vice
 
President,
 
Transformation,
 
Enablement
 
and
Customer
 
Experience
 
on
 
September
 
1,
 
2021,
 
Ms.
 
Morris
 
was
 
Executive
 
Vice
 
President
 
and
 
Chief
Operating Officer,
 
Canadian Personal Banking
 
from April 1, 2020
 
to August 31, 2021,
 
and Executive Vice
President, Lending Solutions, Canadian Personal Banking from
 
September 16, 2019 to March 31, 2020.
Prior to commencing
 
her current role
 
as Senior Vice
 
President and Chief
 
Auditor on March
 
29, 2021, Ms.
O'Dell
 
was
 
Senior
 
Vice
 
President
 
and
 
Chief
 
Auditor,
 
TD
 
Bank
 
America's
 
Most
 
Convenient
 
Bank
 
from
March 2, 2017 to March 28, 2021.
 
Prior to commencing
 
his current role
 
as Group Head
 
US Retail, TD
 
Bank Group and
 
President and CEO,
America's Most Convenient
 
Bank, on January 1,
 
2022, Mr.
 
Salom was Group Head,
 
Wealth Management
and TD Insurance, TD Bank Group from November 1,
 
2017 to December 31, 2021.
Prior to
 
commencing
 
his current
 
role
 
as Group
 
Head
 
and Chief
 
Financial
 
Officer
 
on March
 
2, 2023,
 
Mr.
Tran
 
was Senior
 
Executive Vice
 
President and
 
Chief Financial
 
Officer from
 
September 1,
 
2021 to
 
March
1, 2023,
 
Executive Vice
 
President, Enterprise
 
Finance from
 
May 27,
 
2021 until
 
August 31,
 
2021, Senior
Vice President, TD
 
Bank Group and
 
Chief Financial Officer,
 
TD Bank, America's
 
Most Convenient Bank®
from August 1, 2019 to May 26, 2021.
 
Prior to
 
commencing his
 
current role
 
as Group
 
Head, Wholesale
 
Banking and
 
President and
 
CEO of
 
TD
Securities on
 
November 1,
 
2024, Mr.
 
Wiggan was
 
Group Head,
 
Wealth Management
 
and Insurance,
 
TD
Bank Group from December
 
11, 2023
 
to October 31, 2024,
 
Executive Vice President,
 
Vice Chair and
 
Co-
Head of Global
 
Investment Banking, TD
 
Securities from March
 
1, 2023 to
 
December 10,
 
2023, Executive
Vice President,
 
Vice Chair
 
and Co-Head
 
Global Markets,
 
TD Securities
 
from March
 
3, 2022
 
to February
28,
 
2023,
 
Senior
 
Vice
 
President,
 
Executive
 
Managing
 
Director
 
and
 
Co-Head
 
Global
 
Markets,
 
TD
Securities
 
from
 
January
 
2,
 
2022 to
 
March
 
2,
 
2022,
 
and
 
Senior
 
Vice
 
President
 
and
 
Executive
 
Managing
Director, Global Equities and Commodities
 
from November 1, 2016 to January 1, 2022.
Shareholdings of Directors and Executive Officers
 
To
 
the knowledge of the Bank, as
 
at October 31, 2024, the directors
 
and executive officers of the
 
Bank as
a
 
group
 
beneficially
 
owned,
 
directly
 
or
 
indirectly,
 
or
 
exercised
 
control
 
or
 
direction
 
over
 
an
 
aggregate
 
of
2,234,206.58 of the
 
Bank’s common shares,
 
representing approximately
0.13 %
of the Bank’s
 
issued and
outstanding common shares on that date.
Additional Disclosure for Directors and Executive
 
Officers
To
 
the best of our
 
knowledge, having made
 
due inquiry,
 
the Bank confirms that,
 
as at December
 
4, 2024,
except as set out below:
(i)
 
no director or executive officer
 
of the Bank is, or was within the
 
last ten years, a director or
 
officer of
a company (including the Bank) that:
(a)
 
was subject to
 
an order (including
 
a cease trade
 
order or an
 
order similar to
 
a cease trade
 
or
an
 
order
 
that
 
denied
 
the
 
relevant
 
company
 
access
 
to
 
any
 
exemption
 
under
 
securities
legislation for
 
a period
 
of more
 
than 30
 
consecutive days),
 
that was
 
issued while
 
the director
or
 
executive
 
officer
 
was
 
acting
 
in
 
the
 
capacity
 
as
 
director,
 
chief
 
executive
 
officer
 
or
 
chief
financial officer;
(b)
 
was subject
 
to an
 
order that
 
was issued
 
after the
 
director or
 
executive officer
 
ceased to
 
be a
director, chief
 
executive officer
 
or chief financial
 
officer and
 
which resulted from
 
an event that
occurred
 
while
 
that
 
person
 
was
 
acting
 
in
 
the
 
capacity
 
as
 
director,
 
chief
 
executive
 
officer
 
or
chief financial officer; or
(c)
 
within
 
a
 
year
 
of
 
the
 
person
 
ceasing
 
to
 
act
 
in
 
that
 
capacity,
 
became
 
bankrupt,
 
made
 
a
proposal
 
under
 
any
 
legislation
 
relating
 
to
 
bankruptcy
 
or
 
insolvency
 
or
 
was
 
subject
 
to
 
or
instituted
 
any
 
proceedings,
 
arrangement
 
or
 
compromise
 
with
 
creditors
 
or
 
had
 
a
 
receiver,
receiver manager or trustee appointed to hold its assets.
(ii)
 
in
 
the
 
last
 
ten
 
years,
 
no
 
director
 
or
 
executive
 
officer
 
of
 
the
 
Bank
 
has
 
become
 
bankrupt,
 
made
 
a
proposal
 
under
 
any
 
legislation
 
relating
 
to
 
bankruptcy
 
or
 
insolvency,
 
or
 
become
 
subject
 
to
 
or
instituted any
 
proceedings,
 
arrangement
 
or compromise
 
with creditors,
 
or had
 
a receiver,
 
receiver
manager or trustee appointed to hold the assets of the
 
director or executive officer; and
(iii)
 
no director or
 
executive officer
 
of the Bank
 
has been subject
 
to any penalties
 
or sanctions imposed
by a court
 
relating to securities
 
legislation or by
 
a securities regulatory
 
authority or has
 
entered into
a
 
settlement
 
agreement
 
with
 
a
 
securities
 
regulatory
 
authority
 
or
 
has
 
been
 
subject
 
to
 
any
 
other
penalties
 
or
 
sanctions
 
imposed
 
by
 
a
 
court
 
or
 
regulatory
 
body
 
that
 
would
 
likely
 
be
 
considered
important to a reasonable investor in making an investment
 
decision.
Ms.
 
Goggins
 
was,
 
prior
 
to
 
June
 
14,
 
2016,
 
a
 
director
 
of
 
Valeant
 
Pharmaceuticals
 
International,
 
Inc.
("Valeant").
 
Management
 
cease
 
trade
 
orders
 
were
 
issued
 
for
 
directors
 
and
 
officers
 
of
 
Valeant
 
by
 
the
Autorité
 
des
 
marchés
 
financiers
 
(Quebec)
 
while
 
Ms.
 
Goggins
 
was
 
a
 
director
 
of
 
Valeant.
 
These
 
orders
were effective from March 31, 2016 to April 29, 2016,
 
and from May 17, 2016 to June 8, 2016.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mr.
 
MacIntyre
 
was
 
a
 
director
 
of
 
2180811
 
Ontario
 
Limited
 
("2180811"),
 
the
 
sole
 
general
 
partner
 
of
 
RHB
Group LP ("RHB"). On January
 
17, 2017, RHB and 2180811
 
were deemed to have filed
 
an assignment of
bankruptcy
 
under
 
the
 
Bankruptcy
 
and Insolvency
 
Act.
 
RHB and
 
2180811
 
were
 
majority
 
owned
 
by Birch
Hill Equity Partners, where Mr.
 
MacIntyre is employed.
 
Pre-Approval Policies and Shareholders’ Auditor Service
 
Fees
 
The Bank’s
 
Audit Committee
 
has implemented
 
a policy
 
restricting the services
 
that may
 
be performed
 
by
the shareholders’ independent
 
external auditor.
 
The policy provides
 
detailed guidance to
 
management as
to
 
the
 
specific
 
services
 
that
 
are
 
eligible
 
for
 
Audit
 
Committee
 
pre-approval.
 
By
 
law,
 
the
 
shareholders’
auditor may not provide certain services to the Bank or
 
its subsidiaries.
The types of services to be
 
performed by the shareholders' auditor,
 
together with the maximum amount
 
of
fees that may be paid
 
for such services, must
 
be annually pre-approved by
 
the Audit Committee pursuant
to the policy.
 
The policy
 
also provides
 
that the
 
Audit Committee
 
will, on a
 
quarterly basis,
 
receive a year-
to-date
 
report
 
of
 
fees
 
paid
 
or
 
payable
 
to
 
the
 
shareholders'
 
auditor
 
for
 
services
 
performed,
 
as
 
well
 
as
details
 
of
 
any
 
proposed
 
engagements
 
for
 
consideration
 
and,
 
if
 
necessary
 
pre-approval,
 
by
 
the
 
Audit
Committee.
 
In
 
making
 
its
 
determination
 
regarding
 
the
 
services
 
to
 
be
 
performed
 
by
 
the
 
shareholders’
auditor, the
 
Audit Committee considers
 
compliance with applicable
 
legal and regulatory
 
requirements and
guidance,
 
and
 
with
 
the
 
policy,
 
as
 
well
 
as
 
whether
 
the
 
provision
 
of
 
the
 
services
 
could
 
negatively
 
impact
auditor
 
independence.
 
This
 
includes
 
considering
 
whether
 
the
 
provision
 
of
 
the
 
services
 
would
 
place
 
the
auditor in a
 
position to audit
 
its own work,
 
place the auditor
 
in an advocacy
 
role on behalf
 
of the Bank,
 
or
result in the auditor acting in the role of the Bank’s
 
management.
Fees
 
paid
 
to
 
EY,
 
the
 
Bank’s
 
current
 
shareholders’
 
independent
 
external
 
auditor,
 
by
 
category
 
of
 
fee
 
for
services provided during the two most recently completed
 
fiscal years are detailed in the table below.
 
 
Fees paid to Ernst & Young
 
LLP
 
(thousands of Canadian dollars)
 
2024
 
 
 
2023
 
 
Audit Fees
1
 
$45,580
 
 
$43,085
 
 
Audit-related fees
2
 
3,893
 
 
5,724
 
 
Tax
 
fees
3
 
815
 
 
1,067
 
 
All Other fees
4
 
25
 
 
150
 
 
Total Bank and Subsidiaries
 
$50,313
 
 
$50,026
 
 
Investment Funds
5
 
 
 
 
 
 
– Public Funds
 
2,849
 
 
2,643
 
 
– Private Funds
 
3,571
 
 
4,749
 
 
Total Investment
 
Funds
 
$6,420
 
 
$7,392
 
 
Total
 
Fees
 
$56,733
 
 
$57,418
 
 
Notes:
1.
 
Audit fees
 
are fees
 
for the
 
professional services
 
in connection
 
with the
 
audit of
 
the Bank’s
 
financial statements
 
including the
audit of
 
internal control over
 
financial reporting, the
 
audit of
 
its subsidiaries,
 
and other services
 
that are
 
normally provided
 
by
the shareholders’ auditor in connection with statutory
 
and regulatory filings or engagements.
 
2.
 
Audit-related fees are fees for assurance and
 
related services that are performed by the shareholders’
 
auditor. These services
include:
 
employee
 
benefit
 
plan
 
audits;
 
audit
 
of
 
charitable
 
organizations;
 
audit
 
services
 
for
 
certain
 
special
 
purpose
 
entities
administered
 
by
 
the
 
Bank;
 
accounting
 
and
 
tax
 
consultation
 
in
 
connection
 
with
 
mergers,
 
acquisitions,
 
divestitures
 
and
restructurings; application
 
and general
 
controls reviews;
 
interpretation of
 
accounting, tax
 
and reporting
 
standards; assurance
services
 
or
 
specified
 
procedures
 
that
 
are
 
not
 
required
 
by
 
statute
 
or
 
regulation;
 
reports
 
on
 
control
 
procedures
 
at
 
a
 
service
organization; translation of financial
 
statements and reports in
 
connection with the audit
 
or review; and information
 
technology
advisory services.
 
3.
 
Tax fees comprise general tax planning and advice related to mergers and acquisitions and financing structures; electronic and
paper-based tax
 
knowledge publications;
 
income and
 
commodity tax
 
compliance and
 
advisory services;
 
and transfer
 
pricing
services and customs and duties issues.
 
4.
 
All
 
other fees
 
include fees
 
for benchmark
 
studies; regulatory
 
advisory services;
 
and performance
 
and process
 
improvement
services.
 
5.
 
Includes fees for professional services
 
provided by EY for certain
 
investment funds managed by subsidiaries of
 
the Bank. The
fees mainly
 
relate to
 
audit services;
 
$566 thousand
 
(2023 –
 
$630 thousand)
 
relates to
 
tax and
 
other services.
 
In addition
 
to
 
 
 
other
 
administrative
 
costs,
 
the
 
subsidiaries
 
are
 
responsible
 
for
 
the
 
auditors'
 
fees
 
for
 
professional
 
services
 
rendered
 
in
connections with the annual
 
audits, statutory and regulatory filings, and
 
other services for the
 
investment funds, in return
 
for a
fixed administration fee. For certain funds, these fees
 
are paid directly by the funds.
LEGAL PROCEEDINGS AND REGULATORY
 
ACTIONS
A description
 
of material
 
legal proceedings
 
and regulatory
 
matters to
 
which the
 
Bank is
 
a party
 
is set out
under the
 
heading “Legal
 
and Regulatory
 
Matters” in
 
Note 27
 
of the
 
Annual Financial
 
Statements for
 
the
year ended October 31, 2024, which note is incorporated
 
by reference in this AIF.
On
 
October
 
10,
 
2024,
 
the
 
Bank
 
announced
 
that,
 
following
 
active
 
cooperation
 
and
 
engagement
 
with
authorities
 
and
 
regulators,
 
it
 
had
 
reached
 
a
 
resolution
 
of
 
investigations
 
related
 
to
 
its
 
U.S.
 
BSA/AML
compliance
 
programs.
 
The Bank
 
and
 
certain
 
of its
 
U.S.
 
subsidiaries
 
have consented
 
to orders
 
with
 
the
OCC,
 
the
 
FRB,
 
and
 
FinCEN
 
and
 
entered
 
into
 
plea
 
agreements
 
with
 
the
 
DOJ,
 
Criminal
 
Division,
 
Money
Laundering
 
and
 
Asset
 
Recovery
 
Section
 
and
 
the
 
United
 
States
 
Attorney’s
 
Office
 
for
 
the
 
District
 
of
 
New
Jersey.
 
More information is provided in the "General Development of the
 
Business" section of this AIF.
 
During
 
fiscal
 
2024,
 
Financial
 
Transactions
 
and
 
Reports
 
Analysis
 
Centre
 
of
 
Canada
 
("FINTRAC")
undertook
 
a
 
compliance
 
examination
 
of
 
certain
 
aspects
 
of
 
the
 
Bank’s
 
AML
 
program
 
in
 
Canada.
 
FINTRAC
 
imposed
 
an
 
administrative
 
monetary
 
penalty
 
of
 
$9.2
 
million
 
and
 
issued
 
five
 
violations:
 
(i)
FINTRAC
 
found
 
that
 
TD
 
failed
 
to
 
file
 
suspicious
 
transaction
 
reports
 
(STRs)
 
in
 
20
 
of
 
the
 
cases
 
it
 
had
reviewed
 
and
 
(ii)
 
FINTRAC
 
issued
 
four
 
inter-related
 
violations
 
that
 
primarily
 
stemmed
 
from
 
the
 
Bank’s
failure
 
to
 
properly
 
identify
 
(i.e.,
 
assess
 
and
 
document)
 
its
 
full
 
population
 
of
 
high-risk
 
customers.
 
More
information is provided
 
under "Significant Events
 
– Global Resolution
 
of the Investigations
 
into the Bank's
U.S. BSA/AML Program" on pages 4 to 9 of the 2024
 
MD&A.
From time to
 
time, in the
 
ordinary course of
 
business, the
 
Bank and its
 
subsidiaries are
 
assessed fees
 
or
fines
 
by
 
securities
 
regulatory
 
authorities
1
 
in
 
relation
 
to
 
administrative
 
matters,
 
including
 
late
 
filings
 
or
reporting, which may be considered penalties
 
or sanctions pursuant to securities legislation,
 
but which are
not,
 
individually
 
or in
 
the
 
aggregate,
 
material
 
to
 
the
 
Bank.
 
In
 
addition,
 
the
 
Bank
 
and
 
its subsidiaries
 
are
subject
 
to
 
numerous
 
regulatory
 
authorities
 
around
 
the
 
world,
 
and
 
fees,
 
administrative
 
penalties,
settlement agreements and sanctions may be categorized
 
differently by each regulator.
 
1
National
 
Instrument
 
14-101
 
defines
 
“securities
 
legislation”
 
as
 
Canadian
 
provincial
 
and
 
territorial
 
securities
 
legislation,
 
and
“securities regulatory authority” as Canadian provincial
 
and territorial securities regulatory authorities.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
 
TRANSACTIONS
To
 
the best of our knowledge, the
 
Bank confirms that, as at December
 
4, 2024, there were no directors
 
or
executive officers
 
of the
 
Bank, nor
 
any associate
 
or affiliate
 
of a
 
director or
 
executive officer
 
of the
 
Bank,
with
 
a
 
material
 
interest
 
in
 
any
 
transaction
 
within
 
the
 
three
 
most
 
recently
 
completed
 
financial
 
years
 
or
during the current
 
financial year that
 
has materially affected
 
or is reasonably
 
expected to materially
 
affect
the Bank.
TRANSFER AGENTS AND REGISTRARS
 
Transfer Agent
TSX Trust Company
301-100 Adelaide Street West,
 
Toronto,
 
ON M5H 4H1
Telephone:
 
416-682-3860 or toll-free at 1-800-387-0825 (Canada and U.S.
 
only)
Fax:
 
1-888-249-6189
Email:
 
shareholderinquiries@tmx.com
 
Website:
 
www.tsxtrust.com
 
 
 
Co-transfer Agent and Registrar
Computershare
P.O.
 
Box 43006
Providence, RI 02940-3006
or
150 Royall Street
Canton, MA 02021
Telephone:
 
1-866-233-4836
TDD for hearing impaired:
 
1-800-231-5469
Shareholders outside of U.S.:
 
201-680-6578
TDD shareholders outside of U.S.:
 
201-680-6610
Website:
 
www.computershare.com/investor
 
INTERESTS OF EXPERTS
The
 
Consolidated
 
Financial
 
Statements
 
of
 
the
 
Bank
 
for
 
the
 
year
 
ended
 
October
 
31,
 
2024
 
filed
 
under
National
 
Instrument
 
51-102
 
–
 
Continuous
 
Disclosure
 
Obligations,
 
portions
 
of
 
which
 
are
 
incorporated
 
by
reference
 
in
 
this
 
AIF,
 
have
 
been
 
audited
 
by
 
Ernst
 
&
 
Young
 
LLP,
 
Chartered
 
Professional
 
Accountants,
Licensed Public
 
Accountants, Toronto,
 
Ontario. Ernst
 
& Young
 
LLP is
 
the external
 
auditor who
 
prepared
the
 
Report
 
of
 
Independent
 
Registered
 
Public
 
Accounting
 
Firm
 
–
 
Opinion
 
on
 
the
 
Consolidated
 
Financial
Statements, and
 
Report of
 
Independent Registered
 
Public Accounting
 
Firm –
 
Opinion on
 
Internal Control
over Financial Reporting. Ernst & Young
 
LLP is independent with respect to the Bank
 
within the context of
the
 
CPA
 
Code
 
of
 
Professional
 
Conduct
 
of
 
the
 
Chartered
 
Professional
 
Accountants
 
of
 
Ontario.
 
Ernst
 
&
Young
 
LLP is also
 
independent with respect
 
to the Bank
 
within the meaning
 
of the U.S.
 
federal securities
laws and
 
the
 
applicable
 
rules
 
and regulations
 
thereunder
 
adopted by
 
the
 
U.S.
 
Securities
 
and Exchange
Commission and the Public Company Accounting Oversight
 
Board.
MATERIAL CONTRACTS
Except
 
as
 
set
 
forth
 
below,
 
the
 
Bank
 
has
 
not
 
entered
 
into
 
any
 
material
 
contracts,
 
other
 
than
 
those
contracts entered into in the ordinary course of business,
 
within the last financial year.
A
 
plea
 
agreement
 
was
 
entered
 
into
 
on
 
October
 
10,
 
2024
 
between
 
the
 
Department
 
of
 
Justice,
 
Criminal
Division,
 
Money
 
Laundering
 
and
 
Asset
 
Recovery
 
Section,
 
the
 
United
 
States
 
Attorney’s
 
Office
 
for
 
the
District of
 
New Jersey
 
and TD
 
Bank, N.A.,
 
pursuant to
 
which TD
 
Bank, N.A.
 
plead guilty
 
to one
 
count of
conspiring to
 
fail to
 
maintain an
 
adequate AML
 
program, fail
 
to file
 
accurate currency
 
transaction reports
("CTRs") and launder money.
A
 
plea
 
agreement
 
was
 
entered
 
into
 
on
 
October
 
10,
 
2024
 
between
 
the
 
Department
 
of
 
Justice,
 
Criminal
Division,
 
Money
 
Laundering
 
and
 
Asset
 
Recovery
 
Section,
 
the
 
United
 
States
 
Attorney’s
 
Office
 
for
 
the
District of New
 
Jersey and
 
TD Bank US
 
Holding Company (TDBUSH),
 
pursuant to which
 
TDBUSH plead
guilty to two counts of failing to maintain an adequate
 
AML program and failing to file accurate CTRs.
The above
 
plea
 
agreements
 
were filed
 
as “material
 
contracts”
 
in
 
accordance
 
with
 
the
 
Bank’s
 
regulatory
obligations
 
under
 
securities
 
laws
 
and
 
at
 
the
 
request
 
of
 
the
 
Ontario
 
Securities
 
Commission
 
("OSC"),
 
as
part of ongoing continuous disclosure review by OSC Corporate
 
Finance.
 
Additional
 
information
 
about
 
the
 
Global
 
Resolution
 
can
 
be
 
found
 
under
 
"Significant
 
Events
 
–
 
Global
Resolution
 
of
 
the
 
Investigations
 
into
 
the
 
Bank's
 
U.S.
 
BSA/AML
 
Program"
 
on
 
pages
 
4
 
to
 
9
 
of
 
the
 
2024
MD&A, which is incorporated by reference.
The
 
Bank's
 
material
 
contracts
 
are
 
available
 
under
 
the
 
Bank's
 
issuer
 
profile
 
on
 
SEDAR+
 
at
www.sedarplus.ca
 
ADDITIONAL INFORMATION
Additional
 
information
 
concerning
 
the
 
Bank
 
may
 
be
 
found
 
on
 
SEDAR+
 
at
 
www.sedarplus.ca
and
 
on
EDGAR at www.sec.gov.
Additional information,
 
including directors’
 
and officers’
 
remuneration and
 
indebtedness, principal
 
holders
of the Bank’s
 
securities and
 
options to purchase
 
securities, in
 
each case
 
if applicable,
 
is contained
 
in the
Bank’s
 
management
 
proxy
 
circular
 
for
 
its most
 
recent
 
annual
 
meeting
 
of
 
shareholders
 
that
 
involved
 
the
election
 
of
 
directors.
 
Additional
 
financial
 
information
 
is
 
provided
 
in
 
the
 
Bank’s
 
comparative
 
financial
statements
 
and
 
management’s
 
discussion
 
and
 
analysis
 
for
 
its
 
most
 
recently
 
completed
 
financial
 
year,
which at the date hereof was the year ended October 31, 2024.
Under certain Canadian
 
bank resolution powers
 
that came into effect
 
on September 23,
 
2018 (the "bail-in
regime"), the Canada Deposit
 
Insurance Corporation (“CDIC”) may,
 
in circumstances where the Bank
 
has
ceased, or
 
is about
 
to cease,
 
to be
 
viable, assume
 
temporary control
 
or ownership
 
of the
 
Bank and
 
may
be granted broad powers by one or more orders
 
of the Governor in Council (Canada),
 
including the power
to sell or
 
dispose of
 
all or a
 
part of the
 
assets of
 
the Bank,
 
and the
 
power to
 
carry out
 
or cause
 
the Bank
to carry out a
 
transaction or a series
 
of transactions the purpose
 
of which is to restructure
 
the business of
the
 
Bank.
 
The
 
expressed
 
objectives
 
of
 
the
 
bail-in
 
regime
 
include
 
reducing
 
government
 
and
 
taxpayer
exposure
 
in
 
the
 
unlikely
 
event
 
of
 
a
 
failure
 
of
 
a
 
bank
 
designated
 
by
 
OSFI
as
 
a
 
domestic
 
systemically
important
 
bank
 
("D-SIB"),
 
reducing
 
the
 
likelihood
 
of
 
such
 
a
 
failure
 
by
 
increasing
 
market
 
discipline
 
and
reinforcing that
 
bank shareholders
 
and creditors
 
are responsible
 
for the
 
D-SIBs’ risks
 
and not
 
taxpayers,
and preserving financial stability
 
by empowering the CDIC
 
to quickly restore a
 
failed D-SIB to viability
 
and
allow
 
it
 
to
 
remain
 
open
 
and
 
operating,
 
even
 
where
 
the
 
D-SIB
 
has
 
experienced
 
severe
 
losses.
 
For
 
a
description
 
of
 
Canadian
 
bank
 
resolution
 
powers
 
and
 
the
 
consequent
 
risk
 
factors
 
attaching
 
to
 
certain
liabilities of
 
the Bank,
 
reference is
 
made to
 
https://www.td.com/investor
 
-relations/ir-homepage/regulatory-
disclosures/main-features-of-capital-instruments/main-features-of-capital-instruments.jsp
 
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appendix “A”
Intercorporate Relationships
The following is a list of the directly or indirectly
 
held significant subsidiaries.
 
SIGNIFICANT SUBSIDIARIES
1
(millions of Canadian dollars)
October 31, 2024
North America
Address of Head
or Principal
 
Office
2
Carrying value
 
of shares
owned by the Bank
3
Meloche Monnex Inc.
Security National
 
Insurance Company
Primmum Insurance Company
TD Direct Insurance Inc.
TD General Insurance
 
Company
TD Home and Auto
 
Insurance Company
Montreal, Québec
Montreal, Québec
Toronto, Ontario
Toronto, Ontario
Toronto, Ontario
Toronto, Ontario
$
2,753
TD Wealth
 
Holdings Canada
 
Limited
TD Asset Management Inc.
Toronto, Ontario
Toronto, Ontario
10,367
GMI Servicing Inc.
Winnipeg, Manitoba
TD Waterhouse Private Investment
 
Counsel Inc.
Toronto, Ontario
TD Waterhouse Canada
 
Inc.
Toronto, Ontario
TD Auto Finance (Canada)
 
Inc.
Toronto, Ontario
4,287
TD Group US Holdings LLC
Toronto Dominion Holdings (U.S.A.), Inc.
Cowen Inc.
Cowen Structured
 
Holdings LLC
Cowen Structured Holdings Inc.
ATM Execution LLC
RCG LV Pearl, LLC
Cowen Financial
 
Products LLC
Cowen Holdings, Inc.
Cowen and Company, LLC
Cowen CV Acquisition LLC
Cowen Execution Holdco LLC
Westminster Research
 
Associates LLC
RCG Insurance Company
TD Prime Services
 
LLC
TD Securities
 
Automated Trading
 
LLC
TD Securities (USA) LLC
Toronto Dominion (Texas)
 
LLC
Toronto Dominion (New York) LLC
Toronto Dominion Investments, Inc.
TD Bank US Holding Company
Epoch Investment Partners, Inc.
TD Bank
 
USA, National
 
Association
TD Bank, National Association
TD Equipment Finance, Inc.
TD Private
 
Client Wealth
 
LLC
TD Public Finance LLC
TD Wealth Management Services
 
Inc.
Wilmington, Delaware
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
New York, New York
Chicago, Illinois
New York, New York
New York, New York
New York, New York
New York, New York
Cherry Hill,
 
New Jersey
New York, New York
Cherry Hill,
 
New Jersey
Cherry Hill,
 
New Jersey
Mt. Laurel, New Jersey
New York, New York
New York, New York
Mt. Laurel, New Jersey
81,374
TD Investment Services Inc.
Toronto, Ontario
56
TD Life Insurance
 
Company
Toronto, Ontario
163
TD Mortgage Corporation
Toronto, Ontario
13,231
TD Pacific Mortgage Corporation
Vancouver, British Columbia
The Canada Trust Company
Toronto, Ontario
TD Securities Inc.
Toronto, Ontario
3,213
TD Vermillion Holdings Limited
TD Financial
 
International Ltd.
TD Reinsurance (Barbados)
 
Inc.
Toronto, Ontario
Hamilton, Bermuda
St. James,
 
Barbados
23,714
International
Cowen Malta Holdings Limited
Cowen Insurance
 
Company Ltd
Birkirkara, Malta
Birkirkara, Malta
27
Ramius Enterprise
 
Luxembourg Holdco
 
S.à.r.l.
Luxembourg, Luxembourg
247
Cowen Reinsurance
 
S.A.
Luxembourg, Luxembourg
TD Ireland Unlimited
 
Company
TD Global Finance
 
Unlimited Company
Dublin, Ireland
Dublin, Ireland
2,805
TD Securities (Japan)
 
Co. Ltd.
Tokyo, Japan
13
Toronto Dominion Australia Limited
Sydney, Australia
104
TD Bank Europe Limited
London, England
1,407
Toronto Dominion International
 
Pte. Ltd.
Cowen Execution Services Limited
Singapore, Singapore
London, England
6,812
Toronto Dominion (South East Asia) Limited
Singapore, Singapore
1,643
1
 
Unless otherwise noted, The Toronto-Dominion Bank, either directly or through its subsidiaries, owns 100% of the entity and/or
 
100% of any issued and outstanding voting
securities and
non-voting securities of the entities listed.
2
 
Each subsidiary is incorporated or organized in the country in which its head or principal office is located.
3
 
Carrying amounts are prepared for purposes of meeting the disclosure requirements of Section 308 (3)(a)(ii)
 
of the
Bank Act (Canada)
. Intercompany transactions may be included herein
which are eliminated for consolidated financial reporting purposes.
 
Appendix "B"
Description of Ratings
Description of ratings, as disclosed by Moody's Investors
 
Service on its public website
Ratings assigned
 
on Moody’s
 
global long-term
 
and short-term
 
rating scales
 
are forward-looking
 
opinions
of the relative
 
credit risks
 
of financial
 
obligations issued
 
by non-financial
 
corporates, financial
 
institutions,
structured finance vehicles, project finance
 
vehicles, and public sector entities.
 
Moody’s defines credit risk
as
 
the
 
risk
 
that
 
an
 
entity
 
may
 
not
 
meet
 
its
 
contractual
 
financial
 
obligations
 
as
 
they
 
come
 
due
 
and
 
any
estimated
 
financial
 
loss
 
in
 
the
 
event
 
of
 
default
 
or
 
impairment.
 
The
 
contractual
 
financial
 
obligations
addressed by
 
Moody’s
 
ratings are
 
those that
 
call for,
 
without regard
 
to enforceability,
 
the payment
 
of an
ascertainable
 
amount,
 
which
 
may
 
vary
 
based
 
upon
 
standard
 
sources
 
of
 
variation
 
(e.g.,
 
floating
 
interest
rates), by
 
an ascertainable
 
date. Moody’s
 
rating addresses
 
the issuer’s
 
ability to
 
obtain cash
 
sufficient to
service the
 
obligation, and
 
its willingness
 
to pay.
 
Moody’s ratings
 
do not
 
address non-
 
standard sources
of variation in the amount of the principal
 
obligation (e.g., equity indexed), absent
 
an express statement to
the contrary
 
in a press
 
release accompanying
 
an initial
 
rating.
 
Long-term ratings
 
are assigned to
 
issuers
or obligations
 
with
 
an
 
original
 
maturity
 
of
 
eleven
 
months
 
or
 
more
 
and
 
reflect
 
both
 
on
 
the
 
likelihood
 
of
 
a
default or
 
impairment
 
on contractual
 
financial
 
obligations
 
and the
 
expected
 
financial
 
loss
 
suffered
 
in
 
the
event of
 
default or
 
impairment. Short-term
 
ratings are
 
assigned to
 
obligations with
 
an original
 
maturity of
thirteen
 
months
 
or
 
less
 
and
 
reflect
 
both
 
on
 
the
 
likelihood
 
of
 
a
 
default
 
or
 
impairment
 
on
 
contractual
financial
 
obligations
 
and
 
the
 
expected
 
financial
 
loss
 
suffered
 
in
 
the
 
event
 
of
 
default
 
or
 
impairment.
 
Moody’s issues
 
ratings at the
 
issuer level and
 
instrument level on
 
both the long-term
 
scale and the
 
short-
term
 
scale.
 
Typically,
 
ratings
 
are
 
made
 
publicly
 
available
 
although
 
private
 
and
 
unpublished
 
ratings
 
may
also be assigned.
Moody’s
 
differentiates
 
structured
 
finance
 
ratings
 
from
 
fundamental
 
ratings
 
(i.e.,
 
ratings
 
on
 
nonfinancial
corporate, financial institution, and public
 
sector entities) on the global long-term
 
scale by adding (sf) to all
structured
 
finance
 
ratings.
 
The
 
addition
 
of
 
(sf)
 
to
 
structured
 
finance
 
ratings
 
should
 
eliminate
 
any
presumption
 
that
 
such
 
ratings
 
and
 
fundamental
 
ratings
 
at
 
the
 
same
 
letter
 
grade
 
level
 
will
 
behave
 
the
same.
 
The
 
(sf)
 
indicator
 
for
 
structured
 
finance
 
security
 
ratings
 
indicates
 
that
 
otherwise
 
similarly
 
rated
structured finance
 
and fundamental
 
securities may
 
have different
 
risk characteristics.
 
Through its
 
current
methodologies,
 
however,
 
Moody’s
 
aspires
 
to
 
achieve
 
broad
 
expected
 
equivalence
 
in
 
structured
 
finance
and fundamental rating performance when measured over
 
a long period of time.
Moody’s assigns ratings
 
to long-term and
 
short-term financial obligations.
 
Long-term ratings are
 
assigned
to
 
issuers
 
or
 
obligations
 
with
 
an
 
original
 
maturity
 
of
 
eleven
 
months
 
or
 
more
 
and
 
reflect
 
both
 
on
 
the
likelihood of a
 
default on contractually
 
promised payments
 
and the expected
 
financial loss
 
suffered in
 
the
event of default. Short-term ratings
 
are assigned to obligations with
 
an original maturity of thirteen
 
months
or
 
less
 
and
 
reflect
 
both
 
on
 
the
 
likelihood
 
of
 
a
 
default
 
on
 
contractually
 
promised
 
payments
 
and
 
the
expected financial
 
loss suffered
 
in the event
 
of default.
 
Moody’s appends
 
numerical modifiers
 
1, 2, and
 
3
to
 
each
 
generic
 
rating
 
classification
 
from
 
'Aa'
 
through
 
'Caa'.
 
The
 
modifier
 
1
 
indicates
 
that
 
the
 
obligation
ranks
 
in the
 
higher
 
end of
 
its generic
 
rating category;
 
the modifier
 
2 indicates
 
a mid-range
 
ranking;
 
and
the modifier
 
3
 
indicates
 
a ranking
 
in the
 
lower
 
end
 
of
 
that generic
 
rating category.
 
Additionally,
 
a '(hyb)'
indicator is appended to
 
all ratings of hybrid
 
securities issued by
 
banks, insurers, finance
 
companies, and
securities firms.
A global long-term rating of
 
'Aa' reflects obligations that are
 
judged to be of high quality
 
and are subject to
very
 
low credit
 
risk.
 
Obligations
 
rated
 
'A'
 
are
 
judged
 
to
 
be
 
upper-medium
 
grade
 
and
 
are subject
 
to
 
low
credit
 
risk.
 
Obligations
 
rated
 
'Baa'
 
are
 
judged
 
to
 
be
 
medium-grade
 
and
 
subject
 
to
 
moderate
 
credit
 
risk
and as such
 
may possess
 
certain speculative characteristics.
 
Global short-term
 
ratings of 'P-1'
 
(Prime-1)
reflect a superior ability to repay short-term obligations.
A Moody’s
 
rating outlook
 
is an
 
opinion regarding
 
the likely
 
rating direction
 
over the
 
medium term.
 
Rating
outlooks
 
fall
 
into
 
four
 
categories:
 
'Positive'
 
(POS),
 
'Negative'
 
(NEG),
 
'Stable'
 
(STA),
 
and
 
'Developing'
(DEV). Outlooks
 
may be
 
assigned
 
at the
 
issuer level
 
or at
 
the rating
 
level. Where
 
there is
 
an outlook
 
at
 
the
 
issuer
 
level
 
and
 
the
 
issuer
 
has
 
multiple
 
ratings
 
with
 
differing
 
outlooks,
 
an
 
“(m)”
 
modifier
 
to
 
indicate
multiple
 
will
 
be
 
displayed
 
and
 
Moody’s
 
press
 
releases
 
will
 
describe
 
and
 
provide
 
the
 
rationale
 
for
 
these
differences. A designation
 
of 'RUR' (Rating(s)
 
Under Review) is
 
typically used when
 
an issuer has
 
one or
more
 
ratings
 
under
 
review,
 
which
 
overrides
 
the
 
outlook
 
designation.
 
A
 
designation
 
of
 
'RWR'
 
(Rating(s)
Withdrawn)
 
indicates
 
that
 
an
 
issuer
 
has
 
no
 
active
 
ratings
 
to
 
which
 
an
 
outlook
 
is
 
applicable.
 
Rating
outlooks are
 
not assigned
 
to all
 
rated entities.
 
In some
 
cases, this
 
will be
 
indicated by
 
the display
 
'NOO'
(No Outlook).
A
 
'Stable'
 
outlook
 
indicates
 
a
 
low
 
likelihood
 
of
 
a
 
rating
 
change
 
over
 
the
 
medium
 
term.
 
A
 
'Negative',
'Positive' or 'Developing'
 
outlook indicates
 
a higher likelihood
 
of a rating
 
change over
 
the medium term.
 
A
rating
 
committee
 
that
 
assigns
 
an
 
outlook
 
of
 
'Stable',
 
'Negative',
 
'Positive',
 
or
 
'Developing'
 
to
 
an
 
issuer’s
rating is also indicating its belief
 
that the issuer’s credit profile is consistent
 
with the relevant rating level at
that point in time.
Description of ratings, as disclosed by S&P Global Ratings
 
on its public website
An
 
S&P Global
 
Ratings
 
issue
 
credit
 
rating
 
is a
 
forward-looking
 
opinion
 
about the
 
creditworthiness
 
of
 
an
obligor with
 
respect to
 
a specific
 
financial obligation,
 
a specific
 
class of
 
financial obligations,
 
or a
 
specific
financial program
 
(including ratings
 
on medium-term
 
note programs
 
and commercial
 
paper programs).
 
It
takes
 
into
 
consideration
 
the
 
creditworthiness
 
of
 
guarantors,
 
insurers,
 
or
 
other
 
forms
 
of
 
credit
enhancement
 
on
 
the
 
obligation
 
and
 
takes
 
into
 
account
 
the
 
currency
 
in
 
which
 
the
 
obligation
 
is
denominated.
 
The
 
opinion
 
reflects
 
S&P Global
 
Ratings'
 
view of
 
the obligor's
 
capacity
 
and willingness
 
to
meet its
 
financial commitments
 
as they
 
come due,
 
and this
 
opinion may
 
assess terms,
 
such as
 
collateral
security and subordination, which could affect ultimate
 
payment in the event of default.
Issue
 
credit
 
ratings
 
can
 
be
 
either
 
long-term
 
or
 
short-term.
 
Short-term
 
issue
 
credit
 
ratings
 
are
 
generally
assigned
 
to
 
those
 
obligations
 
considered
 
short-term
 
in
 
the
 
relevant
 
market,
 
typically
 
with
 
an
 
original
maturity
 
of
 
no
 
more
 
than
 
365
 
days.
 
Short-term
 
issue
 
credit
 
ratings
 
are
 
also
 
used
 
to
 
indicate
 
the
creditworthiness
 
of
 
an
 
obligor
 
with
 
respect
 
to
 
put
 
features
 
on
 
long-term
 
obligations.
 
We
 
would
 
typically
assign a
 
long-term issue
 
credit rating
 
to an
 
obligation
 
with an
 
original maturity
 
of greater
 
than 365
 
days.
However,
 
the
 
ratings
 
we
 
assign
 
to
 
certain
 
instruments
 
may
 
diverge
 
from
 
these
 
guidelines
 
based
 
on
market practices.
Issue
 
credit
 
ratings
 
are
 
based,
 
in
 
varying
 
degrees,
 
on
 
S&P
 
Global
 
Ratings'
 
analysis
 
of
 
the
 
following
considerations:
•
 
The likelihood of payment--the capacity and willingness
 
of the obligor to meet its financial
commitments on an obligation in accordance with the terms of the
 
obligation;
•
 
The nature and provisions of the financial obligation, and the
 
promise we impute; and
•
 
The protection afforded by,
 
and relative position of, the financial obligation in the event of
 
a
bankruptcy, reorganization,
 
or other arrangement under the laws of bankruptcy
 
and other laws
affecting creditors' rights.
An issue rating is an assessment of default
 
risk but may incorporate an assessment
 
of relative seniority or
ultimate
 
recovery
 
in
 
the
 
event
 
of
 
default.
 
Junior
 
obligations
 
are
 
typically
 
rated
 
lower
 
than
 
senior
obligations, to
 
reflect lower
 
priority in
 
bankruptcy,
 
as noted
 
above. (Such
 
differentiation
 
may apply
 
when
an entity
 
has both
 
senior and
 
subordinated obligations,
 
secured and
 
unsecured
 
obligations, or
 
operating
company and holding company obligations.)
A
 
long-term
 
obligation
 
rated
 
'AA’
 
differs
 
from
 
the
 
highest-rated
 
obligations
 
only
 
to
 
a
 
small
 
degree.
 
The
obligor's
 
capacity
 
to
 
meet
 
its
 
financial
 
commitments
 
on
 
the
 
obligation
 
is
 
very
 
strong.
 
A
 
long-term
obligation rated ‘A’
 
is somewhat more susceptible
 
to the adverse effects
 
of changes in circumstances
 
and
economic conditions
 
than
 
obligations in
 
higher-rated categories.
 
However,
 
the obligor's
 
capacity to
 
meet
its
 
financial
 
commitments
 
on
 
the
 
obligation
 
is
 
still
 
strong.
 
A
 
long-term
 
obligation
 
rated
 
'BBB'
 
exhibits
adequate protection
 
parameters. However,
 
adverse economic
 
conditions or
 
changing circumstances
 
are
more
 
likely
 
to
 
weaken
 
the
 
obligor's
 
capacity
 
to
 
meet
 
its
 
financial
 
commitments
 
on
 
the
 
obligation.
 
The
 
ratings from 'AA'
 
to 'CCC'
 
may be modified
 
by the
 
addition of a
 
plus (+)
 
or minus
 
(-) sign to
 
show relative
standing within the major rating categories.
A short-term
 
obligation
 
rated 'A-1'
 
is rated
 
in the
 
highest category
 
by S&P
 
Global
 
Ratings.
 
The obligor's
capacity
 
to
 
meet
 
its
 
financial
 
commitments
 
on
 
the
 
obligation
 
is
 
strong.
 
Within
 
this
 
category,
 
certain
obligations
 
are
 
designated
 
with
 
a
 
plus
 
sign
 
(+).
 
This
 
indicates
 
that
 
the
 
obligor's
 
capacity
 
to
 
meet
 
its
financial commitments on these obligations is extremely
 
strong.
The
 
S&P
 
Global
 
Ratings
 
Canadian
 
preferred
 
share
 
rating
 
scale
 
serves
 
issuers,
 
investors,
 
and
intermediaries
 
in
 
the
 
Canadian
 
financial
 
markets
 
by
 
expressing
 
preferred
 
share
 
ratings
 
(determined
 
in
accordance
 
with
 
global
 
rating
 
criteria)
 
in
 
terms
 
of
 
rating
 
symbols
 
that
 
have
 
been
 
actively
 
used
 
in
 
the
Canadian market over a number
 
of years. An S&P Global
 
Ratings preferred share rating on
 
the Canadian
scale
 
is
 
a
 
forward-looking
 
opinion
 
about
 
the
 
creditworthiness
 
of
 
an
 
obligor
 
with
 
respect
 
to
 
a
 
specific
preferred
 
share
 
obligation
 
issued
 
in
 
the
 
Canadian
 
market
 
relative
 
to
 
preferred
 
shares
 
issued
 
by
 
other
issuers in
 
the Canadian
 
market. There
 
is a
 
direct correspondence
 
between the
 
specific ratings
 
assigned
on
 
the
 
Canadian
 
preferred
 
share
 
scale
 
and
 
the
 
various
 
rating
 
levels
 
on
 
the
 
global
 
debt
 
rating
 
scale
 
of
S&P Global
 
Ratings. The
 
Canadian scale
 
rating is
 
fully determined
 
by the
 
applicable global
 
scale rating,
and there are no additional analytical criteria
 
associated with the determination of ratings on
 
the Canadian
scale.
 
S&P
 
Global
 
Ratings'
 
practice
 
is
 
to
 
present
 
ratings
 
on
 
an
 
issuer's
 
preferred
 
shares
 
on
 
both
 
the
global rating
 
scale and
 
on
 
the Canadian
 
national scale
 
when
 
listing the
 
ratings
 
for a
 
particular
 
issuer.
 
A
Canadian
 
National
 
preferred
 
share
 
rating
 
of
 
'P-2'
 
corresponds
 
to
 
global
 
scale
 
preferred
 
share
 
rating
 
of
'BBB'.
An
 
S&P
 
Global
 
Ratings
 
outlook
 
assesses
 
the
 
potential
 
direction
 
of
 
a
 
long-term
 
credit
 
rating
 
over
 
the
intermediate term,
 
which is
 
generally up
 
to two
 
years for
 
investment grade
 
and generally
 
up to
 
one year
for speculative
 
grade. In
 
determining a
 
rating outlook,
 
consideration is
 
given to
 
any changes
 
in economic
and/or
 
fundamental
 
business
 
conditions.
 
A
 
'Stable'
 
rating
 
outlook
 
indicates
 
that
 
a
 
rating
 
is
 
not
 
likely
 
to
change.
Description of ratings, as disclosed by Fitch on its
 
public website
Fitch Ratings
 
publishes credit
 
ratings that
 
are forward
 
-looking opinions
 
on the
 
relative
 
ability of
 
an entity
or obligation
 
to meet
 
financial commitments.
 
Issuer Default
 
Ratings (IDRs)
 
are assigned
 
to corporations,
sovereign entities,
 
and
 
financial
 
institutions,
 
such
 
as banks,
 
leasing
 
companies
 
and
 
insurers,
 
and public
finance entities
 
(local and
 
regional governments).
 
Issue level
 
ratings are
 
also assigned
 
and often
 
include
an
 
expectation
 
of
 
recovery,
 
which
 
may be
 
notched
 
above
 
or below
 
the
 
issuer-level
 
rating.
 
Issue
 
ratings
are
 
assigned
 
to
 
secured
 
and
 
unsecured
 
debt
 
securities,
 
loans,
 
preferred
 
stock
 
and
 
other
 
instruments,
Structured finance
 
ratings
 
are issue
 
ratings
 
to securities
 
backed by
 
receivables
 
or other
 
financial
 
assets
that consider the obligations’ relative vulnerability to default.
Credit ratings are
 
indications of the
 
likelihood of repayment
 
in accordance with
 
the terms of
 
the issuance.
In limited
 
cases, Fitch
 
may include
 
additional considerations
 
(i.e. rate
 
to a
 
higher or
 
lower standard
 
than
that
 
implied
 
in
 
the
 
obligation’s
 
documentation).
 
Fitch’s
 
credit
 
rating
 
scale
 
for
 
issuers
 
and
 
issues
 
is
expressed using the
 
categories ‘AAA’
 
to ‘BBB’ (investment
 
grade) and ‘BB’
 
to ‘D’ (speculative
 
grade) with
an
 
additional
 
+/–
 
for
 
‘AA’
 
through
 
‘CCC’
 
levels,
 
indicating
 
relative
 
differences
 
of
 
probability
 
of
 
default
 
or
recovery for issues. The terms “investment grade” and
 
“speculative grade” are market conventions and do
not
 
imply
 
any
 
recommendation
 
or
 
endorsement
 
of
 
a
 
specific
 
security
 
for
 
investment
 
purposes.
Investment-grade categories indicate relatively
 
low to moderate credit risk, while
 
ratings in the speculative
categories signal either a higher level of credit risk or that
 
a default already occurred.
Credit
 
ratings
 
are
 
also
 
designated
 
as
 
‘long-term’
 
or
 
‘short-term’
 
with
 
different
 
scales
 
used.
 
Long-term
ratings use the noted ‘AAA’
 
to ‘D’ scale. Fitch’s rating
 
analysis considers the long-term rating
 
horizon, and
therefore
 
considers
 
both
 
near-term
 
and
 
long-term
 
key
 
rating
 
drivers.
 
Short-term
 
ratings
 
scale
 
is
 
‘F1+’
 
through
 
‘F3’,
 
‘B’,
 
‘C’
 
and
 
‘D/RD’.
 
The
 
‘D’
 
and
 
‘RD’
 
ratings
 
are
 
used
 
for
 
both
 
long-term
 
and
 
short-term
ratings.
Ratings of
 
individual securities
 
or financial
 
obligations of
 
a corporate
 
issuer address
 
relative vulnerability
to
 
default
 
on
 
an
 
ordinal
 
scale.
 
In
 
addition,
 
for
 
financial
 
obligations
 
in
 
corporate
 
finance,
 
a
 
measure
 
of
recovery
 
given
 
default
 
on
 
that
 
liability
 
is
 
also
 
included
 
in
 
the
 
rating
 
assessment.
 
This
 
notably
 
applies
 
to
covered
 
bonds
 
ratings,
 
which
 
incorporate
 
both
 
an
 
indication
 
of
 
the
 
probability
 
of
 
default
 
and
 
of
 
the
recovery
 
given
 
a
 
default
 
of
 
this
 
debt
 
instrument.
 
On
 
the
 
contrary,
 
Ratings
 
of
 
debtor-in-possession
 
(DIP)
obligations incorporate
 
the
 
expectation
 
of full
 
repayment.
 
The relationship
 
between the
 
issuer scale
 
and
obligation
 
scale
 
assumes
 
a
 
generic
 
historical
 
average
 
recovery.
 
Individual
 
obligations
 
can
 
be
 
assigned
ratings
 
higher,
 
lower,
 
or
 
the
 
same
 
as
 
that
 
entity’s
 
issuer
 
rating
 
or
 
IDR,
 
based
 
on
 
their
 
relative
 
ranking,
relative vulnerability to
 
default or based
 
on explicit Recovery
 
Ratings. As a result,
 
individual obligations of
entities, such as corporations, are assigned ratings
 
higher, lower,
 
or the same as that entity’s issuer
 
rating
or IDR, except
 
DIP obligation ratings
 
that are not
 
based off
 
an IDR.
 
At the lower
 
end of the
 
ratings scale,
Fitch publishes explicit Recovery Ratings in many cases
 
to complement issuer and obligation ratings.
'AA'
 
(Very
 
High
 
Credit
 
Quality)
 
ratings
 
denote
 
expectations
 
of
 
very
 
low
 
credit
 
risk.
 
They
 
indicate
 
very
strong
 
capacity
 
for
 
payment
 
of
 
financial
 
commitments.
 
This
 
capacity
 
is
 
not
 
significantly
 
vulnerable
 
to
foreseeable events.
 
‘A’ (High
 
Credit Quality) ratings
 
denote expectations of
 
low default risk. The
 
capacity
for
 
payment
 
of
 
financial
 
commitments
 
is
 
considered
 
strong.
 
This
 
capacity
 
may,
 
nevertheless,
 
be
 
more
vulnerable
 
to adverse
 
business
 
or economic
 
conditions
 
than is
 
the
 
case
 
for higher
 
ratings.
 
‘BBB’ (Good
Credit Quality) ratings
 
indicate that expectations
 
of credit risk
 
are currently low.
 
The capacity for
 
payment
of financial commitments
 
is considered adequate,
 
but adverse business
 
or economic conditions
 
are more
likely to impair this capacity.
A short-term
 
issuer
 
or obligation
 
rating
 
is based
 
in
 
all cases
 
on
 
the
 
short-term
 
vulnerability
 
to
 
default
 
of
the
 
rated
 
entity
 
and
 
relates
 
to
 
the
 
capacity
 
to
 
meet
 
financial
 
obligations
 
in
 
accordance
 
with
 
the
documentation
 
governing
 
the
 
relevant
 
obligation.
 
Short-term
 
deposit
 
ratings
 
may
 
be
 
adjusted
 
for
 
loss
severity.
 
Short-Term
 
Ratings
 
are assigned
 
to obligations
 
whose initial
 
maturity
 
is viewed
 
as “short
 
term”
based
 
on
 
market
 
convention
 
(a
 
long-term
 
rating
 
can
 
also
 
be
 
used
 
to
 
rate
 
an
 
issue
 
with
 
short
 
maturity).
Typically,
 
this means
 
up to
 
13 months
 
for corporate,
 
sovereign, and
 
structured
 
obligations and
 
up to
 
36
months
 
for
 
obligations
 
in
 
U.S.
 
public
 
finance
 
markets.
 
F1
 
(Highest
 
Short-Term
 
Credit
 
Quality)
 
Indicates
the
 
strongest
 
intrinsic
 
capacity
 
for
 
timely
 
payment
 
of
 
financial
 
commitments;
 
may
 
have
 
an
 
added
 
"+"
 
to
denote any exceptionally strong credit feature.
Outlooks
 
indicate
 
the
 
direction
 
a
 
rating
 
is
 
likely
 
to
 
move
 
over
 
a
 
one-
 
to
 
two-year
 
period.
 
They
 
reflect
financial or
 
other trends
 
that have
 
not yet
 
reached or
 
been sustained
 
the level
 
that would
 
cause a
 
rating
action, but which
 
may do so
 
if such trends
 
continue. A Positive
 
Rating Outlook indicates
 
an upward trend
on the
 
rating scale.
 
Conversely,
 
a Negative
 
Rating Outlook
 
signals
 
a negative
 
trend on
 
the rating
 
scale.
Positive or Negative
 
Rating Outlooks
 
do not imply
 
that a rating
 
change is inevitable,
 
and similarly,
 
ratings
with Stable Outlooks can be raised
 
or lowered without a prior revision
 
to the Outlook. Occasionally,
 
where
the fundamental
 
trend has
 
strong, conflicting
 
elements of
 
both positive
 
and negative,
 
the Rating
 
Outlook
may be described as “Evolving.”
Description of ratings, as disclosed by DBRS Morningstar
 
on its public website
The
 
DBRS
 
Morningstar
 
long-term
 
credit
 
ratings
 
provide
 
opinions
 
on
 
risk
 
of
 
default.
 
DBRS
 
Morningstar
considers
 
risk
 
of
 
default
 
to
 
be
 
the
 
risk
 
that
 
an
 
issuer
 
will
 
fail
 
to
 
satisfy
 
the
 
financial
 
obligations
 
in
accordance with
 
the terms
 
under which
 
a long-term
 
obligation has
 
been issued.
 
Credit ratings
 
are based
on quantitative and
 
qualitative considerations
 
relevant to the
 
issuer, and
 
the relative ranking
 
of claims. All
rating categories from AA to CCC contain the subcategories
 
(high) and (low). The absence of either a
(high) or (low) designation
 
indicates the credit rating
 
is in the middle
 
of the category.
 
A long-term rating of
'AA' is
 
of superior
 
credit quality.
 
The capacity
 
for the
 
payment of
 
financial obligations
 
is considered
 
high.
Credit
 
quality
 
differs
 
from
 
'AAA'
 
only
 
to
 
a
 
small
 
degree.
 
Unlikely
 
to
 
be
 
significantly
 
vulnerable
 
to
 
future
events.
 
A
 
long-term
 
rating
 
of
 
'A'
 
is
 
of
 
good
 
credit
 
quality.
 
The
 
capacity
 
for
 
the
 
payment
 
of
 
financial
obligations
 
is
 
substantial,
 
but
 
of
 
lesser
 
credit
 
quality
 
than
 
'AA'.
 
May
 
be
 
vulnerable
 
to
 
future
 
events,
 
but
qualifying negative factors are considered manageable.
The DBRS Morningstar
 
short-term debt rating
 
scale provides
 
an opinion on
 
the risk that
 
an issuer will
 
not
meet
 
its
 
short-term
 
financial
 
obligations
 
in
 
a
 
timely
 
manner.
 
Ratings
 
are
 
based
 
on
 
quantitative
 
and
qualitative
 
considerations
 
relevant
 
to
 
the
 
issuer
 
and
 
the
 
relative
 
ranking
 
of
 
claims.
 
The
 
'R-1'
 
and
 
'R-2'
rating
 
categories
 
are
 
further
 
denoted
 
by
 
the
 
subcategories
 
'(high)',
 
'(middle)',
 
and
 
'(low)'.
 
A
 
short-term
debt rating of 'R-1' '(high)' is the highest
 
credit quality.
 
The capacity for the payment of short-term
 
financial
obligations as they fall due is exceptionally high. Unlikely to be
 
adversely affected by future events.
The DBRS
 
Morningstar preferred
 
share rating
 
scale reflects
 
an opinion
 
on the
 
risk that
 
an issuer
 
will not
fulfil its obligations with respect
 
to both dividend and
 
principal commitments in respect
 
of preferred shares
issued in the Canadian
 
securities market in accordance
 
with the terms under
 
which the relevant preferred
shares have been issued.
 
Every DBRS Morningstar
 
rating using the preferred
 
share rating scale
 
is based
on quantitative
 
and qualitative
 
considerations relevant
 
to the
 
issuing entity.
 
Each rating
 
category may
 
be
denoted by the
 
subcategories 'high'
 
and 'low'. The
 
absence of either
 
a 'high' or 'low'
 
designation indicates
the rating
 
is
 
in
 
the
 
middle
 
of the
 
category.
 
Preferred
 
shares
 
issued
 
in
 
the
 
Canadian
 
securities
 
markets
are
 
rated
 
using
 
the
 
preferred
 
share
 
rating
 
scale
 
and
 
preferred
 
shares
 
issued
 
outside
 
of
 
the
 
Canadian
securities markets are rated using
 
the long-term obligations scale.
 
Because preferred share dividends
 
are
only payable
 
when approved,
 
the non-payment
 
of a
 
preferred share
 
dividend does
 
not necessarily
 
result
in a 'D'. DBRS Morningstar
 
may also use 'SD' (Selective
 
Default) in cases where
 
only some securities are
affected, such
 
as in
 
the case
 
of a
 
“distressed exchange”.
 
Preferred shares
 
rated 'Pfd-2'
 
are generally
 
of
good
 
credit
 
quality.
 
Protection
 
of
 
dividends
 
and
 
principal
 
is
 
still
 
substantial,
 
but
 
earnings,
 
the
 
balance
sheet
 
and
 
coverage
 
ratios
 
are
 
not
 
as
 
strong
 
as
 
'Pfd-1'
 
rated
 
companies.
 
Generally,
 
'Pfd-2'
 
ratings
correspond with issuers with an 'A' category or higher reference
 
point.
Appendix "C"
 
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF THE TORONTO-DOMINION BANK
CHARTER
In this Charter, "Bank" means
 
The Toronto
 
-Dominion Bank on a consolidated basis.
 
Main Responsibilities:
●
 
overseeing reliable, accurate and clear financial reporting
 
to shareholders
●
 
overseeing the effectiveness of internal controls,
 
including internal control over financial reporting
●
 
recommending to the Board the appointment of the shareholders’
 
auditor for approval by the
shareholders and the compensation and terms of engagement
 
of the shareholders’ auditor for
approval by the Board
●
 
overseeing the work of the shareholders' auditor,
 
including requiring the shareholders' auditor to
report directly to the Committee
●
 
reviewing reports from the shareholders' auditor,
 
chief financial officer,
 
chief auditor, chief
compliance officer, and
 
chief anti-money laundering officer,
 
and evaluating the effectiveness and
independence of each
●
 
overseeing the establishment and maintenance of policies
 
and programs reasonably designed to
achieve and maintain the Bank's compliance with the laws
 
and regulations that apply to it
●
 
acting as the audit committee for certain subsidiaries of the
 
Bank that are federally regulated
financial institutions
Independence is Key:
●
 
the Committee is composed entirely of independent directors
●
 
the Committee meets without management present at
 
each Committee meeting
●
 
the Committee has the authority to engage independent advisors,
 
paid for by the Bank, to help it
make the best possible decisions on the financial reporting,
 
accounting policies and practices,
disclosure practices, compliance, and effectiveness
 
of internal controls of the Bank
Composition and Independence, Financial Literacy and
 
Authority
The Committee shall be composed of members of the Board of Directors
 
in such number as is
determined by the Board with regard to the by-laws of
 
the Bank, applicable laws, rules and regulations,
and any other relevant considerations, subject to a minimum
 
requirement of three directors.
No member of the Committee may be an officer
 
or retired officer of the Bank.
 
Every member of the
Committee shall be independent of the Bank within the meaning
 
of all applicable laws, rules and
regulations including those particularly applicable to audit committee
 
members and any other relevant
consideration as determined by the Board of Directors,
 
including the Bank's Director Independence
Policy.
 
No member of the Committee may serve on more than
 
three public company audit committees
(including the Bank) without the consent of the Corporate
 
Governance Committee and the Board.
The members of the Committee shall be appointed by the
 
Board and shall serve until their successor is
duly appointed, unless the member resigns, is removed,
 
or ceases to be a director.
 
A Chair will be
appointed by the Board upon recommendation of the
 
Corporate Governance Committee, failing which the
members of the Committee may designate a Chair by majority
 
vote.
 
The Committee may from time to
time delegate to its Chair certain powers or responsibilities
 
that the Committee itself may have hereunder,
and if the Chair exercises such powers and responsibilities,
 
the Chair shall report to the Committee with
respect to their actions.
In addition to the qualities set out in the Position Description for
 
Directors, all members of the Committee
should be financially literate or be willing and able to acquire
 
the necessary knowledge quickly.
 
Financially literate means the ability to read and understand
 
financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable
 
to the breadth and complexity
of the issues that can reasonably be expected to be raised
 
by the Bank's financial statements.
 
At least
one member of the Committee shall have a background
 
in accounting or related financial management
experience which would include any experience or background
 
that results in the individual's financial
sophistication, including being or having been an auditor,
 
a chief executive officer,
 
chief financial officer or
other senior officer with financial oversight responsibilities.
In fulfilling the responsibilities set out in this Charter,
 
the Committee has the authority to conduct any
investigation it deems appropriate to, and access any officer,
 
employee or agent of the Bank for the
purpose of fulfilling its responsibilities, including the shareholders'
 
auditor.
 
The Committee may obtain advice and assistance from outside
 
legal, accounting or other advisors as the
Committee deems necessary to carry out its duties and
 
may retain and determine the compensation to be
paid by the Bank for such independent counsel or outside advisor
 
in its sole discretion without seeking
Board approval.
 
Committee members will enhance their familiarity with
 
financial, accounting and other areas relevant to
their responsibilities by participating in educational sessions
 
or other opportunities for development.
Meetings
The Committee shall meet at least four times annually,
 
or more frequently as circumstances dictate or as
the mandate requires.
 
The Committee shall meet with the shareholders'
 
auditor and management
quarterly to review the Bank's financial statements consistent with
 
the section entitled "Financial
Reporting" below.
 
The Committee shall dedicate a portion of each
 
of its regularly scheduled quarterly
meetings to meeting separately with each of the Chief
 
Executive Officer,
 
the Chief Financial Officer,
 
the
General Counsel, the Chief Auditor,
 
the Chief Risk Officer,
 
the Chief Compliance Officer,
 
the Chief Anti-
Money Laundering Officer,
 
and the shareholders' auditor and to meeting on its own
 
without members of
management or the shareholders' auditor present.
 
Any member of the Committee may make a request to
the Chair for a Committee meeting or any part thereof
 
to be held without management present. At each
Committee meeting, the Committee shall meet on its own without
 
members of management.
 
To
 
facilitate open communication between this Committee
 
and the Risk Committee, and where the Chair
of the Risk Committee is not a member of this Committee, the
 
Chair of the Risk Committee shall have a
standing invitation to attend each meeting of this Committee
 
at his or her discretion as a non-voting
observer and receive the materials for each such meeting. In
 
addition, this Committee shall meet with the
Risk Committee at least two times annually to discuss topics relevant
 
to both Committees.
 
The Committee may invite to its meetings any director,
 
member of management of the Bank or such other
persons as it deems appropriate in order to carry out its
 
responsibilities.
 
The Committee may also
exclude from its meetings any persons it deems appropriate
 
in order to carry out its responsibilities.
Specific Duties and Responsibilities
Financial Reporting
The Committee is responsible for the oversight of reliable,
 
accurate and clear financial reporting to
shareholders, including reviewing and discussing the
 
Bank's annual and interim consolidated financial
statements and management's discussion and analysis
 
("MD&A") and reviewing the shareholders' auditor
opinion on the annual financial statements and on the
 
Bank's internal control over financial reporting, prior
to approval by the Board and release to the public, and
 
reviewing, as appropriate, releases to the public
of significant material non-public financial information of the
 
Bank.
 
Such review of the financial reports of
the Bank shall include, when appropriate but at least annually,
 
discussion with management, the Internal
Audit Division and the shareholders' auditor of significant
 
issues regarding accounting principles,
practices, financial statement, and MD&A disclosures, including
 
non-GAAP and other financial measures
(e.g., Items of Note), and significant management estimates
 
and judgments.
The Committee reviews earnings news releases and satisfies
 
itself that adequate procedures are in place
for the review of the Bank's public disclosure of financial
 
information extracted or derived from the Bank's
financial statements, other than the public disclosure in the
 
Bank's annual and interim consolidated
financial statements and MD&A
 
and must periodically assess the adequacy of those
 
procedures.
Financial Reporting Process
The Committee supports the Board in its oversight of the
 
financial reporting process of the Bank including
by:
●
working with management, the shareholders' auditor and the Internal
 
Audit Division to review the
integrity of the Bank's financial reporting processes;
●
reviewing the process relating to and the certifications
 
of the Chief Executive Officer and the
Chief Financial Officer on the integrity of the Bank's
 
quarterly and annual consolidated financial
statements and such other periodic disclosure documents
 
required by regulators or that may be
required by law;
●
reviewing sustainability disclosures required to be included
 
in financial reporting, including any
such disclosures relating to climate-related matters;
●
considering the key accounting policies of the Bank and reviewing
 
in appropriate detail the basis
for significant estimates and judgments including but not
 
limited to actuarial reserves, allowances
for loan losses and other valuation allowances and discussing
 
such matters with management
and/or the shareholders' auditor;
●
keeping abreast of trends and best practices in financial reporting
 
including considering, as they
arise, topical issues and their application to the Bank;
●
reviewing with management and the shareholders' auditor significant
 
accounting principles and
policies and all critical accounting policies and practices
 
used and any significant audit
adjustments made;
●
considering and approving, if appropriate, substantive
 
changes to the Bank's accounting and
financial reporting policies as suggested by management, the
 
shareholders' auditor,
 
or the
Internal Audit Division;
 
●
establishing regular systems of reporting to the Committee
 
by each of management, the
shareholders' auditor and the Internal Audit Division regarding
 
any significant judgments made in
management's preparation of the financial statements and
 
any significant difficulties encountered
during the course of the review or audit, including any restrictions
 
on the scope of work or access
to required information; and
●
reviewing tax and tax planning matters that are material
 
to the financial statements.
The Committee's Role in the Financial Reporting Process
The Committee oversees the financial reporting process
 
at the Bank and reviews quarterly reporting
regarding the process undertaken by management. The
 
Committee approves the scope and terms of the
audit engagement and reviews the results of the review
 
by the shareholders' auditor.
 
The shareholders'
auditor is responsible for planning and carrying out, in accordance
 
with professional standards, an audit
of the Bank's annual financial statements and reviews
 
of the Bank's quarterly financial information.
 
Management is responsible for the Bank's financial reporting
 
process which includes the preparation,
presentation and integrity of the Bank's financial statements
 
and maintenance of appropriate accounting
and financial reporting principles and policies, and internal controls
 
and procedures designed to verify
compliance with accounting standards and applicable laws and
 
regulations.
 
Internal Controls
The shareholders' auditor is also responsible for planning
 
and carrying out, in accordance with
professional standards, an audit of the Bank's internal
 
control over financial reporting.
 
Management is
responsible for devising and maintaining effective
 
internal control over financial reporting and for its
assessment of the effectiveness of such internal
 
control.
 
The Committee is responsible for overseeing the internal control
 
framework and monitoring its
effectiveness including by:
●
reviewing management's reports related to the establishment
 
and maintenance of an adequate
and effective internal control system and processes
 
(including controls related to the prevention,
identification and detection of fraud) that are designed
 
to provide assurance in areas including
reporting (financial, operational and risk), efficiency
 
and effectiveness of operations and
safeguarding assets, monitoring compliance with laws, regulations
 
and guidance, and internal
policies, including compliance with section 404 of the
 
U.S. Sarbanes-Oxley Act and similar rules
of the Canadian Securities Administrators;
◾
as part of this review, the Committee
 
shall consider and discuss with
management whether any deficiencies identified may
 
be classified as a
significant deficiency or material weakness;
●
meeting with management, the Chief Auditor and the shareholders'
 
auditor to assess the
adequacy and effectiveness of the Bank's
 
internal controls, including internal control over
financial reporting and controls related to the prevention,
 
identification and detection of fraud;
●
overseeing the adequacy of governance structures and
 
control processes for all financial
instruments that are measured at fair value for financial reporting
 
purposes;
 
●
reviewing reports from the Risk Committee as considered
 
necessary or desirable with respect to
any issues relating to internal control policies and the effectiveness
 
of related procedures
considered by that Committee in the course of undertaking
 
its responsibilities; and
 
●
reviewing
 
reporting
 
by
 
the
 
Bank
 
to
 
its
 
shareholders
 
regarding
 
internal
 
control
 
over
 
financial
reporting.
Internal Audit Division
The Committee oversees the Internal Audit Division of
 
the Bank and any aspects of the internal audit
function that are outsourced to a third party.
 
The Committee satisfies itself that the Internal Audit Division
is sufficiently independent to perform its responsibilities.
 
In addition, the Committee:
●
discusses with the Chief Auditor and senior management
 
the authority,
 
roles and responsibilities
for the Internal Audit Division and, at least annually,
 
reviews and approves its charter and the
Chief Auditor's mandate and independence attestation;
●
reviews and discusses with the Chief Auditor internal audit
 
priorities and the annual audit plan
(including the risk assessment methodology) and approves
 
the audit plan and any significant
changes thereto and while satisfying itself that the plan is appropriate,
 
risk-based and addresses
all the relevant activities and significant risks over
 
a measurable cycle;
●
reviews and approves the annual financial budget, resource
 
plan and performance objectives,
and reviews significant updates;
●
reviews the Global Internal Audit Policy;
 
●
confirms the appointment and dismissal of the Chief Auditor;
 
●
annually conveys its view of the performance of the Chief
 
Auditor to the Chief Executive Officer
as input into the compensation approval process;
●
at least annually assesses the effectiveness and
 
operational adequacy of the Internal Audit
Division;
●
reviews the results of the independent quality assurance review
 
report on the Internal Audit
Division conducted on a five-year cycle, including information
 
on the qualifications and
independence of the assessor(s) and any potential conflict
 
of interest;
●
periodically reviewing the results of a benchmarking of
 
the Internal Audit Division conducted with
the assistance of an independent third party;
●
reviews and discuss regular reports prepared by the Chief
 
Auditor, including internal control
 
over
financial reporting and all other information outlined in regulatory
 
guidance, together with
management's response and follow-up on outstanding
 
findings, and proactively consider thematic
findings across the Bank;
●
provides a forum for the Chief Auditor to have unfettered
 
access to the Committee to raise any
non-conformance with the Audit Code of Ethics or the
 
standards of the Institute of Internal
Auditors that impacts the overall scope or operation of
 
the Internal Audit Division, organizational
or industry issues or issues with respect to the relationship
 
and interaction between the Internal
Audit Division, management, the shareholders' auditor and/or
 
regulators; and
●
oversees remediation of deficiencies identified by supervisory
 
authorities related to the Internal
Audit Division within an appropriate time frame and to review reports
 
on progress of necessary
corrective actions.
Oversight of Shareholders' Auditor
The Committee annually reviews and evaluates the performance,
 
qualifications, skills, resources (amount
and type), independence and professional skepticism
 
of the shareholders' auditor and recommend to the
Board for recommendation to the shareholders, the appointment
 
of the shareholders' auditor.
 
The
Committee be responsible for approving the auditor's remuneration
 
a satisfies itself that the level of audit
fees is commensurate with the scope of work to obtain
 
a quality audit.
 
The Committee also makes
recommendations to the Board for approval regarding, if appropriate,
 
termination of the shareholders'
auditor.
 
The shareholders' auditor shall be accountable to the Committee
 
and the entire Board, as
representatives of the shareholders, for its review of the
 
financial statements and controls of the Bank.
 
In
addition, the Committee:
●
reviews and approves the annual audit plans and engagement
 
letters of the shareholders' auditor
and satisfy itself that the plans are appropriate, risk-based
 
and address all the relevant activities
over a measurable cycle;
 
●
at least annually,
 
reviews the shareholders' auditor's processes
 
for assuring the quality of their
audit services including ensuring their independence and any
 
other matters that may affect the
audit firm's ability to serve as shareholders' auditor;
●
discusses those matters that are required to be communicated
 
by the shareholders' auditor to the
Committee in accordance with the standards established
 
by the Chartered Professional
Accountants of Canada and the Public Company Accounting
 
Oversight Board ("PCAOB") and the
requirements of the
Bank Act
(Canada) and of the Bank's regulators, including its
 
primary
regulator OSFI, as such matters are applicable to the
 
Bank from time to time;
 
●
reviews with the shareholders' auditor any issues that
 
may be brought forward by it, including any
audit problems or difficulties, such as restrictions
 
on its audit activities or access to requested
information, and management's responses;
●
requests management to take the necessary corrective
 
actions to address any findings and
recommendations of the shareholders' auditor in a timely manner;
 
●
reviews with the shareholders' auditor concerns, if any,
 
about the quality,
 
not just acceptability,
 
of
the Bank's accounting principles and policies as applied
 
in its financial reporting;
 
●
provides a forum for management and the internal and/or
 
shareholders' auditor to raise issues
regarding their relationship and interaction.
 
To
 
the extent disagreements regarding financial
reporting are not resolved, be responsible for the resolution of
 
such disagreements between
management and the internal and/or shareholders' auditor;
 
●
at least annually,
 
reviews and evaluates the qualifications, performance
 
and independence of the
lead, and other key senior partners of the shareholders'
 
auditor, monitor the rotation timing
 
and,
as required upon rotation of the lead and other key senior partners,
 
assess the qualifications of
the shareholders' auditor's proposed new lead and other key
 
senior partners and obtain
confirmation from the shareholders' auditor of compliance
 
with the requirements for the
qualifications for auditors pursuant to the
Bank Act
(Canada), and guidance by other applicable
regulators;
 
●
at least every five years, conducts a periodic comprehensive
 
review of the shareholders' auditor;
and
●
annually reviews and discusses the Canadian Public Accountability
 
Board's ("CPAB")
 
and
PCAOB's public reports with the shareholders' auditor
 
and, as necessary,
 
discuss any CPAB
and/or PCAOB findings specific to the inspection of the Bank's
 
audit.
Independence of Shareholders' Auditor
The Committee monitors and assesses the independence
 
of the shareholders' auditor through various
mechanisms, including by:
●
reviewing and approving (or recommending to the Board
 
for approval) the audit engagement
terms and fees and other legally permissible services
 
to be performed by the shareholders'
auditor for the Bank, with such approval to be given either
 
specifically or pursuant to pre-approval
procedures adopted by the Committee;
 
●
reviewing from the shareholders' auditor,
 
at least annually,
 
a formal written statement confirming
independence and delineating all relationships between the shareholders'
 
auditor and the Bank
consistent with the rules of professional conduct of the Canadian
 
provincial chartered
accountants' institutes or other regulatory bodies, as applicable;
●
reviewing and discussing with the Board and the shareholders'
 
auditor, annually and otherwise
 
as
necessary, any relationships
 
or services between the shareholders' auditor and the Bank
 
or any
factors that may impact the objectivity and independence of the
 
shareholders' auditor;
●
reviewing, approving and monitoring policies and procedures
 
for the employment of past or
present partners, or employees of the shareholders' auditor
 
as required by applicable laws; and
●
reviewing, approving and monitoring other policies and procedures
 
put in place to facilitate
auditor independence, such as the criteria for tendering the
 
shareholders' auditor contract and the
rotation of members of the audit engagement team, as
 
applicable.
Finance Department
The Committee oversees the Finance Department of the Bank,
 
including by:
●
reviewing and approving the mandate of the Finance Department
 
and the mandate of the Chief
Financial Officer at least annually;
●
reviewing and approving, at least annually,
 
the Finance Department strategic priorities, budget
and resource plan, including reviewing reports from management
 
on resource adequacy;
●
annually assessing the effectiveness of the Finance
 
Department;
 
●
periodically reviewing the results of a benchmarking of
 
the Finance Department conducted with
the assistance of an independent third party;
●
annually conveying its view of the performance of the Chief Financial
 
Officer to the Chief
Executive Officer as input into the compensation
 
approval process;
●
confirming the appointment and dismissal of the Chief
 
Financial Officer; and
●
providing a forum for the Chief Financial Officer
 
to have unfettered access to the Committee to
raise any financial reporting issues or issues with respect
 
to the relationship and interaction
among the Finance Department, management, the shareholders'
 
auditor and/or regulators.
 
Compliance
The Committee oversees the establishment and maintenance
 
of policies and programs reasonably
designed to achieve and maintain the Bank's compliance
 
with the laws and regulations that apply to it,
including by:
●
establishing and maintaining procedures in accordance with regulatory
 
requirements for the
receipt, retention and treatment of confidential, anonymous
 
submissions of concerns regarding
questionable accounting, internal accounting controls or
 
auditing matters, and reviewing reports
on such complaints and submissions as required under
 
the applicable policy; and
 
●
reviewing professional pronouncements and changes to
 
key regulatory requirements relating to
accounting rules to the extent they apply to the financial
 
reporting process of the Bank.
Global Compliance Department
 
The Committee shall oversee the Global Compliance Department
 
of the Bank and the execution of its
mandate and shall satisfy itself that the Global Compliance Department
 
is sufficiently independent to
perform its responsibilities.
 
In addition, the Committee
 
shall:
●
review and approve its annual plan, including its budget, resources
 
and strategic priorities, and
any significant changes to the annual plan;
●
annually review and approve the mandate of the Global
 
Compliance Department and the
mandate of the Chief Compliance Officer;
●
at least annually assess the effectiveness of the Global
 
Compliance Department;
●
periodically review the results of a benchmarking of the Global
 
Compliance Department
conducted with the assistance of an independent third party;
●
confirm the appointment and dismissal of the Chief Compliance
 
Officer;
●
annually convey its view of the performance of the Chief
 
Compliance Officer to the Chief
Executive Officer as input into the compensation
 
approval process;
●
review with management the Bank's compliance with applicable
 
regulatory requirements and the
Regulatory Compliance Management ("RCM") Program;
●
regularly review and discuss reports prepared by the Chief Compliance
 
Officer for the Committee,
including with regard to reports by regulators and supervisory
 
authorities related to the Global
Compliance Department, the Bank's RCM program or the Bank's
 
compliance with applicable laws
and regulations and follow-up on any outstanding issues
 
including proactive consideration of
whether deficiencies in one area may be present in other
 
areas;
 
●
at least annually review the assessment by the Chief Compliance
 
Officer on the adequacy of,
adherence to and effectiveness of the Bank's day-to-day
 
RCM controls, as well as the Opinion of
the Chief Compliance Officer as to whether the RCM
 
Program and controls are sufficiently robust
to achieve compliance with the applicable enterprise-wide
 
regulatory requirements; and
 
●
provide a forum for the Chief Compliance Officer
 
to have unfettered access to the Committee. to
raise any compliance issues or concerns with respect to
 
the relationship and interaction among
the Global Compliance Department, management and/or
 
regulators.
 
Financial Crime Risk Management ("FCRM"))
The Committee shall oversee and monitor the establishment,
 
maintenance and ongoing effectiveness of
the Anti-Money Laundering ("AML") / Anti-Terrorist
 
Financing ("ATF")
 
/ Economic Sanctions / Anti-Bribery
and Anti-Corruption Program ("FCRM Program") that is
 
designed so that the Bank is in compliance with
the laws and regulations that apply to it as well as its own policies,
 
including:
●
reviewing with management the Bank's compliance with
 
applicable regulatory requirements;
●
reviewing an annual report from the Chief Anti-Money Laundering
 
Officer regarding the
assessment of the effectiveness of the FCRM Program,
 
and following up with management on
the status of recommendations and suggestions, as appropriate;
 
and
 
●
reviewing the opinion of the Chief Auditor on the effectiveness
 
of the FCRM Program (including
the AML) every two years and following up with management on
 
the status of recommendations
and suggestions, as appropriate.
FCRM Department
The Committee shall oversee the FCRM Department of the Bank
 
and the execution of its mandate and
shall satisfy itself that the FCRM Department is sufficiently
 
independent to perform its responsibilities.
 
In
addition, the Committee shall:
●
review and approve the FCRM Department's annual plan,
 
including its budget, resources and
strategic priorities, and any significant changes to the annual
 
plan;
 
●
consider and approve the AML Program Framework, including
 
the Enterprise AML/ATF
 
and
Enterprise Sanctions policies;
●
at least annually assess the effectiveness of the FCRM
 
Department;
●
review the results of an independent effectiveness
 
review of the FCRM Program (including AML)
conducted periodically;
●
periodically review the results of a benchmarking of the FCRM
 
Department conducted with the
assistance of an independent third party;
●
annually review and approve the mandate of the FCRM
 
Department and the mandate of the Chief
Anti-Money Laundering Officer;
●
confirm the appointment and dismissal of the Chief Anti
 
-Money Laundering Officer;
●
annually convey its view of the performance of the Chief
 
Anti-Money Laundering Officer to the
Chief Executive Officer as input into the compensation
 
approval process;
●
regularly review and discuss reports prepared by the Chief Anti-Money
 
Laundering Officer for the
Committee, including with regard to reports by supervisory
 
authorities related to the FCRM
Program, on the Bank's compliance with applicable laws and regulations
 
and on the design and
operation of the FCRM Program, the adequacy of resources
 
(people, systems and budget), and
any recommendations thereto, and follow-up on any
 
outstanding issues including proactive
consideration of whether deficiencies in one area may
 
be present in other areas; and
●
provide a forum for the Chief Anti-Money Laundering
 
Officer to have unfettered access to the
Committee to raise any compliance issues or concerns
 
with respect to the relationship and
interaction among the FCRM Department, management and/or
 
regulators.
General
The Committee shall have the following additional general duties
 
and responsibilities:
●
acting as the audit committee for certain Canadian subsidiaries
 
of the Bank that are federally-
regulated financial institutions, including meeting on an
 
annual basis, without management
present, with the appointed actuaries of the applicable
 
subsidiaries of the Bank that are federally-
regulated financial institutions;
●
reviewing with the Bank's General Counsel any legal matter
 
arising from litigation, asserted
claims or regulatory non-compliance that could have a
 
material impact on the Bank's financial
condition and provide a forum for the General Counsel to
 
have unfettered access to the
Committee to raise any legal issues;
●
provide a forum for the Chief Risk Officer to have
 
unfettered access to the Committee to raise any
compliance issues;
●
performing such other functions and tasks as may be
 
mandated by regulatory requirements
applicable to audit committees or delegated by the Board;
●
conducting an annual evaluation of the Committee to
 
assess its contribution and effectiveness in
fulfilling its mandate;
●
review and assess the adequacy of this Charter at least
 
annually and submit this Charter to the
Corporate Governance Committee for review and recommendation
 
to the Board for approval;
noting that changes considered administrative by the
 
Chair of the Committee and the Board Chair
can be reviewed and approved by the Corporate Governance
 
Committee throughout the year and
aggregated once per year for review and concurrence
 
by the Board;
●
maintaining minutes or other records of meetings and activities of
 
the Committee; and
●
the Committee Chair will report to the Board on recommendations
 
and material matters arising at
Committee meetings and any significant matters that arise
 
between Board meetings and shall
report as required to the Risk Committee on issues of relevance
 
to it.
 
Posted: December 2024
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 1
Management’s Discussion and Analysis
This Management’s Discussion and
 
Analysis (MD&A) is presented to enable
 
readers to assess material changes in
 
the financial condition and
operating results of TD Bank Group (“TD”
 
or the “Bank”) for the year ended
 
October 31, 2024, compared with the corresponding
 
period in the prior
year. This MD&A should be
 
read in conjunction with the audited Consolidated
 
Financial Statements and related Notes
 
for the year ended
October 31, 2024. This MD&A
 
is dated December 4, 2024. Unless otherwise
 
indicated, all amounts are expressed
 
in Canadian dollars and have been
primarily derived from the Bank’s annual Consolidated
 
Financial Statements prepared in accordance
 
with International Financial Reporting Standards
(IFRS) as issued by the International
 
Accounting Standards Board (IASB). Note
 
that certain comparative amounts have
 
been revised to conform with
the presentation adopted in the current period.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
2
GROUP FINANCIAL CONDITION
Balance Sheet Review
40
SIGNIFICANT EVENTS
4
Credit Portfolio Quality
42
Capital Position
52
FINANCIAL RESULTS OVERVIEW
Securitization and Off-Balance Sheet
 
Arrangements
59
Net Income
14
Related Party Transactions
60
Revenue
15
Financial Instruments
61
Provision for Credit Losses
16
Expenses
17
RISK FACTORS AND MANAGEMENT
Taxes
18
Risk Factors that May Affect
 
Future Results
61
Quarterly Financial Information
19
Managing Risk
70
BUSINESS SEGMENT ANALYSIS
ACCOUNTING STANDARDS
 
AND POLICIES
Business Focus
21
Critical Accounting Policies
 
and Estimates
104
Canadian Personal and Commercial
 
Banking
23
Current and Future Changes in
 
Accounting Policies
108
U.S. Retail
27
Controls and Procedures
109
Wealth Management and Insurance
32
Wholesale Banking
35
ADDITIONAL FINANCIAL INFORMATION
110
Corporate
38
GLOSSARY
117
2023 FINANCIAL RESULTS OVERVIEW
Summary of 2023 Performance
39
Additional information relating to the Bank, including the Bank’s Annual Information Form, is available on the Bank’s website at
http://www.td.com
, on SEDAR+
 
at
http://www.sedar.com
, and
on the U.S. Securities and Exchange Commission’s website at
http://www.sec.gov
 
(EDGAR filers section).
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 2
Caution Regarding Forward-Looking
 
Statements
From time to time, the Bank (as defined in
 
this document) makes written and/or oral
 
forward-looking statements, including in this
 
document, in other filings with
Canadian regulators or the United States (U.S.)
 
Securities and Exchange Commission
 
(SEC), and in other communications. In addition,
 
representatives of the
Bank may make forward-looking statements
 
orally to analysts, investors, the
 
media, and others. All such statements are
 
made pursuant to the “safe harbour”
provisions of, and are intended to be forward-looking
 
statements under, applicable Canadian and U.S. securities
 
legislation, including the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking
 
statements include, but are not limited to,
 
statements made in this document, the
 
Management’s Discussion and
Analysis (“2024 MD&A”) in the Bank’s 2024 Annual
 
Report under the heading “Economic Summary
 
and Outlook”, under the headings “Key Priorities
 
for 2025” and
“Operating Environment and Outlook” for
 
the Canadian Personal and Commercial
 
Banking, U.S. Retail, Wealth Management
 
and Insurance, and Wholesale
Banking segments, and under the heading
 
“2024 Accomplishments and Focus for
 
2025” for the Corporate segment, and in other
 
statements regarding the Bank’s
objectives and priorities for 2025 and beyond and
 
strategies to achieve them, the regulatory
 
environment in which the Bank operates, and
 
the Bank’s anticipated
financial performance.
 
Forward-looking statements are typically identified
 
by words such as “will”, “would”, “should”,
 
“believe”, “expect”, “anticipate”, “intend”,
 
“estimate”, “plan”, “goal”,
“target”, “may”, and “could”. By their very
 
nature, these forward-looking statements
 
require the Bank to make assumptions
 
and are subject to inherent risks and
uncertainties, general and specific. Especially
 
in light of the uncertainty related
 
to the physical, financial, economic, political,
 
and regulatory environments, such
risks and uncertainties – many of which are
 
beyond the Bank’s control and the effects of which
 
can be difficult to predict – may cause actual
 
results to differ
materially from the expectations expressed
 
in the forward-looking statements.
 
Risk factors that could cause, individually or
 
in the aggregate, such differences include:
 
strategic, credit, market (including equity, commodity, foreign exchange,
interest rate, and credit spreads), operational
 
(including technology, cyber security, process, systems, data, third-party, fraud, infrastructure, insider
 
and conduct),
model, insurance, liquidity, capital adequacy, legal and regulatory compliance (including
 
financial crime), reputational, environmental and
 
social, and other risks.
 
Examples of such risk factors include general
 
business and economic conditions in
 
the regions in which the Bank operates (including
 
the economic, financial, and
other impacts of pandemics); geopolitical
 
risk; inflation, interest rates and recession
 
uncertainty; regulatory oversight and
 
compliance risk; risks associated with
 
the
Bank’s ability to satisfy the terms of the global resolution
 
of the civil and criminal investigations into
 
the Bank’s U.S. BSA/AML program; the impact
 
of the global
resolution of the civil and criminal investigations
 
into the Bank’s U.S. BSA/AML program on the
 
Bank’s businesses, operations,
 
financial condition,
 
and reputation;
the ability of the Bank to execute on long-term
 
strategies, shorter-term key strategic priorities,
 
including the successful completion of
 
acquisitions and dispositions
and integration of acquisitions, the ability of
 
the Bank to achieve its financial or strategic
 
objectives with respect to its investments,
 
business retention plans, and
other strategic plans; the risk of large declines
 
in the value of Bank’s Schwab equity investment
 
and corresponding impact on TD’s market value;
 
technology and
cyber security risk (including cyber-attacks,
 
data security breaches or technology failures)
 
on the Bank’s technologies, systems and networks,
 
those of the Bank’s
customers (including their own devices),
 
and third parties providing services to
 
the Bank; data risk; model risk; fraud activity;
 
insider risk; conduct risk; the failure
 
of
third parties
 
to comply with their obligations to the Bank
 
or its affiliates, including relating to the care
 
and control of information, and other risks arising
 
from the
Bank’s use of third-parties; the impact of new and
 
changes to, or application of, current laws,
 
rules and regulations, including without limitation
 
consumer protection
laws and regulations, tax laws, capital guidelines
 
and liquidity regulatory guidance; increased
 
competition from incumbents and new entrants
 
(including Fintechs
and big technology competitors); shifts in
 
consumer attitudes and disruptive technology;
 
environmental and social risk (including
 
climate-related risk); exposure
related to litigation and regulatory matters; ability
 
of the Bank to attract, develop, and
 
retain key talent; changes in foreign exchange
 
rates, interest rates, credit
spreads and equity prices; downgrade, suspension
 
or withdrawal of ratings assigned by any rating
 
agency,
 
the value and market price of the Bank’s common
shares and other securities may be impacted
 
by market conditions and other factors;
 
the interconnectivity of Financial Institutions
 
including existing and potential
international debt crises; increased funding
 
costs and market volatility due to market illiquidity
 
and competition for funding; critical accounting
 
estimates and
changes to accounting standards, policies,
 
and methods used by the Bank; and the occurrence
 
of natural and unnatural catastrophic events
 
and claims resulting
from such events.
 
The Bank cautions that the preceding list is
 
not exhaustive of all possible risk factors and
 
other factors could also adversely affect the
 
Bank’s results. For more
detailed information, please refer to the “Risk
 
Factors and Management” section of
 
the 2024 MD&A, as may be updated in
 
subsequently filed quarterly reports to
shareholders and news releases (as
 
applicable) related to any events or transactions
 
discussed under the headings
 
“Significant Events” or “Significant and
Subsequent Events” in the relevant MD&A,
 
which applicable releases may be found on
 
www.td.com.
 
All such factors, as well as other uncertainties
 
and potential events, and the inherent
 
uncertainty of forward-looking statements,
 
should be considered carefully
when making decisions with respect
 
to the Bank. The Bank cautions readers not
 
to place undue reliance on the Bank’s forward-looking
 
statements. Material
economic assumptions underlying the
 
forward-looking statements contained in
 
this document are set out in the 2024 MD&A
 
under the headings
 
“Economic
Summary and Outlook” and “Significant Events”,
 
under the headings “Key Priorities
 
for 2025” and “Operating Environment and Outlook”
 
for the Canadian Personal
and Commercial Banking, U.S. Retail, Wealth
 
Management and Insurance, and Wholesale
 
Banking segments, and under the heading
 
“2024 Accomplishments
and Focus for 2025” for the Corporate segment,
 
each as may be updated in subsequently
 
filed quarterly reports to shareholders.
 
Any forward-looking statements contained
 
in this document represent the views of
 
management only as of the date hereof 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 as at
and for the periods ended on the dates presented,
 
and may not be appropriate for other purposes.
 
The Bank does not undertake to update any
 
forward-looking
statements, whether written or oral, that
 
may be made from time to time by or on its behalf,
 
except as required under applicable securities
 
legislation.
This document was reviewed by the Bank’s Audit Committee and was approved by the Bank’s Board of Directors,
 
on the Audit Committee’s recommendation, prior to its release.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 3
TABLE 1: FINANCIAL HIGHLIGHTS
(millions of Canadian dollars, except
 
where noted)
2024
2023
Results of operations
Total revenue – reported
1
$
57,223
$
50,690
Total revenue – adjusted
1,2
56,789
52,037
Provision for (recovery of) credit losses
4,253
2,933
Insurance service expenses (ISE)
1
6,647
5,014
Non-interest expenses – reported
1
35,493
29,855
Non-interest expenses – adjusted
1,2
29,148
26,517
Net income – reported
1
8,842
10,634
Net income – adjusted
1,2
14,277
14,995
Financial positions
(billions of Canadian dollars)
Total loans net of allowance for loan losses
$
949.5
$
895.9
Total assets
1
2,061.8
1,955.1
Total deposits
1,268.7
1,198.2
Total equity
115.2
112.1
Total risk-weighted assets (RWA)
3
630.9
571.2
Financial ratios
Return on common equity (ROE) – reported
1,4
8.2
%
9.9
%
Return on common equity – adjusted
1,2
13.6
14.2
Return on tangible common equity (ROTCE)
1,2,4
11.2
13.4
Return on tangible common equity – adjusted
1,2
18.0
18.7
Efficiency ratio – reported
1,4
62.0
58.9
Efficiency ratio – adjusted, net of ISE
1,2,4,5
58.1
56.4
Provision for (recovery of) credit losses
 
as a % of net average loans and acceptances
0.46
0.34
Common share information – reported
 
(Canadian dollars)
Per share earnings
1
Basic
$
4.73
$
5.53
Diluted
4.72
5.52
Dividends per share
4.08
3.84
Book value per share
4
59.59
56.56
Closing share price
6
76.97
77.46
Shares outstanding (millions)
 
 
Average basic
1,758.8
1,822.5
Average diluted
1,760.0
1,824.4
End of period
1,750.1
1,790.7
Market capitalization (billions of Canadian dollars)
$
134.7
$
138.7
Dividend yield
4
5.1
%
4.6
%
Dividend payout ratio
4
86.1
69.3
Price-earnings ratio
1,4
16.3
14.0
Total shareholder return (1 year)
4
4.5
(6.9)
Common share information – adjusted
(Canadian dollars)
1,2
Per share earnings
1
Basic
$
7.82
$
7.92
Diluted
7.81
7.91
Dividend payout ratio
 
52.1
%
48.4
%
Price-earnings ratio
1
9.9
9.8
Capital ratios
3
Common Equity Tier 1 Capital ratio
13.1
%
14.4
%
Tier 1 Capital ratio
14.8
16.2
Total Capital ratio
16.8
18.1
Leverage ratio
4.2
4.4
Total Loss Absorbing Capacity
 
(TLAC) ratio
28.7
32.7
TLAC Leverage ratio
8.1
8.9
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17,
Insurance Contracts
 
(IFRS 17). Refer to Note 4 of the Bank’s 2024 Consolidated
Financial Statements for further details.
2
 
The Toronto-Dominion Bank (“TD” or the
 
“Bank”) prepares its Consolidated Financial Statements in accordance with IFRS, the current Generally
 
Accepted Accounting Principles (GAAP),
and refers to results prepared in accordance with IFRS as the “reported” results. The Bank also utilizes non-GAAP
 
financial measures such as “adjusted” results and non-GAAP ratios to
assess each of its businesses and to measure
 
overall Bank performance. To arrive
 
at adjusted results, the Bank adjusts reported results for “items of note”. Refer to the “Financial Results
Overview” section of this document for further explanation, a list of the items of note, and a reconciliation of adjusted
 
to reported results. Non-GAAP financial measures and ratios used in
this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other
 
issuers.
3
 
These measures have been included in this document in accordance with the Office of the Superintendent
 
of Financial Institutions Canada’s (OSFI’s) Capital Adequacy Requirements
(CAR), Leverage Requirements, and TLAC guidelines. Refer to the “Capital Position” section of this document for
 
further details.
4
 
For additional information about this metric, refer to the Glossary of this document.
5
 
Efficiency ratio – adjusted, net of ISE is calculated by dividing adjusted non-interest expenses by adjusted
 
total revenue, net of ISE. Adjusted total revenue, net of ISE –
2024: $50,142 million, 2023: $47,023 million. Effective fiscal 2024, the composition of this non-GAAP
 
ratio and the comparative amounts have been revised.
6
 
Toronto Stock Exchange (TSX) closing
 
market price.
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 4
SIGNIFICANT EVENTS
-
a) Global Resolution of the Investigations into the Bank’s U.S. BSA/AML Program
On October 10, 2024, following active cooperation
 
and engagement with authorities and
 
regulators, the Bank reached a resolution
 
with respect to previously
disclosed investigations related to its U.S. Bank
 
Secrecy Act (BSA) and AntiMoney
 
Laundering (AML) compliance programs.
 
The Bank and certain of its U.S.
subsidiaries consented to orders with the Office of
 
the Comptroller of the Currency (OCC), the Federal
 
Reserve Board (FRB), and the Financial
 
Crimes
Enforcement Network (FinCEN) and entered
 
into plea agreements with the Department
 
of Justice (DOJ), Criminal Division, Money
 
Laundering and Asset
Recovery Section and the United States
 
Attorney’s Office for the District of New Jersey (collectively, the “Global Resolution”).
 
Details of the Global Resolution
include: (i) a total payment of US$3.088 billion
 
(C$4.233 billion), all of which was provisioned
 
during the 2024 fiscal year; (ii) TD Bank, N.A.
 
(TDBNA) pleading
guilty to one count of conspiring to fail to maintain
 
an adequate AML program, fail to file
 
accurate currency transaction reports
 
(CTRs) and launder money and TD
Bank US Holding Company (TDBUSH) pleading
 
guilty to two counts of failing to maintain
 
an adequate AML program and failing
 
to file accurate CTRs; (iii)
requirements to remediate the Bank’s U.S. BSA/AML
 
program, broadly aligned to its existing
 
remediation program, which requirements
 
the Bank has begun to
address; (iv) a requirement to prioritize the
 
funding and staffing of the remediation, which includes
 
Board certifications for dividend distributions
 
from certain of the
Bank’s U.S. subsidiaries to the Bank; (v) formal oversight
 
of the U.S. BSA/AML remediation through
 
an independent compliance monitorship;
 
(vi) a prohibition
against the average combined total assets
 
of TD’s two U.S. banking subsidiaries (TD Bank,
 
N.A. and TD Bank USA, N.A.) (collectively, the “U.S. Bank”)
 
exceeding
US$434 billion (representing the combined
 
total assets of the U.S. Bank as at September
 
30, 2024) (the “Asset Limitation”), and if
 
the U.S. Bank does not achieve
compliance with all actionable articles in
 
the OCC consent orders (and for each successive
 
year that the U.S. Bank remains non-compliant),
 
the OCC may require
the U.S.
 
Bank to further reduce total consolidated
 
assets by up to 7%; (vii) the U.S. Bank being
 
subject to OCC supervisory approval processes
 
for any additions
of new bank products, services, markets, and
 
stores prior to the OCC’s acceptance of the U.S. Bank’s
 
improved AML policies and procedures,
 
to ensure the AML
risk of new initiatives is appropriately considered
 
and mitigated; (viii) requirements for
 
the Bank and TD Group U.S. Holdings, LLC
 
(TDGUS) to retain a third party
to assess the effectiveness of the corporate governance
 
and U.S. management structure and composition
 
to adequately oversee U.S. operations;
 
and (ix)
requirements to comply with the terms of the
 
plea agreements with the DOJ during a
 
five-year term of probation (which could be extended
 
as a result of the Bank
failing to complete the compliance undertakings,
 
failing to cooperate or to report alleged misconduct
 
as required, or committing additional crimes);
 
(x) an ongoing
obligation to cooperate with DOJ investigations;
 
and (xi) an ongoing obligation to report evidence
 
or allegations of violations by the Bank, its
 
affiliates, or their
employees that may be a violation of U.S. federal
 
law.
Refer to “Key Terms of the Global Resolution”
 
below for additional information about
 
the terms of the orders and plea agreements.
 
Key Terms of the Global Resolution
 
Order/Agreement
Key Requirements
Plea Agreements between the DOJ and
TDBUSH and TDBNA dated
October 10, 2024
●
 
TDBUSH plead guilty to BSA/AML program violations (31 U.S.C. § 5318(h) and 5322) and currency transaction report violations (31 U.S.C. § 5313
and 5324).
●
 
TDBNA plead guilty to conspiracy (18 U.S.C. § 371) with three objects: BSA/AML program violations (31 U.S.C. § 5318(h)) and 5322), currency
transaction report violations (31 U.S.C. § 5313 and 5324), and money laundering (18 U.S.C. § 1956(a)(2)(B)(i)).
●
 
Monetary Penalty: fine of US$1,434,013,478.40 (US$1,428,513,478.40 after crediting) for TDBUSH and a fine of US$500,000 and a forfeiture of
US$452,432,302 (US$328,932,302 after crediting) for TDBNA.
●
 
Term of Probation: Five-year term of probation.
●
 
Remediation requirements:
-
 
Independent Compliance Monitor. Retain an independent compliance monitor for a period of three years to oversee the Bank’s compliance
remediation and enhancement.
 
-
 
BSA/AML Compliance Obligations. Continue to implement and enhance its AML compliance program such that, at minimum, it meets the
requirements as set forth in Attachment C to the Plea Agreements, which lays out compliance commitments, including with respect to tone
from the top; policies, procedures, and internal controls; transaction monitoring and reporting; oversight and independence; insider risk;
training; internal reporting; employee discipline; monitoring, testing, and audit; and address any deficiencies in its AML compliance program,
as specified in the Plea Agreements.
 
●
 
Cooperation: Cooperate with the DOJ in any investigation or prosecution relating to the conduct, individuals, and entities described in the Plea
Agreements and the Statement of Facts attached to the Plea Agreements, as well as any other conduct, individuals, and entities under investigation
by the DOJ at any time during the length of the Agreements’ obligations.
●
 
Disclosure: To the extent that the Bank learns of any evidence or allegation of conduct by the Bank, its affiliates, or their employees that may be a
violation of U.S. federal law, promptly report to the DOJ any such evidence or allegation.
●
 
Sale/Merger/Transfer: Any change in corporate form, including a sale, merger, or transfer of business operations that are material to the Bank’s
consolidated operations, or to the operations of any subsidiaries, branches, or affiliates involved in the conduct described in the Statement of Facts,
as they exist as of the date of the Agreements, whether such transaction is structured as a sale, asset sale, merger, transfer, or other change in
corporate form, the Bank must include in any such contract a provision binding the purchaser, or any successor in interest thereto, to the obligations
described in the Agreements, and the other party to the contract must agree in writing to the terms and obligations to the Agreements; meet other
requirements prior to any such change in corporate form, including a sale, merger, or transfer of business operations, as specified in the
Agreements.
●
 
Breach of Agreements: The following would constitute a breach of the Agreements: (a) any felony under U.S. federal law; (b) providing deliberately
false, incomplete, or misleading information to the DOJ; (c) failing to cooperate with the DOJ; (d) failing to implement a compliance program as set
forth in the Plea Agreements and Attachment C to the Plea Agreements and complete the monitorship as set forth in the Plea Agreements and
Attachment D to the Plea Agreements; (e) committing any acts that, had they occurred within the jurisdictional reach of the United States, would be
a violation of federal money laundering laws or the Bank Secrecy Act; or (f) otherwise failing specifically to perform or to fulfill completely each of the
obligations under the Agreements. In the event of a breach of the Agreements, the Bank will be subject to prosecution for any federal criminal
violation of which the DOJ is aware, including the charges to which the Bank pleaded guilty.
 
●
 
Non-Contradiction: The Bank will not make any public statement, in litigation or otherwise, contradicting its acceptance of responsibility or the facts
described in the Information or Statement of Facts. The Bank will seek preclearance from the DOJ before issuing any affirmative public statement in
connection with the resolutions, including via press release, press conference remarks, or a scripted statement to investors.
●
 
Acknowledgement by the Bank and TDGUS of the Agreements by TDBNA and TDBUSH and agreement to undertake the cooperation commitments
outlined in the Agreements and ensure that TDBNA and TDBUSH comply with all terms of the Agreements.
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 5
Order/Agreement
Key Requirements
FinCEN Consent Order involving TDBNA
and TD Bank USA, N.A. (TDBUSA)
●
 
BSA/AML program violations (31 U.S.C. § 5318 (h)(1) and 31 C.F.R. § 1020.210(a)), suspicious activity report violations (31 U.S.C. § 5318(g) and
31 C.F.R. § 1020.320), and currency transaction report violations (31 U.S.C. § 5313 and 31 C.F.R.
 
§ 1010.311).
●
 
BSA/AML program violations (31 U.S.C. § 5318 (h)(1) and 31 C.F.R. § 1020.210(a)), suspicious activity report violations (31 U.S.C. § 5318(g) and
31 C.F.R. § 1020.320), and currency transaction report violations (31 U.S.C. § 5313 and 31 C.F.R.
 
§ 1010.311).
●
 
Monetary Penalty: US$1.3 billion (requiring a payment of US$757 million after crediting).
●
 
Remediation Requirements:
-
 
Independent Compliance Monitor. The Order requires the Bank to retain an independent compliance monitor for a period of 4 years, which
will be required to undertake various reviews and issue reports as outlined in the Order.
-
 
Suspicious activity report (SAR) Lookback. The Order recognized that the Bank has retained an independent third party to conduct a SAR
lookback review, which will be overseen by the independent compliance monitor. Within 150 days from the engagement of the monitor, the
SAR lookback consultant must deliver to FinCEN and the monitor a report summarizing the proposed scope and methodology of the review.
Within 18 months from the date of the SAR lookback report, the SAR lookback consultant must deliver a detailed report that summarizes the
findings of its review.
-
 
BSA/AML Program Review. The Order requires the Bank to retain an independent third party to conduct a review of the effectiveness of its
BSA/AML program, similar to the review required by the FRB and OCC. Within 60 days from the engagement of the monitor, the monitor
must propose an AML program consultant or elect to serve as the consultant. Within 90 days from the engagement of the consultant, the
consultant must deliver to FinCEN a report summarizing the proposed scope and methodology of the review. Within 60 days from the end of
the consultant’s review, but no later than one year from the date of its engagement, the consultant must submit to FinCEN a final written
report.
-
 
Accountability Review. The Order requires the independent compliance monitor to assess the accountability review work that the Bank has
conducted concerning the involvement of personnel in the conduct described in the Order. Within 120 days from the engagement of the
monitor, the monitor must deliver to FinCEN a report summarizing the proposed scope and methodology of the review. Within 60 days from
the end of the monitor’s review, but no later than one year from the date of its engagement, the monitor must submit to FinCEN a final
written report.
-
 
Data Governance Review. The Order requires the independent compliance monitor to oversee a data governance review, which will involve
an assessment of the Bank’s data governance framework. Within 120 days from the engagement of the monitor, the monitor must deliver to
FinCEN a report summarizing the proposed scope and methodology of the review. Within 60 days from the end of the monitor’s review, but
no later than one year from the date of its engagement, the monitor must submit to FinCEN a final written report.
●
 
Cooperation: The Order requires the Bank to cooperate with FinCEN in all matters within the scope of or related to the resolution.
●
 
Non-Contradiction: The Order requires the Bank not to make any public statement that contradicts the admissions or acceptance of responsibility or
any terms of the Order.
OCC Consent Orders involving TDBNA and
TDBUSA
●
 
BSA/AML program violation (12 C.F.R. § 21.21), suspicious activity report violations (12 C.F.R.
 
§ 21.11), currency transaction report violations (31
C.F.R. § 1010.312), customer due diligence violation (31 C.F.R.
 
§ 1020.210(a)(2)(v)) and recklessly engaging in unsafe or unsound practices
related to the Bank’s BSA/AML Compliance Program.
 
●
 
Monetary Penalty: US$450 million.
●
 
The Orders will remain in effect until amended, suspended, waived, or terminated, in writing by the OCC.
●
 
Remediation Requirements (dates listed below may be extended by written approval from the OCC):
-
 
Compliance Committee. Appoint, within 15 days of the Order’s effective date, a Compliance Committee to monitor and oversee the
TDBNA’s and TDBUSA’s compliance
 
with the Orders.
-
 
BSA/AML Action Plan. Submit a written plan, within 150 days of the Order’s effective date, detailing the remedial actions necessary to
achieve and sustain compliance with the BSA, its implementing regulations, and specified articles of the Orders, and to address all
BSA/AML deficiencies, violations, and corrective actions (the “BSA/AML Action Plan”). Adopt and implement the BSA/AML Action Plan and
provide progress reports.
-
 
BSA/AML Program Assessment and Remediation.
 
Retain, within 60 days of the Order’s effective date or as otherwise specified in the
BSA/AML Action Plan, an independent third-party consultant to conduct an end-to-end review and assessment of their BSA/AML Program
and draft a written report documenting its findings and recommendations, to be submitted to the boards of directors (Boards) of TDBNA and
TDBUSA, and the OCC, at the same time. Effectively remediate any identified gaps and deficiencies.
 
-
 
New Products, Services, Branches, and Markets. Submit, within 150 days of the Order’s effective date, or as otherwise specified in the
BSA/AML Action Plan, to the OCC for review and prior written determination of no supervisory objection, improved policies and procedures
for evaluating the BSA/AML risks posed by adding a new product or service and ensuring the Bank has adequate controls to mitigate such
risks, prohibits TDBNA and TDBUSA from adding new products or services until they receive a determination of no supervisory objection to
the improved policies and procedures. After receiving no supervisory objection to the policies and procedures, the Orders prohibit TDBNA
and TDBUSA from adding any new medium or high BSA/AML risk product or service without, among other requirements, a prior
determination of no supervisory objection. Prohibition from opening a new branch or entering a new market without first receiving no
supervisory objection.
-
 
BSA Officer and Staffing. Maintain a qualified BSA Officer vested with sufficient independence, authority, stature, and resources, and
requires the Boards to ensure that TDBNA and TDBUSA have sufficient managers and staff with the appropriate skills, expertise, and with
the requisite authority, to support the BSA Officer and BSA/AML program. Following the Independent Consultant review, ensure there is an
annual review of the adequacy of the Bank’s BSA Officer and staff, with the determinations finalized in writing, to be submitted to the OCC,
and the Boards are responsible for ensuring any necessary changes are implemented. Ensure that the BSA Officer and staff have sufficient
training, authority, resources, and skill, that management has the necessary knowledge to oversee the Bank’s compliance with the BSA, that
information systems are effective, and that there are clear lines of authority and responsibility for the BSA/AML compliance function and
staff, including giving the BSA Officer the ultimate accountability for and authority over all the U.S. BSA/AML Program components.
 
-
 
BSA/AML Training. Implement, within 120 days of the Order’s effective date, or as otherwise specified in the BSA/AML Action Plan, an
effective BSA/AML Training Program that meets certain minimum requirements, as detailed in the Orders.
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 6
Order/Agreement
Key Requirements
OCC Consent Orders involving TDBNA and
TDBUSA
-
 
BSA/AML Internal Controls. Develop and implement, within 120 days of the Order’s effective date, or as otherwise specified in the BSA/AML
Action Plan, an effective Internal Controls Program to identify and control the risks associated with money laundering and terrorist financing
and other illicit financial activity, and to achieve and maintain compliance with the BSA. The Internal Controls Program must meet certain
minimum requirements, as detailed in the Orders.
-
 
Customer Due Diligence and Risk Identification. Develop and implement, within 120 days of the Order’s effective date, or as otherwise
specified in the BSA/AML Action Plan, an effective customer due diligence (CDD) program to ensure appropriate collection and analysis of
customer information when opening new accounts, when renewing or modifying existing accounts for customers, and when the Bank
obtains event-driven information indicating that it would be prudent to obtain updated information and maintain accurate customer risk
profiles. The CDD Program must meet certain minimum requirements, as detailed in the Orders.
-
 
Suspicious Activity Identification, Evaluation, and Reporting. Develop and implement, within 120 days of the Order’s effective date, or as
otherwise specified in the BSA/AML Action Plan, an effective suspicious activity monitoring and reporting program to ensure the timely and
appropriate identification, review, and disposition of unusual activity, and the filing of SARs. The Suspicious Activity Review Program must
meet certain minimum requirements, as detailed in the Orders.
 
-
 
BSA/AML Independent Testing. Develop and implement, within 120 days of the Order’s effective date, or as otherwise specified in the
BSA/AML Action Plan, an effective BSA/AML independent testing program to test the Bank’s compliance with the BSA, relative to its risk
profile, and the overall adequacy of the Bank’s BSA/AML Program. The BSA/AML Audit Program must meet certain minimum requirements,
as detailed in the Orders. Develop risk assessment and planning processes that clearly document AML risk, and for management to require
reporting on no less than a quarterly basis of all deficiencies in BSA/AML processes and controls identified through the BSA/AML Audit
Program to the Bank’s Board or BSA/AML Audit Committee, and to senior management, after which the Boards or BSA/AML Audit
Committee must ensure that management takes prompt action to remediate the cited deficiencies and validates corrective action.
-
 
Suspicious Activity Review Lookback. Retain, within 60 days of the Order’s effective date, or as otherwise specified in the BSA/AML Action
Plan, an independent third-party consultant to conduct a review and provide a written report on the Bank’s suspicious activity monitoring,
investigation, decisioning, and reporting. The OCC has discretion to expand the scope of the look-back after its review of the report.
 
-
 
Accountability for Employees Involved in Misconduct. TDBNA and TDBUSA are prohibited from retaining, now or in the future, any individual
as an officer, employee, agent, consultant, or contractor who participated in, was subject to formal discipline, or was separated or terminated
in connection with the underlying conduct described in the Orders, and TDBNA and TDBUSA are required to submit, within 30 days of the
Order’s effective date, to the OCC policies, procedures, and reporting requirements for ensuring compliance with the accountability
requirements. The Orders also require the HR senior executive officers of TDBNA and TDBUSA to submit, on a quarterly basis, compliance
with the accountability requirements.
 
-
 
General Board Requirements. Ensure timely adoption and implementation of all corrective actions required by the Orders, verification of
adherence to the corrective actions, and ensure the corrective actions are effective in addressing the deficiencies that led to the Orders.
●
 
Limits on Growth. TDBNA and TDBUSA may not take any action that would cause the average of the Bank’s total consolidated assets for the
current calendar quarter and the immediately preceding calendar quarter to exceed the total consolidated assets reported as of September 30,
2024. If TDBNA and TDBUSA do not meet the deadline for compliance with all actionable articles in the Orders, the OCC may require TDBNA and
TDBUSA to reduce their total consolidated assets by up to 7% from their total consolidated assets as reported as of the most recent quarter, and for
each year TDBNA and TDBUSA continue to be in noncompliance with the Orders, the OCC may require further reductions up to 7% from their total
consolidated assets as reported as of the most recent calendar quarter. The Deputy Comptroller of the OCC may, at their discretion, temporarily
suspend the asset limit in light of unusual circumstances at TDBNA or TDBUSA.
 
●
 
Prioritization of Expenditure on Remediation. Prior to declaring or paying dividends, engaging in share repurchases, or making any other capital
distribution, the Boards of TDBNA and TDBUSA must certify in writing to the OCC that the Bank has allocated appropriate resources and staffing to
the remediation required by the Orders.
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 7
Order/Agreement
Key Requirements
Federal Reserve Cease & Desist Order with
TD Bank, TD Group US Holdings LLC
(TDGUS) and TDBUSH
●
 
Issued pursuant to 12 U.S.C. § 1818(b) and (i)(2)(B)
●
 
Monetary Penalty: US$123.5 million.
●
 
The Order will remain in effect until stayed, modified, terminated, or suspended in writing by the FRB.
●
 
Remediation Requirements (dates listed below may be extended by written approval from the FRB):
-
 
Board Oversight. Submit to the FRB, within 90 days of the Order’s effective date, a written plan to oversee the matters identified in the
Order.
 
-
 
Corporate Governance and Management Review. Retain, within 30 days of the Order’s effective date, an independent third party to assess
the effectiveness of the corporate governance, board and U.S. management structure, and staffing needs at TD Bank, TDGUS, and
TDBUSH and draft a written report of findings and recommendations, which will be provided to the FRB and to the Office of the
Superintendent of Financial Institutions (OSFI) at the same time it is provided to the Boards of TD Bank and TDGUS. Submit to the FRB and
OSFI a written board oversight plan that is designed to address the findings and recommendations in the report and that describes the
actions the Boards of TD Bank and TDGUS will take to strengthen the management and corporate governance structure of TD Bank,
TDGUS, and TDBUSH.
 
-
 
U.S. Remediation Office: Submit, within 90 days of the Order’s effective date, a written plan to establish a Remediation Office in the United
States to operate under the oversight of the Boards. The Remediation Office will be responsible for several undertakings pursuant to the
Order.
-
 
U.S. Law Compliance Program. Submit, within 60 days of the Order’s effective date, a compliance program (U.S. Law Compliance Program)
to the FRB, including a timeline for implementation. The U.S. Law Compliance Program related obligations include, among other
requirements, the relocation to the U.S. the part of the TD Bank, TDGUS, and TDBUSH compliance function that is responsible for
establishing and maintaining compliance with the applicable BSA/AML requirements by the branches, affiliates, and global business lines of
TD Bank, TDGUS, and TDBUSH.
-
 
BSA/AML Compliance Review. Retain, within 30 days of the Order’s effective date, an independent third party to conduct a review of the
BSA/AML compliance elements of the U.S. Law Compliance Program. The independent third party will be responsible for preparing a written
report of findings and recommendations, which will be provided to the FRB at the same time it is provided to the Boards. TD Bank, TDGUS,
and TDBUSH must submit a written plan that is designed to fully address the findings and recommendations in the report and that describes
the actions that will be taken to strengthen compliance with the applicable BSA/AML requirements.
-
 
Resource Allocation for Remediation. Prior to TDGUS or TDBUSH declaring or paying dividends, engaging in share repurchases, or making
any other capital distribution, the Boards must certify to the FRB that the appropriate resources and staffing have been allocated to
remediation, as required by the Order.
 
-
 
Accountability for Employees Involved in Misconduct. TD Bank, TDGUS, and TDBUSH are prohibited from retaining, now or in the future,
any individual as an officer, employee, agent, consultant, or contractor who participated in, was subject to formal discipline, or was
separated or terminated in connection with the underlying described in the Order.
 
-
 
Ongoing Reporting. Submit quarterly progress reports detailing the form and manner of actions taken to comply with the Order, a timetable
and schedule to implement specific remedial actions to be taken, and the results thereof. Pursuant to the Order, the written OCC progress
reports will be sent to the FRB.
Remediation of U.S. BSA/AML Program
As described in the DOJ Statement of Facts,
 
between January 2014 and October 2023,
 
the U.S. Bank’s BSA/AML Program had long-term, pervasive,
 
and
systemic deficiencies and the U.S. Bank (a)
 
failed to substantively update, and severely
 
limited the types of activity screened
 
through, the transaction monitoring
system, and (b) failed to adequately train employees
 
who served as the first line of defense
 
against money laundering. TDBNA’s failure to effectively manage its
employee risk also contributed to insider misconduct.
 
In addition, as noted in the OCC Consent
 
Order, deficiencies in the U.S. Bank’s BSA/AML Program included
deficiencies related to: internal controls and risk
 
management practices; risk assessments;
 
customer due diligence; customer risk ratings;
 
suspicious activity
identification, evaluation, and reporting; governance;
 
staffing; independent testing; and training, among
 
others. There was a systemic breakdown
 
in the policies,
procedures, and processes to identify and report
 
suspicious activity.
The Bank is focused on remediating its U.S.
 
BSA/AML program to meet the requirements
 
of the Global Resolution, and it has organized
 
its remediation efforts
consistent with the requirements of the Global
 
Resolution. The redesign of the U.S.
 
BSA/AML program is focused on improvements
 
to capabilities across five core
pillars, namely: (i) People and Talent, (ii) Governance and Structure, (iii)
 
Policy and Risk Assessment, (iv) Process and
 
Control, and (v) Data and Technology.
Progress to date on the remediation includes:
(i)
People
and
Talent:
The
Bank
has
overhauled
its
U.S.
BSA/
AML
program
resourcing
across
all
three
lines
of
defence.
The
Bank
has
established
a
dedicated and expanded U.S. Financial Crime
 
Risk Management leadership team and
 
structure, with emphasis on specific experience
 
and subject matter
expertise, including the appointment of the
 
BSA Officer as required by the OCC order. The Bank has also
 
created and hired new resources across
 
the first
line of defence with years of risk management
 
and control experience, particularly in Financial
 
Crime areas. The Internal Audit function
 
has also been
further developed to include resources with
 
specialized testing experience in the domain
 
as well as specific to remediation validation
 
work.
(ii)
Governance
and
Structure:
The
Bank
has
strengthened
its
oversight
structure
and
accountability
across
all
three
lines
of
defence,
including
the
risk
management and audit functions, and has
 
established a dedicated committee at the U.S.
 
boards (the “U.S. Compliance Committee”)
 
as well as a
dedicated committee of the Bank’s Board of Directors
 
(the “Remediation Committee”) for remediation
 
oversight. In addition, the Bank has established
 
an
executive U.S. Remediation Office, which will be responsible
 
for overseeing the execution of the remediation
 
program and engaging with the U.S.
regulators in relation to the actions required
 
to be taken by the Bank under the Global
 
Resolution. The Bank also anticipates
 
that the monitorship will be
appointed in fiscal 2025
1
.
 
(iii)
Policy
and
Risk
Assessment:
The
Bank
has
introduced
new
standards
with
the
goal
of
enhancing
capabilities
to
measure
financial
crime
risk
more
effectively. Specifically, new risk limits have been designed and implemented, and changes to certain
 
risk assessment processes were introduced
 
to help
highlight specific products and areas of
 
specific risk.
 
(iv)
Process
an
d
Control:
The
Bank
has
enhanced
customer
onboarding
procedures
for
cash
intensive
clients.
In
addition,
the
Bank
has
added
additional
transactions to the Bank’s monitoring system and
 
added new scenarios to help increase the
 
detection of potentially suspicious activity
 
across its products
1
 
Under the terms of the plea agreements and consent orders, the selection of the monitor will be made by the DOJ
 
and FinCEN. Accordingly, the timing of the appointment
 
of the
monitorship is not entirely within the Bank’s control.
 
 
ex992p8i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 8
-
and services. The Bank has also implemented
 
rolebased
 
targeted training and enhanced Bank-wide
 
general training to reinforce understanding
 
and
accountability.
(v)
Data
and
Technology:
The
Bank
has
deployed
new
data
-
driven
technology
solutions
and
has
deployed
the
first
phases
of
an
enhanced
transaction
monitoring platform. The new system has an
 
enhanced data model and new capabilities
 
to modernize and manage the Bank’s detection
 
proficiency into
the future. Advanced analytics have been introduced
 
to improve the speed of investigation activities,
 
and to do proactive modeling of current risks
 
that
impact the Bank.
With the talent, governance, structure, and policy
 
foundations in place, the Bank expects
 
to have the majority of its management remediation
 
actions implemented
in calendar 2025, with additional management
 
actions planned for calendar 2026. In addition,
 
sustainability and testing activities are planned
 
for calendar 2026
and calendar 2027. The Bank is also targeting
 
to have the Suspicious Activity Report lookback
 
to be completed in 2027 per the FinCEN
 
Consent Order.
 
All
management remediation actions will be
 
subject to validation by the Bank’s internal audit
 
function, followed by the review and acceptance
 
by the appointed
monitor, demonstrated sustainability, and, ultimately, the review and approval of the Bank’s U.S. banking regulators
 
and the DOJ. The following graph illustrates
the Bank’s expected remediation plan and progress.
The Bank’s remediation timeline is based on the Bank’s
 
current plans, as well as assumptions related
 
to the duration of planning activities, including
 
the
completion of external benchmarking and
 
lookback reviews. The Bank’s ability to
 
meet its planned remediation milestones assumes
 
that the Bank will be able to
successfully execute against its U.S. BSA/AML
 
remediation program plan, which is
 
subject to inherent risks and uncertainties including
 
the Bank’s ability to attract
and retain key employees, the ability of
 
third parties to deliver on their contractual obligations,
 
and the successful development and implementation
 
of required
technology solutions. Furthermore, the execution
 
of the U.S. BSA/AML remediation plan,
 
including these planned milestones, will not
 
be entirely within the Bank’s
control including because of (i) the requirement
 
to obtain regulatory approval or non-objection
 
before proceeding with various steps, and
 
(ii) the requirement for the
various deliverables to be acceptable to the regulators
 
and/or the monitors. For additional information
 
on the risks associated with the remediation
 
of the Bank’s
U.S. BSA/AML program, see “Risk Factors That
 
May Affect Future Results – Global Resolution of
 
the Investigations into the Bank’s U.S. BSA/AML
 
Program”.
For information about estimated U.S. BSA/AML
 
remediation and governance and
 
control expenses for the 2025 fiscal year, see the “Key Priorities
 
for 2025”
section of the U.S. Retail segment; for additional
 
information about the Bank’s AML governance
 
framework, see the “Managing Risk”
 
section; and for information
about the risks associated with the remediation
 
of the Bank’s U.S. BSA/AML program, see
 
the “Risk Factors That May Affect Future
 
Results – Global Resolution of
the Investigations into the Bank’s U.S. BSA/AML
 
Program”
 
section.
Assessment and Strengthening of the
 
Bank’s Enterprise AML Program
The Bank is undertaking several improvements
 
to the Bank’s enterprise-wide AML/Anti-Terrorist Financing and Sanctions Programs
 
(“Enterprise AML Program”).
These improvements are made in the context
 
of the Bank’s 2023 annual assessment of
 
its Enterprise AML Program, which was
 
rated unsatisfactory as of October
31, 2023. The depth and severity of U.S. BSA/AML
 
program deficiencies contributed to
 
the effectiveness rating of the Enterprise AML Program.
 
Moreover, during
fiscal 2024, Financial Transactions and Reports Analysis
 
Centre of Canada (FINTRAC) undertook a
 
compliance examination of certain aspects of
 
the Bank’s AML
program in Canada. FINTRAC imposed
 
an administrative monetary penalty
 
of $9.2 million and issued five violations:
 
(i) FINTRAC found that TD failed to file
suspicious transaction reports (STRs) in
 
20 of the cases it had reviewed and (ii)
 
FINTRAC issued four inter-related violations
 
that primarily stemmed from the
Bank’s failure to properly identify (i.e., assess
 
and document) its full population of high-risk
 
customers. Based on the Bank’s work to date,
 
the Bank (a) has not
identified issues to the same extent in Canada,
 
Europe or Asia as in the U.S., and (b)
 
has not experienced the same severe AML-related
 
events in Canada,
Europe or Asia as those experienced in the
 
U.S. However, the Bank has concluded that most of the pervasive
 
AML related issues in the U.S. are, to a
 
varying
extent, also applicable to certain aspects of
 
the Enterprise AML Program outside
 
the U.S. The Bank has identified a number
 
of areas in the Enterprise AML
Program outside the U.S. that require improvement.
 
Common themes requiring attention relate
 
to governance and oversight of various
 
components of the
Enterprise AML Program, quality of reporting
 
to senior management and the board of
 
directors, quality control processes, adequacy
 
of procedures in targeted
areas, operational deficiencies in respect of high-risk
 
customers, and certain aspects of
 
transaction monitoring.
Improvements to the Enterprise AML Program
 
outside the U.S. are underway, with corresponding investments
 
and resourcing in place across all three lines
 
of
defence, including key technology initiatives,
 
to ensure the Bank can address these deficiencies.
 
The Bank is also applying learnings obtained from
 
the
deficiencies identified in its U.S. BSA/AML
 
program to its Enterprise AML Program
 
outside the U.S. In particular, these improvements to
 
the Enterprise AML
Program outside the U.S. fall under three
 
main categories:
●
Tactical Enhancements: The Bank has launched the implementation of a
 
number of operational and business process
 
enhancements across the
enterprise, where necessary, that are similar to the initial enhancements
 
made to its U.S. BSA/AML program. These enhancements
 
are intended to
provide interim risk mitigation and strengthen
 
the control environment in specific key
 
areas.
●
Strategic Enhancements: A detailed plan
 
has been developed to upgrade the Enterprise
 
AML Program outside the U.S. and address
 
the areas that require
improvement, with ongoing updates.
●
 
FINTRAC Remediation: As a result of
 
the FINTRAC examination, the Bank
 
has established a remediation program and
 
submitted a detailed plan to
FINTRAC to address the FINTRAC violations
 
and ensure compliance with regulatory expectations.
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 9
Similar to the U.S. BSA/AML remediation
 
program, the FINTRAC remediation and
 
other planned strategic enhancements of
 
the Enterprise AML Program outside
the U.S. are organized under five core pillars:
i.
 
People & Talent: Similar to investments made in the U.S., the Bank has
 
recruited AML program leadership and
 
talent with a focus on deep subject matter
expertise, with additional recruitment underway.
ii.
 
Governance & Structure: The Bank is redefining
 
its enterprise AML governance approach,
 
including strengthening oversight structure
 
and reporting across
all three lines of defense.
iii. Policy & Risk Assessment: Similar to the changes
 
being made in the U.S., new enterprise
 
standards and capabilities are being updated
 
to measure
financial crime risk more effectively, and strengthen oversight across
 
key areas of the program, including high
 
risk and high cash customer activity.
iv. Process & Control: The Bank is in the process of enhancing
 
enterprise customer onboarding procedures,
 
updating approaches to transaction and
customer monitoring, and implementing
 
training to support enhanced processes and
 
reinforce accountability.
v.
 
Data & Technology: The Bank has established an enhancement plan to deliver
 
new technology solutions with stronger
 
detection and data management
capabilities, advanced analytics, new scenarios,
 
and modelling capabilities.
Based on the Bank’s current plans, the majority
 
of the above-mentioned remediation and
 
enhancement actions are anticipated
 
to be implemented by the Bank by
the end of calendar 2025, and will then be
 
subject to internal review, challenge, and validation of the
 
activities. See “Remediation of U.S. BSA/AML
 
Program”
 
for
U.S. BSA/AML remediation timeline.
Impact on the Bank’s Financial Performance Objectives
Reflecting a challenging macroeconomic
 
environment and the impact of the resolution
 
of investigations related to the Bank’s AML program,
 
in fiscal 2024, the
Bank did not meet the Bank’s medium-term financial
 
targets to attain 7-10% adjusted EPS growth (the
 
Bank’s fiscal 2024 adjusted EPS growth
 
was -1.3%), a
16%+ return on equity (the Bank’s fiscal 2024
 
adjusted return on equity was 13.6%), and a
 
positive operating leverage
2
 
(the Bank’s fiscal 2024 adjusted revenue,
net of insurance service expense, and adjusted
 
expense growth were 7.1% and 10.5%,
 
respectively).
The Bank expects that fiscal 2025 will be a transition
 
year, is prioritizing the investments and work that are required
 
to meet its regulatory commitments, and
expects that elevated risk and control expenses
 
will negatively impact earnings during the 2025
 
fiscal year. In addition, the Bank continues to invest in its
businesses. Accordingly, for fiscal 2025, it will be challenging for
 
the Bank to generate earnings growth.
 
The Bank does not expect to meet the following
 
three
previously disclosed medium-term financial
 
targets in fiscal 2025: 7-10% adjusted EPS
 
growth, 16%+ return on equity and positive
 
operating leverage.
 
The Bank is currently undertaking a broad-based
 
strategic review and will reassess
 
organic opportunities and priorities, productivity
 
and efficiency initiatives, and
capital allocation alternatives, with the objective
 
of delivering competitive returns for our
 
shareholders. As a result of this review, the Bank is suspending
 
the
following medium-term financial targets:
 
7-10% adjusted EPS growth, 16%+
 
return on equity and positive operating leverage.
 
The Bank expects to provide
updates on its strategic review, and on the Bank's medium-term
 
financial targets, in the second half of 2025.
 
The Bank remains confident in the earnings
 
growth
potential of its Canadian Personal & Commercial
 
Banking, Wealth Management & Insurance and
 
Wholesale Banking segments. While the Bank
 
expects that its
balance sheet restructuring activities in the
 
U.S. Retail segment and U.S. AML remediation
 
will impact the U.S. Retail segment, it remains
 
committed to the US
market and confident in the strength of the
 
US franchise.
As a result of the Bank’s investments in its risk
 
and control infrastructure and investments
 
supporting business growth, including employee-related
 
expenses, net
of expected productivity and restructuring run-rate
 
savings, the Bank expects that expense
 
growth for the 2025 fiscal year will be in
 
the range of 5-7%
3
.
Impact on the Bank’s U.S. Priorities
The U.S. Retail segment’s top priority remains
 
remediating the U.S. BSA/AML program
 
and strengthening the governance and
 
control environment. In addition, to
help ensure we can continue to support our
 
customers’ financial needs in the U.S.
 
while not exceeding the limitation on the combined
 
total assets of the U.S. Bank,
the Bank is focused on executing multiple balance
 
sheet restructuring actions in fiscal 2025. Refer
 
to the “Key Priorities for 2025”
 
section of the U.S. Retail
segment section for additional information,
 
including the loss associated with the balance
 
sheet restructuring actions which is treated as
 
an item of note in the U.S.
Retail segment results.
Impact on the Bank’s Operations
The plea agreements have resulted in one
 
TD entity being disqualified from serving as
 
an investment adviser or underwriter
 
to registered investment companies in
the United States, which has required
 
TD to seek a waiver from the U.S. Securities
 
and Exchange Commission (“SEC”) and implement
 
interim arrangements until
a waiver is obtained. Another TD entity has
 
become disqualified from relying on
 
the U.S. Department of Labor’s “qualified
 
professional asset manager” exemption
for purposes of providing asset management
 
services to employee benefit plans subject
 
to the U.S. Employee Retirement Income
 
Security Act of 1974 (“ERISA”).
As a result, TD is relying on alternative exemptions
 
for purposes of ERISA compliance, which
 
are expected to allow TD to continue to operate
 
these businesses
without disruption. In addition, TD has made
 
minor modifications to its U.S. registered
 
securities programs. None of these changes
 
had a material impact on the
Bank’s fourth quarter of 2024 results.
The terms of the Global Resolution and
 
the financial, operational and business impact
 
that those terms have had on the Bank have
 
led to the Bank exceeding
certain internal risk metrics, resulting in
 
additional escalation and monitoring activities
 
within the Bank, including with respect to the
 
Bank’s remediation activities.
b)
Restructuring Charges
The Bank continued to undertake certain
 
measures in 2024 to reduce its cost base and
 
achieve greater efficiency. In connection with these measures, the Bank
incurred $566 million of restructuring charges
 
for the year ended October 31, 2024 (October 31,
 
2023 – $363 million), which primarily
 
relate to employee
severance and other personnel-related
 
costs and real estate optimization. This restructuring
 
program concluded in the third quarter
 
of 2024.
2
 
Operating leverage is a non-GAAP measure. At the total Bank level, TD calculates operating leverage
 
as the difference between the % change in adjusted revenue (U.S. Retail in source
currency) net of insurance service expense, and adjusted expenses (U.S. Retail in US$) grossed up
 
by the retailer program partners' share of PCL for the Bank's U.S. strategic card
portfolio. Collectively, these adjustments provide a measure
 
of operating leverage that management believes is more reflective of underlying business performance.
3
 
The Bank’s
 
expectations regarding
 
expense growth
 
is based
 
on the
 
Bank’s assumptions
 
regarding risk
 
and control
 
investments, employee-related
 
expenses, foreign
 
exchange impact,
and productivity and restructuring savings. These assumptions are subject to inherent uncertainties
 
and may vary based on factors both within and outside the Bank’s control including the
accuracy of
 
the Bank’s
 
employee compensation
 
and benefit
 
expense forecasts,
 
impact of
 
business performance
 
on variable
 
compensation, inflation,
 
the pace
 
of productivity
 
initiatives
across the organization,
 
and unexpected expenses
 
such as legal
 
matters. Refer to
 
the “Risk Factors
 
That May Affect
 
Future Results” section
 
of this document
 
for additional information
about risks and uncertainties that may impact the Bank’s estimates.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 10
c) Federal Deposit Insurance Corporation Special
 
Assessment
On November 16, 2023, the Federal Deposit
 
Insurance Corporation (FDIC) announced
 
a final rule that implements a special
 
assessment to recover the losses to
the Deposit Insurance Fund arising from
 
the protection of uninsured depositors during
 
the U.S. bank failures in the spring of 2023.
 
The special assessment
resulted in the recognition of $411 million (US$300 million) pre-tax
 
in non-interest expenses in the first
 
quarter of fiscal 2024.
On February 23, 2024, the FDIC notified
 
all institutions subject to the special assessment
 
that its estimate of total losses increased
 
compared to the amount
communicated with the final rule in November
 
2023. Accordingly, the Bank recognized an additional expense for
 
the special assessment of $103 million
(US$75 million)
in the second quarter of fiscal 2024.
 
During the fourth quarter of fiscal 2024,
 
the Bank updated the special assessment
 
estimate based on actual
invoices received during the year and recognized
 
an expense recovery of $72 million (US$52
 
million).
The final amount of the Bank’s special assessment
 
may be further updated as the FDIC determines
 
the actual losses to the Deposit Insurance
 
Fund.
 
d) Sale of Schwab Common Shares
 
On August 21, 2024, the Bank sold 40.5
 
million shares of common stock of The Charles
 
Schwab Corporation (“Schwab”) for proceeds
 
of approximately $3.4 billion
(US$2.5 billion). The share sale reduced the
 
Bank’s ownership interest in Schwab from 12.3%
 
to 10.1%. The Bank recognized approximately
 
$1.0 billion
(US$0.7 billion) as other income (net of $0.5
 
billion (US$0.4 billion) loss from accumulated
 
other comprehensive income (AOCI),
 
reclassified to earnings), in the
fourth quarter of fiscal 2024.
FINANCIAL RESULTS OVERVIEW
 
CORPORATE OVERVIEW
The Toronto-Dominion Bank and its subsidiaries are collectively known as
 
TD Bank Group (“TD” or the “Bank”). TD is
 
the sixth largest bank in North America by
assets and serves more than 27.9 million
 
customers in four key businesses operating
 
in a number of locations in financial centres
 
around the globe: Canadian
Personal and Commercial Banking, including
 
TD Canada Trust and TD Auto Finance Canada; U.S.
 
Retail, including TD Bank, America’s Most Convenient
 
Bank
®
,
TD Auto Finance U.S., TD Wealth (U.S.), and an
 
investment in The Charles Schwab Corporation;
 
Wealth Management and Insurance, including
 
TD Wealth
(Canada), TD Direct Investing, and TD Insurance;
 
and Wholesale Banking,
 
including TD Securities and TD Cowen.
 
TD also ranks among the world’s leading
online financial services firms, with more
 
than 17 million active online and mobile customers.
 
TD had $2.06 trillion in assets on October
 
31, 2024. The
Toronto-Dominion Bank trades under the symbol “TD” on the Toronto and New York Stock Exchanges.
ECONOMIC SUMMARY AND OUTLOOK
The global economy remains on track for a
 
modest slowdown in calendar 2024, as high interest
 
rates continue to weigh on growth. Alongside
 
slower growth,
inflation across the G-7 has cooled, and
 
central banks have started to lower interest
 
rates. TD Economics expects future interest
 
rate reductions to be gradual, as
central banks assess how growth and inflation
 
respond. In addition, the evolution of geopolitical
 
risks maintains a degree of uncertainty
 
on both the economic
outlook and the inflation trajectory.
The U.S. economy has continued to grow at
 
a solid pace in calendar 2024 supported
 
by resilient consumer spending and
 
strength in business investment. High
borrowing costs have curtailed residential investment,
 
which has weighed on overall growth.
 
With U.S. domestic demand outpacing many of
 
its advanced economy
peers, import growth has also run ahead
 
of exports, leading to little support to growth
 
from international trade.
Based on the October 2024 data, the
 
U.S. job market has stabilized recently, with the unemployment rate
 
at 4.1%, up modestly from a year ago.
 
This can be
characterized as a normalization following
 
tight conditions that persisted for longer than
 
expected after the pandemic. The U.S. economy
 
carries the markings of a
“soft landing” that is allowing inflation pressures
 
to gradually drift lower and opened
 
the door to interest rate cuts by the U.S. Federal
 
Reserve. The U.S. central
bank lowered its policy rate by half a point in
 
September and another quarter point in October.
 
TD Economics expects the U.S. Federal
 
Reserve to continue to lower interest rates
 
over the next year. However, the pace of interest rate reductions has
become more uncertain following the November
 
election. Given the likelihood of increased
 
tariffs under the new administration, and the potential
 
for tax cuts, the
risk that inflation experiences renewed upward
 
pressure has increased. This could slow
 
the pace of interest rate reductions. TD
 
Economics expects the federal
funds rate to be lowered to 3.25-3.50% by the
 
end of calendar 2025 – a level that is still
 
on the restrictive side.
After Canada’s economy slowed notably in calendar
 
2023, strong population gains have lifted
 
economic growth in the first half of calendar
 
2024. Population
increases have also contributed to labour force
 
growth outpacing job creation, taking
 
the unemployment rate higher and cooling
 
labour market conditions. The
unemployment rate was 6.5% in October, above its pre-pandemic
 
level, but still below its long-run average.
 
Looking ahead, TD Economics expects
 
population
growth to slow sharply over the next
 
few years as the federal government reduced
 
its targets for permanent and non-permanent
 
residents. The negative impact of
the weaker population inflows on consumer
 
spending and housing activity is likely to be
 
more than offset by the boost to activity from lower
 
interest rates. As such,
TD Economics forecasts a modest pickup
 
in overall economic growth in calendar 2025
 
from this year’s estimated tepid
 
rate of around 1%.
As a result of favourable inflation dynamics
 
alongside a softening economy, the Bank of Canada has
 
cut interest rates four times in calendar 2024, taking
 
the
overnight rate to 3.75% in October. TD Economics expects
 
the Bank of Canada to continue lowering interest
 
rates over the next year, reaching between 2.25% to
2.50% by the end of calendar 2025. Interest
 
rates differentials between Canada and the
 
U.S. have widened, weakening the Canadian dollar. TD Economics
expects the Canadian dollar will trade in the
 
71 to 73 U.S. cent range over the next
 
few quarters.
HOW THE BANK REPORTS
The Bank prepares its Consolidated Financial
 
Statements in accordance with IFRS, the
 
current GAAP,
 
and refers to results prepared in accordance
 
with IFRS as
“reported” results.
 
Non-GAAP and Other Financial Measures
In addition to reported results, the Bank also
 
presents certain financial measures, including
 
non-GAAP financial measures that are historical,
 
non-GAAP ratios,
supplementary financial measures and capital
 
management measures, to assess its results.
 
Non-GAAP financial measures, such as “adjusted”
 
results, are utilized
to assess the Bank’s businesses and to measure
 
the Bank’s overall performance.
To
arrive at adjusted results, the Bank adjusts
 
for “items of note”, from reported
results. Items of note are items which management
 
does not believe are indicative of underlying
 
business performance and are disclosed
 
in Table 3. Non-GAAP
ratios include a non-GAAP financial measure
 
as one or more of its components. Examples
 
of non-GAAP ratios include adjusted basic
 
and diluted earnings per
share (EPS), adjusted dividend payout ratio, adjusted
 
efficiency ratio, and adjusted effective income tax rate.
 
The Bank believes that non-GAAP financial
measures and non-GAAP ratios provide
 
the reader with a better understanding of how
 
management views the Bank’s performance. Non-GAAP
 
financial measures
and non-GAAP ratios used in this document
 
are not defined terms under IFRS and,
 
therefore, may not be comparable to similar
 
terms used by other issuers.
Supplementary financial measures depict
 
the Bank’s financial performance and position,
 
and capital management measures depict
 
the Bank’s capital position, and
both are explained in this document where
 
they first appear.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 11
U.S. Strategic Cards
The Bank’s U.S. strategic cards portfolio is comprised
 
of agreements with certain U.S. retailers
 
pursuant to which TD is the U.S. issuer
 
of private label and co-
branded consumer credit cards to their U.S.
 
customers. Under the terms of the individual
 
agreements, the Bank and the retailers
 
share in the profits generated by
the relevant portfolios after credit losses.
 
Under IFRS, TD is required to present the gross
 
amount of revenue and provisions for
 
credit losses (PCL) related to
these portfolios in the Bank’s Consolidated Statement
 
of Income. At the segment level, the retailer
 
program partners’ share of revenues
 
and credit losses is
presented in the Corporate segment, with an
 
offsetting amount (representing the partners’
 
net share) recorded in Non-interest expenses,
 
resulting in no impact to
Corporate’s reported Net income (loss). The
 
Net income (loss) included in the U.S. Retail
 
segment includes only the portion of revenue
 
and credit losses
attributable to TD under the agreements.
 
Investment in The Charles Schwab Corporation
 
and IDA Agreement
On August 21, 2024, the Bank sold 40.5
 
million shares of common stock of Schwab for
 
proceeds of approximately $3.4 billion (US$2.5
 
billion). The share sale
reduced the Bank’s ownership interest in Schwab
 
from 12.3% to 10.1%. The Bank recognized
 
approximately $1.0 billion (US$0.7 billion) as
 
other income (net of
$0.5 billion (US$0.4 billion) loss from AOCI
 
reclassified to earnings), in the fourth quarter
 
of fiscal 2024.
 
The Bank accounts for its investment in
 
Schwab using the equity method. The U.S.
 
Retail segment reflects the Bank’s share of
 
net income from its investment
in Schwab. The Corporate segment net income
 
(loss) includes amounts for amortization
 
of acquired intangibles, the acquisition
 
and integration charges related to
the Schwab transaction, and the Bank’s share of restructuring
 
and other charges incurred by Schwab.
 
The Bank’s share of Schwab’s earnings available to
common shareholders is reported with
 
a one-month lag. For further details,
 
refer to Note 12 of the 2024 Consolidated
 
Financial Statements.
On November 25, 2019, the Bank and Schwab
 
signed an insured deposit account agreement
 
(the “2019 Schwab IDA Agreement”), with an
 
initial expiration
date of July 1, 2031. Under the 2019 Schwab
 
IDA Agreement, starting July 1, 2021, Schwab
 
had the option to reduce the deposits by up
 
to US$10 billion per year
(subject to certain limitations and adjustments),
 
with a floor of US$50 billion. In addition, Schwab
 
requested some further operational flexibility
 
to allow for the
sweep deposit balances to fluctuate over
 
time, under certain conditions and subject to
 
certain limitations.
On May 4, 2023, the Bank and Schwab entered
 
into an amended insured deposit account
 
agreement (the “2023 Schwab IDA Agreement”
 
or the “Schwab IDA
Agreement”), which replaced the 2019 Schwab
 
IDA Agreement. Pursuant to the 2023 Schwab
 
IDA Agreement, the Bank continues to make
 
sweep deposit
accounts available to clients of Schwab. Schwab
 
designates a portion of the deposits
 
with the Bank as fixed-rate obligation amounts
 
(FROA). Remaining deposits
are designated as floating-rate obligations.
 
In comparison to the 2019 Schwab IDA Agreement,
 
the 2023 Schwab IDA Agreement extends
 
the initial expiration date
by three years to July 1, 2034 and provides
 
for lower deposit balances in its first
 
six years, followed by higher balances in
 
the later years. Specifically, until
September 2025, the aggregate FROA
 
will serve as the floor. Thereafter, the floor will be set at US$60 billion.
 
In addition, Schwab had the option to buy
 
down up
to $6.8 billion (US$5 billion) of FROA by paying
 
the Bank certain fees in accordance with the
 
2023 Schwab IDA Agreement, subject
 
to certain limits.
 
By the end of the first quarter of fiscal 2024,
 
Schwab had fully exercised its option
 
buy down up to US$5 billion of FROA and
 
had paid a total of $337 million
(US$250 million) in termination fees to the
 
Bank in accordance with the 2023 Schwab
 
IDA Agreement. The fees were intended
 
to compensate the Bank for losses
incurred from discontinuing certain hedging relationships
 
and for lost revenues. The net impact
 
was recorded in net interest income. Refer to
 
the “Related Party
Transactions” section in this document for further details.
The following table provides the operating results
 
on a reported basis for the Bank.
 
TABLE 2: OPERATING RESULTS – Reported
(millions of Canadian dollars)
2024
2023
Net interest income
$
30,472
$
29,944
Non-interest income
1
26,751
20,746
Total revenue
1
57,223
50,690
Provision for credit losses
4,253
2,933
Insurance service expenses
1
6,647
5,014
Non-interest expenses
1
35,493
29,855
Income before income taxes and share
 
of net income from investment in Schwab
1
10,830
12,888
Provision for (recovery of) income taxes
1
2,691
3,118
Share of net income from investment in Schwab
703
864
Net income – reported
1
8,842
10,634
Preferred dividends and distributions on other
 
equity instruments
526
563
Net income available to common shareholders
1
$
8,316
$
10,071
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 12
The following table provides a reconciliation between
 
the Bank’s adjusted and reported results.
 
For further details refer to the “Significant
 
Events” or “Financial
Results Overview” section.
 
 
TABLE 3: NON-GAAP FINANCIAL
 
MEASURES
 
– Reconciliation of Adjusted
 
to Reported Net Income
(millions of Canadian dollars)
2024
2023
Operating results – adjusted
Net interest income
1,2
$
30,749
$
30,394
Non-interest income
1,3,4
26,040
21,643
Total revenue
3
56,789
52,037
Provision for (recovery of) credit losses
4,253
2,933
Insurance service expenses
3
6,647
5,014
Non-interest expenses
3,5
29,148
26,517
Income before income taxes and share of net income from
 
investment in Schwab
16,741
17,573
Provision for (recovery of) income taxes
3,355
3,651
Share of net income from investment in Schwab
6
891
1,073
Net income – adjusted
3
14,277
14,995
Preferred dividends and distributions on other equity instruments
526
563
Net income available to common shareholders –
 
adjusted
3
13,751
14,432
Pre-tax adjustments for items of note
Amortization of acquired intangibles
7
(290)
(313)
Acquisition and integration charges related to the Schwab
 
transaction
5,6
(109)
(149)
Share of restructuring and other charges from investment
 
in Schwab
6
(49)
(35)
Restructuring charges
5
(566)
(363)
Acquisition and integration-related charges
5
(379)
(434)
Charges related to the terminated First Horizon (FHN)
 
acquisition
5
–
(344)
Payment related to the termination of the FHN transaction
5
–
(306)
Impact from the terminated FHN acquisition-related capital hedging
 
strategy
1
(242)
(1,251)
Impact of retroactive tax legislation on payment card clearing services
4
–
(57)
Gain on sale of Schwab shares
4
1,022
–
U.S. balance sheet restructuring
4
(311)
–
Indirect tax matters
2,5
(226)
–
Civil matter provision/Litigation settlement
4,5
(274)
(1,642)
FDIC special assessment
5
(442)
–
Global resolution of the investigations into the Bank’s U.S.
 
BSA/AML program
5
(4,233)
–
Less: Impact of income taxes
Amortization of acquired intangibles
(41)
(42)
Acquisition and integration charges related to the Schwab
 
transaction
(23)
(25)
Restructuring charges
(150)
(97)
Acquisition and integration-related charges
(82)
(89)
Charges related to the terminated FHN acquisition
–
(85)
Impact from the terminated FHN acquisition-related capital hedging
 
strategy
(60)
(308)
Impact of retroactive tax legislation on payment card clearing services
–
(16)
U.S. balance sheet restructuring
(77)
–
Indirect tax matters
(53)
–
Civil matter provision/Litigation settlement
(69)
(456)
FDIC special assessment
(109)
–
Canada Recovery Dividend (CRD) and federal tax rate increase
 
for fiscal 2022
8
–
585
Total adjustments for items of note
(5,435)
(4,361)
Net income available to common shareholders – reported
3
$
8,316
$
10,071
1
 
Prior to May 4, 2023, the impact shown covers periods before the termination of the FHN transaction
 
and includes
 
the following components, reported
 
in the Corporate segment: i) mark-
to-market gains (losses) on interest rate swaps recorded in non-interest income – 2023: ($1,386) million,
 
ii) basis adjustment amortization related to de-designated fair value hedge
accounting relationships, recorded in net interest income – 2023: $262 million, and iii) interest income (expense) recognized
 
on the interest rate swaps, reclassified from non-interest
income to net interest income with no impact to total adjusted net income – 2023: $585 million. After the termination
 
of the merger agreement, the residual impact of the strategy is
reversed through net interest income – 2024: ($242) million,
 
2023: ($127) million.
2
 
Adjusted net interest income excludes the following item of note:
i.
 
Indirect tax matters – 2024: $35 million, reported in the Corporate segment. Refer to “Taxes
 
”
 
in the “Financial Results Overview”
 
section for further details.
3
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
4
 
Adjusted non-interest income excludes the following items of note:
i.
 
Impact of retroactive tax legislation on payment card clearing services – 2023: $57 million,
 
reported in the Corporate segment;
ii.
 
The Bank sold 40.5 million shares of common stock of Schwab and recognized a gain on the sale – 2024: $1,022
 
million, reported in the Corporate segment;
iii.
 
U.S. balance sheet restructuring – 2024: $311 million, reported in the
 
U.S. Retail segment; and
iv.
 
Stanford litigation settlement – 2023: $39 million. This reflects the foreign exchange loss and is reported in the Corporate
 
segment.
5
 
Adjusted non-interest expenses exclude the following items of note:
i.
 
Amortization of acquired intangibles – 2024: $172 million, 2023: $193 million, reported in the Corporate segment;
ii.
 
The Bank’s own acquisition and integration charges related to the Schwab transaction – 2024: $88
 
million, 2023: $95 million, reported in the Corporate segment;
iii.
 
Restructuring charges – 2024: $566 million, 2023: $363 million, reported in the Corporate segment;
iv.
 
Acquisition and integration-related charges – 2024: $379 million, 2023: $434 million, reported in the Wholesale
 
Banking segment;
 
v.
 
Charges related to the terminated FHN acquisition – 2023: $344 million, reported in the U.S. Retail segment;
 
vi.
 
Payment related to the termination of the FHN transaction – 2023: $306 million, reported in the Corporate segment;
vii.
 
Indirect tax matters – 2024: $191 million, reported in the Corporate segment.
 
Refer to “Taxes”
 
in the “Financial Results Overview”
 
section for further details;
viii.
 
Civil matter provision/Litigation settlement – 2024: $274 million in respect of a civil matter,
 
2023: $1,603 million in respect of the Stanford litigation settlement, reported in the
Corporate segment;
ix.
 
FDIC special assessment – 2024: $442 million,
 
reported in the U.S. Retail segment; and
x.
Charges for the global resolution of the investigations into the Bank’s U.S. BSA/AML program – 2024:
 
$4,233 million, reported in the U.S. Retail segment.
6
 
Adjusted Share of net income from investment in Schwab excludes the following items of note on an after-tax basis.
 
The earnings impact of these items is reported in the Corporate
segment:
i.
 
Amortization of Schwab-related acquired intangibles – 2024: $118
 
million, 2023: $120 million;
ii.
 
The Bank’s share of acquisition and integration charges associated with Schwab’s acquisition
 
of TD Ameritrade – 2024: $21 million,
 
2023: $54 million;
iii.
 
The Bank’s share of restructuring charges incurred by Schwab – 2024: $27 million, 2023: $35 million;
 
and
iv.
 
The Bank’s share of the FDIC special assessment charge incurred by Schwab – 2024:
 
$22 million.
7
 
Amortization of acquired intangibles relates to intangibles acquired as a result of asset acquisitions and business
 
combinations, including the after-tax amounts for amortization of
acquired intangibles relating to the Share of net income from investment in Schwab, reported in the Corporate segment.
 
Refer to footnotes 5 and 6 for amounts.
8
 
CRD and impact from increase in the Canadian federal tax rate for fiscal 2022 recognized in 2023, reported in the
 
Corporate segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 13
TABLE 4: RECONCILIATION OF REPORTED
 
TO ADJUSTED EARNINGS
 
PER SHARE
1
(Canadian dollars)
2024
2023
Basic earnings per share – reported
2
$
4.73
$
5.53
Adjustments for items of note
3.09
2.39
Basic earnings per share – adjusted
2
$
7.82
$
7.92
Diluted earnings per share – reported
2
$
4.72
$
5.52
Adjustments for items of note
3.09
2.39
Diluted earnings per share – adjusted
2
$
7.81
$
7.91
1
 
EPS is computed by dividing net income available to common shareholders by the weighted-average number of
 
shares outstanding during the period. Numbers may not add due to
rounding.
2
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
TABLE 5: AMORTIZATION OF
 
INTANGIBLES, NET OF INCOME TAXES
(millions of Canadian dollars)
2024
2023
Schwab
1
$
118
$
120
Wholesale Banking related intangibles
108
117
Other
23
34
Included as items of note
249
271
Software and asset servicing rights
432
365
Amortization of intangibles, net of income
 
taxes
$
681
$
636
1
 
Included in Share of net income from investment in Schwab.
RETURN ON COMMON EQUITY
The consolidated Bank ROE is calculated
 
as reported net income available to common
 
shareholders as a percentage of average
 
common equity. The
consolidated Bank adjusted ROE is calculated
 
as adjusted net income available to
 
common shareholders as a percentage of average
 
common equity. Adjusted
ROE is a non-GAAP ratio and can be utilized
 
in assessing the Bank’s use of equity.
 
ROE for the business segments is calculated
 
as the segment net income available to
 
common shareholders as a percentage of
 
average allocated capital. The
Bank’s methodology for allocating capital
 
to its business segments is largely aligned
 
with the common equity capital requirements
 
under Basel III. Capital allocated
to the business segments increased to 11.5% of Common Equity
 
Tier 1 (CET1) Capital effective in the first quarter of 2024,
 
compared with 11% in fiscal 2023.
 
TABLE 6: RETURN ON COMMON EQUITY
(millions of Canadian dollars, except
 
as noted)
2024
2023
Average common equity
1
$
100,979
$
101,608
Net income available to common shareholders
 
– reported
1
8,316
10,071
Items of note, net of income taxes
5,435
4,361
Net income available to common shareholders
 
– adjusted
1
$
13,751
$
14,432
Return on common equity – reported
1
8.2
%
9.9
%
Return on common equity – adjusted
1
13.6
14.2
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
RETURN ON TANGIBLE COMMON EQUITY
Tangible common equity (TCE) is calculated as common shareholders’ equity
 
less goodwill, imputed goodwill and intangibles
 
on the investments in Schwab and
other acquired intangible assets, net of related
 
deferred tax liabilities. ROTCE is calculated
 
as reported net income available to common
 
shareholders after
adjusting for the after-tax amortization of
 
acquired intangibles, which are treated as an
 
item of note, as a percentage of average
 
TCE. Adjusted ROTCE is
calculated using reported net income available
 
to common shareholders, adjusted for all
 
items of note, as a percentage of average
 
TCE. TCE, ROTCE, and
adjusted ROTCE can be utilized in assessing
 
the Bank’s use of equity. TCE is a non-GAAP financial measure,
 
and ROTCE and adjusted ROTCE are
 
non-GAAP
ratios.
TABLE 7: RETURN ON TANGIBLE COMMON
 
EQUITY
(millions of Canadian dollars, except
 
as noted)
2024
2023
Average common equity
1
$
100,979
$
101,608
Average goodwill
18,431
17,919
Average imputed goodwill and intangibles
 
on investments in Schwab
5,836
6,127
Average other acquired intangibles
2
560
584
Average related deferred tax liabilities
(230)
(154)
Average tangible common equity
1
76,382
77,132
Net income available to common shareholders
 
– reported
1
8,316
10,071
Amortization of acquired intangibles, net of income
 
taxes
249
271
Net income available to common shareholders
 
adjusted for
 
amortization of acquired intangibles, net
 
of income taxes
1
8,565
10,342
Other items of note, net of income taxes
5,186
4,090
Net income available to common shareholders
 
– adjusted
1
$
13,751
$
14,432
Return on tangible common equity
1
11.2
%
13.4
%
Return on tangible common equity – adjusted
1
18.0
18.7
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
2
 
Excludes intangibles relating to software and asset servicing rights.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ex992p14i1 ex992p14i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 14
IMPACT OF FOREIGN EXCHANGE RATE ON U.S. RETAIL SEGMENT TRANSLATED EARNINGS
The following table reflects the estimated impact
 
of foreign currency translation on key
 
U.S. Retail segment income statement items.
 
The impact is calculated as
the difference in translated earnings using the average
 
U.S. to Canadian dollars exchange rates in the
 
periods noted.
 
TABLE 8: IMPACT OF FOREIGN EXCHANGE
 
RATE ON U.S. RETAIL SEGMENT
 
TRANSLATED EARNINGS
(millions of Canadian dollars, except as
 
noted)
2024 vs. 2023
2023 vs. 2022
Increase (Decrease)
Increase (Decrease)
U.S. Retail Bank
Total revenue – reported
$
126
$
650
Total revenue – adjusted
1
128
650
Non-interest expenses – reported
166
365
Non-interest expenses – adjusted
1
70
346
Net income – reported, after-tax
(57)
214
Net income – adjusted, after-tax
1
39
228
Share of net income from investment in
 
Schwab
2
6
51
U.S. Retail segment net income – reported,
 
after-tax
(51)
265
U.S. Retail segment net income – adjusted, after-tax
1
45
279
Earnings per share
(Canadian dollars)
Basic – reported
$
(0.03)
$
0.15
Basic – adjusted
1
0.02
0.15
Diluted – reported
(0.03)
0.15
Diluted – adjusted
1
0.02
0.15
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
2
Share of net income from investment in Schwab and TD Ameritrade and the foreign exchange impact
 
are reported with a one-month lag.
Average foreign exchange rate (equivalent
 
of CAD $1.00)
2024
2023
U.S. dollar
0.735
0.741
FINANCIAL RESULTS OVERVIEW
Net Income
45
Reported net income for the year was $8,842
 
million, a decrease of $1,792 million, or 17%,
 
compared with last year. The decrease primarily reflects
 
the impact of
the charges for the global resolution of the investigations
 
into the Bank’s U.S. BSA/AML program
 
in U.S. Retail,
 
higher non-interest expenses, including
investments in risk and control infrastructure,
 
higher insurance service expenses and
 
higher PCL, partially offset by higher revenues,
 
the prior year impact in the
Corporate segment of the Stanford litigation
 
settlement,
 
the lower current period impact of the terminated
 
FHN acquisition-related capital hedging strategy,
 
and the
current year gain on sale of Schwab shares in
 
the Corporate segment.
 
On an adjusted basis, net income for the year
 
was $14,277 million, a decrease of
$718 million, or 5%, compared with last
 
year. The reported ROE for the year was 8.2%, compared
 
with 9.9% last year. The adjusted ROE for the year was
 
13.6%,
compared with 14.2% last year.
4
 
Amounts exclude Corporate segment.
5
 
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
 
 
 
 
 
 
 
 
 
 
 
 
ex992p15i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 15
By segment, the decrease in reported net income
 
reflects decreases in U.S. Retail of $5,489
 
million and in Wealth Management and Insurance
 
of $46 million,
partially offset by increases in the Corporate segment
 
of $2,864 million, in Canadian Personal
 
and Commercial Banking of $531 million,
 
and in Wholesale Banking
of $348 million.
Reported diluted EPS for the year was $4.72,
 
a decrease of 14%, compared with $5.52
 
last year. Adjusted diluted EPS for the year was $7.81,
 
a decrease of
1%, compared with $7.91 last year.
FINANCIAL RESULTS OVERVIEW
Revenue
6
Reported revenue was $57,223 million, an
 
increase of $6,533 million, or 13%, compared
 
with last year. Adjusted
revenue was $56,789 million, an increase of $4,752
 
million, or 9%, compared with last year.
NET INTEREST INCOME
Reported net interest income for the year
 
was $30,472 million, an increase of $528
 
million, or 2%, compared
with last year. The increase primarily reflects volume growth
 
and higher deposit margins in Canadian Personal
and Commercial Banking, partially offset by lower
 
net interest income in Wholesale Banking.
 
Adjusted net
interest income was $30,749 million, an increase
 
of $355 million, or 1%.
By segment, the increase in reported net interest
 
income reflects increases in Canadian
 
Personal and
Commercial Banking of $1,505 million,
 
in the Corporate segment of $246 million,
 
and in Wealth Management
and Insurance of $162 million, partially offset by decreases
 
in Wholesale Banking of $956 million
 
and in U.S.
Retail of $429 million.
 
NET INTEREST MARGIN
Net interest margin is calculated by dividing
 
net interest income by average interest-earning
 
assets. This metric
is an indicator of the profitability of the Bank’s earning
 
assets less the cost of funding. Net interest
 
margin
decreased by 2 basis points (bps) during the
 
year to 1.72%, compared with 1.74% last
 
year, primarily due to the
impact of maintaining elevated liquidity levels.
 
Average interest earning assets used in the calculation
 
is a non-
GAAP financial measure and net interest
 
margin is a non-GAAP ratio. They are not defined
 
terms under IFRS
and, therefore, may not be comparable to similar
 
terms used by other issuers.
NON-INTEREST INCOME
Reported non-interest income for the year
 
was $26,751 million, an increase of $6,005
 
million, or 29%, compared with last year, primarily reflecting
 
higher lending
revenue, trading-related revenue, underwriting
 
fees, and equity commissions in
 
Wholesale Banking, the prior period impact
 
of the terminated FHN acquisition-
related capital hedging strategy and the current
 
year gain on sale of Schwab shares in the
 
Corporate segment, higher insurance premiums,
 
the impact of
reinsurance recoveries for catastrophe
 
claims, and higher fee-based and transaction
 
revenue in Wealth Management and Insurance.
 
Adjusted non-interest income
was $26,040 million, an increase of $4,397
 
million, or 20%.
By segment, the increase in reported non-interest
 
income reflects increases in Wholesale
 
Banking of $2,424 million, in the Corporate
 
segment of $2,018 million,
and in Wealth Management and Insurance of $1,743
 
million, partially offset by decreases in U.S.
 
Retail of $148 million and in Canadian Personal
 
and Commercial
Banking of $32 million.
TABLE 9: NON-INTEREST INCOME
(millions of Canadian dollars, except
 
as noted)
2024 vs. 2023
2024
2023
% change
Investment and securities services
Broker dealer fees and commissions
$
1,522
$
1,263
21
Full-service brokerage and other securities
 
services
1,668
1,518
10
Underwriting and advisory
1,436
997
44
Investment management fees
669
636
5
Mutual fund management
1,994
1,897
5
Trust fees
111
109
2
Total investment and securities services
7,400
6,420
15
Credit fees
1,898
1,796
6
Trading income (losses)
3,628
2,417
50
Service charges
1
2,626
2,514
4
Card services
2,947
2,932
1
Insurance revenue
1
6,952
6,311
10
Other income (loss)
1
1,300
(1,644)
179
Total
1
$
26,751
$
20,746
29
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
6
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP and Other Financial Measures” in the “Financial Results Overview” section of this document.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ex992p16i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 16
TRADING-RELATED REVENUE
Trading-related revenue is the total of trading income (loss),
 
net interest income on trading positions, and
 
income (loss) from financial instruments
 
designated at
fair value through profit or loss (FVTPL)
 
that are managed within a trading portfolio.
 
Trading income (loss) includes realized and unrealized
 
gains and losses on
trading assets and liabilities. Net interest income
 
on trading positions arises from interest and
 
dividends related to trading assets and liabilities
 
and is reported net
of interest expense associated with funding
 
these assets and liabilities in the following
 
table. Trading-related revenue excludes underwriting
 
fees and commissions
on securities transactions. Trading-related revenue is
 
a non-GAAP financial measure, which is not
 
a defined term under IFRS and, therefore,
 
may not be
comparable to similar terms used by
 
other issuers. Management believes that
 
the trading-related revenue is an appropriate
 
measure of trading performance.
Trading-related revenue by product line depicts trading
 
income for each major trading category.
TABLE 10: TRADING-RELATED REVENUE
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Trading income (loss)
$
3,628
$
2,417
Net interest income (loss)
1
(732)
435
Other
2
(193)
(672)
Total
$
2,703
$
2,180
Trading-related TEB adjustment
79
180
Total trading-related revenue (TEB)
$
2,782
$
2,360
By product
Interest rate and credit
$
1,147
$
821
Foreign exchange
905
860
Equity and other
730
679
Total trading-related revenue (TEB)
$
2,782
$
2,360
1
 
Excludes taxable equivalent basis (TEB).
 
2
 
Includes income (loss) from securities designated at FVTPL that are managed within a trading portfolio of $(208)
 
million (2023
 
– $(548) million) reported in Other Income (Loss) on the
2024 Consolidated Financial Statements and other adjustments.
FINANCIAL RESULTS OVERVIEW
Provision for Credit
 
Losses
PCL for the year was $4,253 million,
 
an increase of $1,320 million compared
 
with last year. PCL –
impaired was $3,877 million, an increase of
 
$1,391 million, reflecting credit migration in
 
the non-retail and
consumer lending portfolios.
 
PCL – performing was $376 million, a decrease
 
of $71 million. The current
year performing provisions largely reflect
 
current credit conditions including credit
 
migration, and volume
growth. Total PCL as an annualized percentage of credit volume was 0.46%.
By segment, PCL was higher in U.S. Retail
 
by $604
 
million, in Canadian Personal and Commercial
Banking by $412 million, in Wholesale Banking
 
by $191 million, in the Corporate segment
 
by $114 million,
and lower in Wealth Management and Insurance by
 
$1 million.
While results may vary by quarter, and are subject to changes
 
to economic conditions, the Bank’s fiscal
2025 PCLs are expected to be in the range
 
of 45 to 55 basis points
7
.
7
The Bank’s estimated PCL range is based on forward-looking assumptions that have inherent risks and
 
uncertainties. Results may vary depending on actual economic or credit
conditions and performance, such as the level of unemployment, interest rates, economic growth or contraction, and
 
borrower or industry specific credit factors and conditions. The Bank’s
PCL estimate is subject to risks and uncertainties including those set out in the “Risk Factors That May Affect
 
Future Results” section of this document.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ex992p17i1 ex992p17i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 17
FINANCIAL RESULTS OVERVIEW
Expenses
8
NON-INTEREST EXPENSES
Reported non-interest expenses for the year
 
were
$35,493 million, an increase of $5,638 million, or
 
19%,
compared with last year, primarily reflecting the impact of
the charges for the global resolution of the investigations
 
into
the Bank’s U.S. BSA/AML program in
 
U.S. Retail, investments
in risk and control infrastructure, higher employee-related
expenses, including TD Cowen, the FDIC
 
special assessment
in U.S. Retail, and higher technology spend
 
supporting
business growth, partially offset by the prior year
 
impacts of the
Stanford litigation settlement and the payment
 
related to
termination of the First Horizon transaction
 
in the Corporate
segment. On an adjusted basis, non-interest
 
expenses were
$29,148 million, an increase of $2,631 million, or
 
10%. Due to
higher than estimated legal and regulatory expenses,
 
all of
which arose in the fourth quarter, the Bank did not meet its
previously-disclosed expectation that
 
its adjusted non-interest
expense growth for fiscal 2024 would be in
 
the high single
digits.
By segment, the increase in reported non-interest
 
expenses
reflects increases in U.S. Retail of $4,536
 
million, in Wholesale
Banking of $816 million, in Wealth Management and
 
Insurance
of $377 million, and in Canadian Personal and
 
Commercial
Banking of $310 million, partially offset by a decrease
 
in the
Corporate segment of $401 million.
INSURANCE SERVICE EXPENSES (ISE)
Insurance service expenses for the year
 
were $6,647 million. This represents an increase
 
of $1,633 million, or 33%, compared with
 
last year, of which
$916 million, or 18%, was driven by estimated
 
losses from catastrophe claims. The remaining
 
increase reflects less favourable prior
 
years’ claims development
and increased claims severity.
EFFICIENCY RATIO
The efficiency ratio measures operating efficiency
 
and is calculated by dividing non-interest expenses
 
by total revenue. A lower ratio indicates a
 
more efficient
business operation. Adjusted efficiency ratio is
 
calculated in the same manner using
 
adjusted non-interest expenses and
 
total revenue.
The reported efficiency ratio was 62.0%, compared
 
with 58.9% last year. The adjusted efficiency ratio, net of
 
ISE, was 58.1%, compared with 56.4% last
 
year.
TABLE 11: NON-INTEREST EXPENSES
 
AND EFFICIENCY RATIO
1
(millions of Canadian dollars, except
 
as noted)
2024 vs. 2023
2024
2023
% change
Salaries and employee benefits
Salaries
$
9,920
$
9,559
4
Incentive compensation
4,481
4,065
10
Pension and other employee benefits
2,332
2,129
10
Total salaries and employee benefits
16,733
15,753
6
Occupancy
Depreciation and impairment losses
1,048
987
6
Rent and maintenance
910
812
12
Total occupancy
1,958
1,799
9
Technology and equipment
Equipment, data processing and licenses
2,379
2,056
16
Depreciation and impairment losses
277
252
10
Total technology and equipment
2,656
2,308
15
Amortization of other intangibles
702
672
4
Communication and marketing
 
1,516
1,452
4
Restructuring charges
566
363
56
Brokerage-related and sub-advisory fees
498
456
9
Professional, advisory and outside services
1
3,064
2,493
23
Other expenses
1
7,800
4,559
71
Total expenses
1
$
35,493
$
29,855
19
Efficiency ratio – reported
1
62.0
%
58.9
%
310
bps
Efficiency ratio – adjusted, net of ISE
2
58.1
56.4
170
1
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
2
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
8
 
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview”
 
section of this
document.
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 18
FINANCIAL RESULTS OVERVIEW
Taxes
Reported total income and other taxes decreased
 
by $42 million, or 0.8%, compared with
 
last year, reflecting a decrease in income
 
tax expense of $427 million, or
13.7%, partially offset by an increase in other
 
taxes of $385 million, or 19%.
 
Adjusted total income and other taxes
 
decreased by $102 million from last year, or
1.8%, reflecting a decrease in income tax expense
 
of $296 million, or 8.1%, and an increase
 
in other taxes of $194 million, or 9.6%.
The Bank’s reported effective income tax rate was
 
24.8% for 2024, compared with 24.2%
 
last
 
year. The year-over-year increase primarily
 
reflects the tax impact
of the non-deductible charges for the global
 
resolution of the investigations into the Bank’s
 
U.S. BSA/AML program and
 
lower tax-exempt dividend income, partially
offset by the favourable tax impact associated
 
with the gain on sale of Schwab shares, while
 
the prior year tax rate was significantly impacted
 
by adjustments
associated with the implementation of the
 
Canada Recovery Dividend and the Canadian
 
federal tax rate increase as well as the terminated
 
First Horizon
transaction. For a reconciliation of the Bank’s
 
effective income tax rate with the Canadian
 
statutory income tax rate, refer to Note 24
 
of the 2024 Consolidated
Financial Statements.
The Bank reported its investment in Schwab
 
using the equity method of accounting. Schwab’s
 
tax expense (2024:
 
$215 million; 2023: $279 million) was not
 
part
of the Bank’s effective tax rate.
To allow for an after-tax calculation of
 
adjusted income, the adjusted provision
 
for income taxes is calculated by adjusting
 
the taxes for each item of note using
the applicable income tax rate of the relevant legal
 
entity. The adjusted effective income
 
tax rate is calculated as the adjusted
 
provision for income taxes before
other taxes as a percentage of adjusted net
 
income before taxes. The Bank’s
 
adjusted effective income tax rate for 2024
 
was 20.0%, compared with 20.8% last
year. The year-over-year decrease primarily reflects
 
favourable earnings mix, partially offset by lower
 
tax-exempt dividend income.
 
Adjusted results are not defined
terms under IFRS and, therefore, may not
 
be comparable to similar terms used
 
by other issuers.
TABLE 12: INCOME AND OTHER
 
TAXES – Reconciliation of Reported to
 
Adjusted Provision for Income and
 
Other Taxes
(millions of Canadian dollars, except
 
as noted)
2024
2023
Provision for income taxes – reported
1
$
2,691
$
3,118
Total adjustments for items of note
664
533
Provision for income taxes – adjusted
1
3,355
3,651
Other taxes
Payroll
909
853
Capital and premium
231
222
GST, HST, and provincial sales
2
1,002
719
Municipal and business
273
236
Total other taxes – reported
2,415
2,030
Total adjustments for items of note related
 
to indirect tax matters
(191)
–
Total other taxes – adjusted
2,224
2,030
Total taxes – adjusted
1
$
5,579
$
5,681
Effective income tax rate – reported
24.8
%
24.2
%
Effective income tax rate – adjusted
20.0
20.8
1
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
 
2
Goods and services tax (GST) and Harmonized sales tax (HST).
Canadian Tax Measures
Bill C-59 was substantively enacted on May
 
28, 2024 and received royal assent on
 
June 20, 2024. The legislation advances
 
certain tax measures originally
introduced in the Canadian Federal budget
 
presented on March 28, 2023. In particular, Bill C-59 denies
 
the dividend received deduction in respect of
 
dividends
received by certain financial institutions on
 
shares that are mark-to-market property, subject to a minor
 
carve out for dividends on certain preferred
 
shares, as well
as imposes a 2% tax on the net value of
 
share repurchases by public corporations
 
in Canada. These measures are effective and have
 
been implemented by the
Bank as of January 1, 2024.
International Tax Reform – Pillar Two Global Minimum Tax
 
On December 20, 2021, the Organisation
 
for Economic Co-operation and Development
 
(OECD)
 
published Pillar Two model rules as part of its efforts toward
international tax reform. The Pillar Two model rules provide
 
for the implementation of a 15% global
 
minimum tax for large multinational enterprises,
 
which is to be
applied on a jurisdiction-by-jurisdiction
 
basis. Pillar Two legislation was enacted in Canada on
 
June 20, 2024 under Bill C-69, which includes
 
the
Global Minimum
Tax Act
 
addressing the Pillar Two model rules. The rules are
 
effective for the Bank for the fiscal year beginning
 
on November 1, 2024.
 
The
Global Minimum Tax
Act
may result in a tax on future dispositions
 
of shares in Charles Schwab, depending
 
on the accounting gain at that time and
 
its impact on effective tax rates. The
tax could be up to 15% of the accounting gain
 
and would be payable in Canada. Also,
 
similar legislation has passed in other jurisdictions
 
in which the Bank
operates and will result in additional taxes being
 
paid in those countries. The Bank estimates
 
that its effective tax rate will increase by 0.25%-0.50%
 
as a result of
these additional annual taxes, with the bulk
 
of the additional taxes arising in Ireland
 
due to its statutory corporate tax rate of 12.5%.
Indirect Tax Matters
 
On September 26, 2024, the Tax Court of Canada released its decision in
 
the case of
Royal Bank of Canada v. His Majesty the King
, 2024 TCC 125, a case on
the ability to claim input tax credits on
 
certain inputs to the credit card business.
 
The outcome of this case has caused the
 
Bank to revisit its historical input tax
credit claims.
 
The Bank also reviewed aspects of its
 
methodology for claiming input tax credits on
 
certain areas that have been challenged by
 
the Canada
Revenue Agency (CRA) and it has established
 
a provision of $226 million (inclusive of interest)
 
related to indirect tax matters.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 19
FINANCIAL RESULTS OVERVIEW
Quarterly Financial Information
FOURTH QUARTER 2024 PERFORMANCE
 
SUMMARY
Reported net income for the quarter was $3,635
 
million, an increase of $769 million, or 27%,
 
compared with the fourth quarter last
 
year, primarily reflecting higher
revenues and the current year gain on sale of
 
Schwab shares in the Corporate Segment,
 
partially offset by higher insurance service expenses
 
and higher non-
interest expenses, including investments
 
in risk and control infrastructure.
 
On an adjusted basis, net income for
 
the quarter was $3,205 million, a decrease
 
of
$280 million, or 8%. Reported diluted EPS
 
for the quarter was $1.97, an increase
 
of 33%, compared with $1.48 in the fourth
 
quarter of last year. Adjusted diluted
EPS for the quarter was $1.72, a decrease of
 
5%, compared with $1.82 in the fourth
 
quarter of last year.
Reported revenue for the quarter was $15,514
 
million, an increase of $2,336 million, or 18%,
 
compared with the fourth quarter last
 
year, of which $718 million,
or 5%, was driven by reinsurance recoveries
 
for catastrophe claims. Adjusted revenue
 
for the quarter was $14,897 million, an increase
 
of $1,655 million, or 12%,
compared with the fourth quarter last year.
Reported net interest income for the quarter
 
was $7,940 million, an increase of $446
 
million, or 6%, compared with the fourth quarter
 
last year, primarily
reflecting volume growth in Canadian Personal
 
and Commercial Banking, and higher
 
deposit margins
in the personal and commercial banking
 
businesses and
Wealth Management and Insurance. Adjusted net
 
interest income for the quarter was $8,034
 
million, an increase of $476 million, or
 
6%.
 
By segment, the increase
in reported net interest income reflects increases
 
in Canadian Personal and Commercial
 
Banking of $353 million, in the Corporate
 
segment of $88 million, and in
Wealth Management and Insurance of $56 million,
 
partially offset by decreases in U.S. Retail
 
of $27 million and in Wholesale Banking
 
of $24 million.
Reported non-interest income for the quarter
 
was $7,574 million, an increase of $1,890
 
million, or 33%, compared with the fourth quarter
 
last year, of which
$718 million, or 13%, was driven by reinsurance
 
recoveries for catastrophe claims.
 
The remaining increase was primarily driven
 
by the current quarter’s gain on
sale of Schwab shares in the Corporate Segment,
 
higher lending revenue, underwriting
 
fees and trading-related revenue in
 
Wholesale Banking, and higher fee-
based revenue, transaction revenue, and higher
 
insurance premiums in Wealth Management
 
and Insurance, partially offset by the impact
 
of U.S. balance sheet
restructuring in U.S. Retail. Adjusted non-interest
 
income was $6,863 million, an increase
 
of $1,179 million, or 21%. By segment, the increase
 
in reported non-
interest income reflects increases in the
 
Corporate segment of $986 million, in Wealth
 
Management and Insurance of $925 million,
 
and in Wholesale Banking of
$307 million, partially offset by decreases in U.S.
 
Retail of $285 million and in Canadian Personal
 
and Commercial Banking of $43 million.
PCL for the quarter was $1,109 million, an increase
 
of $231 million compared with the fourth
 
quarter last year. PCL – impaired was $1,153 million,
 
an increase
of $434 million,
 
or 60%, reflecting credit migration in
 
the non-retail and consumer lending portfolios.
 
PCL – performing was a recovery of
 
$44 million, compared
with a build of $159 million in the fourth quarter last
 
year. The performing release this quarter largely reflects improvement
 
in the economic outlook, including
 
the
impact of lower interest rates, and was recorded
 
in the Canadian Personal and Commercial
 
Banking and U.S. Retail segments. Total PCL for the quarter as an
annualized percentage of credit volume
 
was 0.47%.
By segment, PCL was higher by $100
 
million in U.S. Retail,
 
by $77 million in Wholesale Banking,
 
by $40 million in Canadian Personal &
 
Commercial Banking,
and by $14 million in the Corporate segment.
Insurance service expenses for the quarter
 
were $2,364 million. This represents
 
an increase of $1,018 million, or 76%,
 
compared with the fourth quarter last
year, of which $893 million, or 66%, was driven
 
by estimated losses from catastrophe
 
claims. The remaining increase reflects
 
less favourable prior years’
 
claims
development and increased claims severity.
Reported non-interest expenses for the quarter
 
were $8,050 million, an increase of $422 million,
 
or 6%, compared with the fourth quarter
 
last year, primarily
reflecting investments in risk and control infrastructure,
 
the provision for indirect tax matters in
 
the Corporate Segment, and higher technology
 
and marketing
spend supporting business growth, partially
 
offset by the prior year’s restructuring
 
charges in the Corporate Segment. Adjusted
 
non-interest expenses for the
quarter were $7,731 million, an increase of
 
$743 million, or 11%, compared with the fourth quarter last
 
year, primarily driven by investments in risk and control
infrastructure, investments supporting business
 
growth,
 
including technology and occupancy
 
costs, and other operating expenses. By
 
segment, the increase in
reported non-interest expenses reflects increases
 
in the Corporate segment of $249 million,
 
in Wealth Management and Insurance of $150
 
million, in U.S. Retail of
$65 million, and in Canadian Personal and
 
Commercial Banking of $63 million, partially
 
offset by a decrease in Wholesale Banking of
 
$105 million.
The Bank’s reported effective tax rate was 13.4% for
 
the quarter, compared with 18.5% in the same quarter last
 
year. The year-over-year decrease primarily
reflects the non-taxable gain on sale of Schwab
 
shares, partially offset by lower tax-exempt dividend
 
income, the tax impact of the non-deductible
 
charges for the
global resolution of the investigations into
 
the Bank’s U.S. BSA/AML program and
 
the impact of higher reported pre-tax income.
 
The Bank’s adjusted effective tax rate was 18.8% for the quarter, compared
 
with 19.3% in the same quarter last year. The year-over-year decrease
 
primarily
reflects the impact of lower adjusted
 
pre-tax income,
 
partially offset by lower tax-exempt dividend income.
 
QUARTERLY TREND ANALYSIS
Subject to the impact of seasonal trends and
 
items of note, the Bank’s reported earnings
 
were down 17% in 2024, compared with last
 
year, reflecting a challenging
macroeconomic environment and the impact
 
of the charges for the global resolution of
 
the investigations into the Bank’s U.S. BSA/AML
 
program. As the year
progressed, the Bank benefited from higher
 
market-related revenues in the Wholesale
 
Banking and Wealth Management and Insurance
 
segments, and volume
growth and higher deposit margins
 
i
n Canadian Personal and Commercial Banking,
 
reflecting a declining rate environment.
 
Including the impact of recoveries from
reinsurance coverage, insurance service
 
expenses were higher, reflecting less favourable prior years’
 
claims development, more severe weather-related
 
events,
and increased claims severity. Credit conditions continued to normalize
 
throughout the year which resulted in higher
 
PCLs. Expenses were higher, reflecting
investments in risk and control infrastructure
 
and employee-related expenses including variable
 
compensation. The Bank’s quarterly earnings
 
were impacted by,
among other things, seasonality, the number of days in a quarter, the economic environment
 
in Canada and the U.S., and foreign currency
 
translation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 20
TABLE 13: QUARTERLY RESULTS
(millions of Canadian dollars, except as noted)
For the three months ended
 
2024
2023
Oct. 31
Jul. 31
Apr. 30
Jan. 31
Oct. 31
Jul. 31
Apr. 30
Jan. 31
Net interest income
$
7,940
$
7,579
$
7,465
$
7,488
$
7,494
$
7,289
$
7,428
$
7,733
Non-interest income
1
7,574
6,597
6,354
6,226
5,684
5,625
4,969
4,468
Total revenue
1
15,514
14,176
13,819
13,714
13,178
12,914
12,397
12,201
Provision for (recovery of) credit losses
1,109
1,072
1,071
1,001
878
766
599
690
Insurance service expenses
1
2,364
1,669
1,248
1,366
1,346
1,386
1,118
1,164
Non-interest expenses
1
8,050
11,012
8,401
8,030
7,628
7,359
6,756
8,112
Provision for (recovery of) income taxes
1
534
794
729
634
616
704
859
939
Share of net income from investment in Schwab
178
190
194
141
156
182
241
285
Net income (loss) – reported
1
3,635
(181)
2,564
2,824
2,866
2,881
3,306
1,581
Pre-tax adjustments for items of note
2
 
 
 
Amortization of acquired intangibles
60
64
72
94
92
88
79
54
Acquisition and integration charges related to the
 
 
 
Schwab transaction
35
21
21
32
31
54
30
34
Share of restructuring and other charges from
 
 
 
investment in Schwab
–
–
–
49
35
–
–
–
Restructuring charges
–
110
165
291
363
–
–
–
Acquisition and integration-related charges
82
78
102
117
197
143
73
21
Charges related to the terminated FHN acquisition
–
–
–
–
–
84
154
106
Payment related to the termination of the
 
FHN transaction
–
–
–
–
–
306
–
–
Impact from the terminated FHN acquisition-related
capital hedging strategy
59
62
64
57
64
177
134
876
Impact of retroactive tax legislation on payment card
 
clearing services
–
–
–
–
–
57
–
–
Gain on sale of Schwab shares
(1,022)
–
–
–
–
–
–
–
U.S. balance sheet restructuring
311
–
–
–
–
–
–
–
Indirect tax matters
226
–
–
–
–
–
–
–
Civil matter provision/Litigation settlement
–
–
274
–
–
–
39
1,603
FDIC special assessment
 
(72)
–
103
411
–
–
–
–
Global resolution of the investigations into the
Bank’s U.S. BSA/AML program
52
3,566
615
–
–
–
–
–
Total pre-tax adjustments for items of note
(269)
3,901
1,416
1,051
782
909
509
2,694
Less: Impact of income taxes
2,3
161
74
191
238
163
141
108
121
Net income – adjusted
1,2
3,205
3,646
3,789
3,637
3,485
3,649
3,707
4,154
Preferred dividends and distributions on other
 
 
 
equity instruments
193
69
190
74
196
74
210
83
Net income available to common
 
 
 
shareholders – adjusted
1,2
$
3,012
$
3,577
$
3,599
$
3,563
$
3,289
$
3,575
$
3,497
$
4,071
 
 
 
(Canadian dollars, except as noted)
 
 
 
Basic earnings (loss) per share
1
 
 
 
Reported
 
$
1.97
$
(0.14)
$
1.35
$
1.55
$
1.48
$
1.53
$
1.69
$
0.82
Adjusted
2
1.72
2.05
2.04
2.01
1.82
1.95
1.91
2.24
Diluted earnings (loss) per share
1
 
 
 
Reported
 
1.97
(0.14)
1.35
1.55
1.48
1.53
1.69
0.82
Adjusted
2
1.72
2.05
2.04
2.00
1.82
1.95
1.91
2.23
Return on common equity – reported
1
13.4
%
(1.0)
%
9.5
%
10.9
%
10.5
%
10.8
%
12.4
%
5.9
%
Return on common equity – adjusted
1,2
11.7
14.1
14.5
14.1
12.9
13.8
14.0
16.1
 
 
 
(billions of Canadian dollars, except as noted)
 
 
 
 
Average total assets
1
$
2,035
$
1,968
$
1,938
$
1,934
$
1,910
$
1,898
$
1,944
$
1,931
Average interest-earning assets
4
1,835
1,778
1,754
1,729
1,715
1,716
1,728
1,715
Net interest margin – reported
1.72
%
1.70
%
1.73
%
1.72
%
1.73
%
1.69
%
1.76
%
1.79
%
Net interest margin – adjusted
2
1.74
1.71
1.75
1.74
1.75
1.70
1.81
1.82
1
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
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.
3
Includes the CRD and impact from increase in the Canadian federal tax rate for fiscal 2022.
4
Average interest-earning assets is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial
 
Measures” in the “Financial Results Overview” section and the Glossary of
this document for additional information about this metric.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 21
BUSINESS SEGMENT ANALYSIS
Business Focus
For management reporting purposes, the Bank’s operations
 
and activities are organized around the following
 
four key business segments: Canadian Personal
 
and
Commercial Banking, U.S. Retail, Wealth Management
 
and Insurance, and Wholesale Banking.
 
The Bank’s other activities are grouped into the
 
Corporate
segment.
 
Canadian Personal and Commercial Banking
serves over 15 million customers in
 
Canadian personal and business banking.
 
Personal Banking delivers ease,
value, and trusted advice to customers through
 
a comprehensive suite of deposit, savings,
 
payment and lending products and services,
 
supported by a network of
1,060 branches, 3,400
 
automated teller machines (ATM), mobile specialized salesforce,
 
and telephone, mobile and internet banking
 
services. Business Banking is
a premier, customer-centric franchise that delivers deep
 
sector expertise, valuable advice, and
 
a broad range of customized products and
 
services to meet the
needs of business owners,
 
leveraging its network of commercial branches
 
and specialized customer centers across
 
Canada.
U.S. Retail
includes the Bank’s personal, business banking
 
and wealth management operations in
 
the U.S., as well as the Bank’s investment in
 
Schwab.
Operating under the TD Bank, America’s Most
 
Convenient Bank
®
 
brand, the U.S. Retail Bank serves over
 
10 million customers in stores from
 
Maine to Florida,
and via auto dealerships and credit card
 
partner business locations nationwide. Personal
 
Banking provides a full range of financial
 
products and services to
customers from Maine to the Carolinas and
 
Florida through a network of 1,132 stores,
 
2,561 ATMs, telephone, and mobile and internet banking services.
 
Business
banking offers a diversified range of products and
 
services to help businesses meet their financing,
 
investment, cash management, international
 
trade, and day-to-
day banking needs. Wealth management provides
 
wealth products and services to retail and
 
institutional clients. The contribution from
 
the Bank’s investment in
Schwab is reported as equity in net income
 
of an investment in Schwab.
 
Wealth Management and Insurance
serves approximately 6 million customers across
 
the wealth and insurance businesses
 
in Canada. Wealth Management
offers wealth solutions to retail clients in Canada
 
through the direct investing, advice-based,
 
and asset management businesses. Wealth
 
Management also offers
asset management products to institutional
 
clients in Canada and globally. Insurance offers property and casualty
 
insurance through direct channels and
 
to
members of affinity groups, as well as life and
 
health insurance products to customers across
 
Canada.
Wholesale Banking
serves over 17,000 corporate, government,
 
and institutional clients in key financial
 
markets around the world. Operating under
 
the TD
Securities brand, Wholesale Banking offers
 
capital markets and corporate and investment banking
 
services to external clients and provides market
 
access and
wholesale banking solutions for the Bank’s
 
wealth and retail operations and their customers.
 
Wholesale Banking’s expertise is supported by
 
a presence across
North America, Europe, and Asia-Pacific.
Corporate segment
 
is comprised of service and control functions,
 
including Technology Solutions, Shared Services, Treasury and Balance Sheet
 
Management,
Marketing, Human Resources, Finance,
 
Risk Management, Compliance, Anti-Money
 
Laundering, Legal, Real Estate, Internal
 
Audit, and Others. Certain costs
relating to these functions are allocated
 
to operating business segments. The basis
 
of allocation and methodologies are reviewed
 
periodically to align with
management’s evaluation of the value provided
 
to the Bank’s business segments.
Results of each business segment reflect revenue,
 
expenses, assets, and liabilities generated
 
by the businesses in that segment. Where applicable,
 
the Bank
measures and evaluates the performance of
 
each segment based on adjusted results
 
and ROE, and for those segments the Bank indicates
 
that the measure is
adjusted. For further details, refer to Note 28
 
of the 2024
 
Consolidated Financial Statements.
 
Effective fiscal 2024, certain asset management
 
businesses which
were previously reported in the U.S. Retail
 
segment are now reported in the Wealth Management
 
and Insurance segment. Comparative
 
period information has
been adjusted to reflect the new alignment.
Net interest income within Wholesale Banking
 
is calculated on a TEB, which means
 
that the value of non-taxable or tax-exempt income,
 
including dividends, is
adjusted to its equivalent before-tax value.
 
Using TEB allows the Bank to measure income
 
from all securities and loans consistently
 
and makes for a more
meaningful comparison of net interest income
 
with similar institutions. The TEB increase
 
to net interest income and provision for
 
income taxes reflected in
Wholesale Banking results is reversed in
 
the Corporate segment. The TEB adjustment
 
for the year was $79 million (October 31, 2023
 
– $181 million).
Share of net income from investment in
 
Schwab is reported in the U.S. Retail
 
segment. Amounts for amortization of acquired
 
intangibles, the Bank’s share of
acquisition and integration charges associated
 
with Schwab’s acquisition of TD Ameritrade,
 
the Bank’s share of Schwab’s restructuring charges,
 
and the Bank’s
share of Schwab’s FDIC special assessment
 
charge are recorded in the Corporate segment.
The “Key Priorities for 2025” section for each
 
business segment, provided on the following
 
pages, is based on the Bank’s views and
 
assumptions, including
those set out in the “Economic Summary and Outlook”
 
section and the actual outcome may be materially
 
different. For more information regarding the factors,
assumptions, and risks that may impact
 
the Bank’s views, refer to the “Caution Regarding
 
Forward-Looking Statements” section
 
and the “Risk Factors That
May Affect Future Results” section.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 22
TABLE 14: RESULTS BY SEGMENT
1,2
(millions of Canadian dollars)
Canadian Personal
Wealth
and Commercial
Management
Wholesale
Banking
U.S. Retail
 
and Insurance
Banking
3
Corporate
3
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Net interest income (loss)
$
15,697
$
14,192
$
11,600
$
12,029
$
1,226
$
1,064
$
582
$
1,538
$
1,367
$
1,121
$
30,472
$
29,944
Non-interest income (loss)
4,093
4,125
2,113
2,261
12,309
10,566
6,704
4,280
1,532
(486)
26,751
20,746
Total revenue
19,790
18,317
13,713
14,290
13,535
11,630
7,286
5,818
2,899
635
57,223
50,690
Provision for (recovery of) credit
losses – impaired
1,555
1,013
1,437
965
–
1
247
16
638
491
3,877
2,486
Provision for (recovery of) credit
losses – performing
200
330
95
(37)
–
–
70
110
11
44
376
447
Total provision for (recovery of)
credit losses
1,755
1,343
1,532
928
–
1
317
126
649
535
4,253
2,933
Insurance service expenses
–
–
–
–
6,647
5,014
–
–
–
–
6,647
5,014
Non-interest expenses
8,010
7,700
12,615
8,079
4,285
3,908
5,576
4,760
5,007
5,408
35,493
29,855
Income (loss) before
 
income taxes
10,025
9,274
(434)
5,283
2,603
2,707
1,393
932
(2,757)
(5,308)
10,830
12,888
Provision for (recovery of)
income taxes
2,806
2,586
200
658
648
706
275
162
(1,238)
(994)
2,691
3,118
Share of net income from
 
investment in Schwab
–
–
709
939
–
–
–
–
(6)
(75)
703
864
Net income (loss) –
 
reported
7,219
6,688
75
5,564
1,955
2,001
1,118
770
(1,525)
(4,389)
8,842
10,634
Pre-tax adjustments for
items of note
Amortization of acquired
intangibles
 
–
–
–
–
–
–
–
–
290
313
290
313
Acquisition and integration
charges related to the
Schwab transaction
–
–
–
–
–
–
–
–
109
149
109
149
Share of restructuring and other
charges from investment
in Schwab
–
–
–
–
–
–
–
–
49
35
49
35
Restructuring charges
–
–
–
–
–
–
–
–
566
363
566
363
Acquisition and integration-
related charges
–
–
–
–
–
–
379
434
–
–
379
434
Charges related to the
terminated FHN acquisition
–
–
–
344
–
–
–
–
–
–
–
344
Payment related to the
termination of the
 
FHN transaction
–
–
–
–
–
–
–
–
–
306
–
306
Impact from the terminated
FHN acquisition-related
capital hedging strategy
–
–
–
–
–
–
–
–
242
1,251
242
1,251
Impact of retroactive tax
legislation on payment
card clearing services
–
–
–
–
–
–
–
–
–
57
–
57
Gain on sale of Schwab shares
–
–
–
–
–
–
–
–
(1,022)
–
(1,022)
–
U.S. balance sheet restructuring
–
–
311
–
–
–
–
–
–
–
311
–
Indirect tax matters
–
–
–
–
–
–
–
–
226
–
226
–
Civil matter provision/
Litigation settlement
–
–
–
–
–
–
–
–
274
1,642
274
1,642
FDIC special assessment
–
–
442
–
–
–
–
–
–
–
442
–
Global resolution of the
investigations into the Bank’s
U.S. BSA/AML program
–
–
4,233
–
–
–
–
–
–
–
4,233
–
Total pre-tax adjustments
for items of note
–
–
4,986
344
–
–
379
434
734
4,116
6,099
4,894
Less: Impact of income taxes
4
–
–
186
85
–
–
82
89
396
359
664
533
Net income (loss) –
adjusted
5
$
7,219
$
6,688
$
4,875
$
5,823
$
1,955
$
2,001
$
1,415
$
1,115
$
(1,187)
$
(632)
$
14,277
$
14,995
Average common equity
6
$
21,618
$
18,151
$
44,415
$
40,915
$
6,141
$
5,692
$
15,821
$
14,134
$
12,984
$
22,716
$
100,979
$
101,608
Risk-weighted assets
185,704
168,514
271,959
235,444
20,571
17,979
122,584
121,232
30,082
27,992
630,900
571,161
1
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
2
The retailer program partners’ share of revenues and credit losses is presented in the Corporate segment, with an
 
offsetting amount (representing the partners’ net share) recorded in
Non-interest expenses, resulting in no impact to Corporate reported Net income (loss). The Net income (loss) included
 
in the U.S. Retail segment includes only the portion of revenue and
credit losses attributable to the Bank under the agreements.
3
Net interest income within Wholesale Banking is calculated on a TEB. The TEB adjustment reflected in Wholesale
 
Banking is reversed in the Corporate segment.
4
Includes the CRD and impact from increase in the Canadian federal tax rate for fiscal 2022.
5
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
6
For additional information about this metric, refer to the Glossary of this document.
 
 
 
 
 
 
 
 
 
ex992p23i1 ex992p23i0 ex992p23i2
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 23
BUSINESS SEGMENT ANALYSIS
Canadian Personal and
 
Commercial Banking
Canadian Personal and Commercial Banking offers a full range of financial products and services to over 15 million
customers in the Bank’s personal and commercial banking businesses in Canada.
TABLE 15: REVENUE
 
(millions of Canadian dollars)
2024
2023
Personal banking
$
13,828
$
12,705
Business banking
5,962
5,612
Total
$
19,790
$
18,317
KEY PRODUCT GROUPS
Personal Banking
●
 
Personal Deposits – chequing, savings, and
 
investment products for retail customers.
●
 
Real Estate Secured Lending (RESL) – lending
 
products for homeowners secured by residential
 
properties.
●
 
Credit Cards, Payments and Consumer Lending
 
– proprietary and co-branded credit
 
cards, debit, digital wallets, loyalty offerings, payment
 
plans, and
unsecured financing products.
Business Banking
 
●
 
Commercial Banking – borrowing, deposit
 
and cash management solutions for
 
businesses across a range of industries.
 
●
 
Small Business Banking – financial products
 
and services for small businesses.
●
 
Auto Finance – financing solutions for the prime
 
and non-prime automotive markets, recreational
 
and leisure vehicles, and automotive
 
floor plan financing.
●
 
Merchant Solutions – point-of-sale
 
technology and payment solutions for large
 
and small businesses.
 
INDUSTRY PROFILE
The personal and business banking industry
 
in Canada is mature and highly competitive,
 
consisting of large chartered banks, sizeable
 
regional banks and credit
unions, niche players competing in specific
 
products and geographies, and a variety
 
of non-traditional competitors. These industries
 
serve individuals and
businesses and offer products including borrowing, deposits,
 
cash management and financing solutions.
 
Products are distributed through retail branches,
commercial banking centers, and other
 
specialized distribution channels, as well
 
as by leveraging technology with a focus
 
on customer experiences that are
integrated across channels. Market leadership
 
and profitability depend upon delivering
 
a full suite of competitively priced products,
 
proactive advice that meets
customers’ needs, outstanding service and
 
convenience, integrated omnichannel experiences,
 
prudent risk management, and disciplined
 
expense management.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 24
STRATEGIC OBJECTIVES, ACCOMPLISHMENTS
 
AND PRIORITIES
 
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN 2024
Provide trusted advice to help our
customers feel confident about their
financial future
●
 
Record New to Canada account acquisition,
 
driven by tailored banking packages to meet
 
new Canadians’ needs,
preferred language offerings in-branch, and strategic
 
relationships
●
 
Helped thousands of Canadians save
 
for their first home with TD’s First Home Savings Account
 
(FHSA)
●
 
Since the launch of TD Goal Builder, a financial goal setting
 
and tracking tool, thousands of TD customers
 
across
Canada have worked with their Personal
 
Bankers to build a personalized path to achieving
 
their financial goals
●
 
Launched TD eCommerce Solutions, a service
 
that integrates TD’s online payment processing
 
with a turnkey, highly
customizable web-platform builder, enabling Canadian businesses
 
to start selling their products and services online
 
with
quick setup, and to accept payments with ease
Consistently deliver legendary,
personal, and connected customer
experiences across all channels
●
 
Continued to enhance Canadian Personal and
 
Commercial Banking product offerings and innovative
 
solutions for
customers, increase frontline banker capacity, and reduce customer
 
friction, helping to result in record Legendary
Experience Index (LEI) results across channels
●
 
Continued to optimize the customer and colleague
 
experience associated with TD Mortgage
 
Direct, driving record
customer engagement and RESL volume
 
via connected digital experiences
●
 
TD Canada Trust was recognized as a Financial Service
 
Excellence shared award winner for “Customer
 
Service
Excellence”
9
, “Branch Service Excellence”
10
, and “Automated Telephone Banking Excellence”
11
 
among the Big 5
Banks
12
 
in the 2024 Ipsos Customer Service Index
 
(CSI) study
13
●
 
Business banking continued to expand areas
 
of specialization through additions to teams
 
in the technology and
innovation sector, including the launch of TD Innovation Partners
 
(TDIP), a new full-service team providing
 
bespoke,
high-touch banking and financing solutions in
 
support of technology companies at all
 
stages
●
 
TD Auto Finance ranked “Highest in Dealer
 
Satisfaction among Non-Prime and Prime
 
Credit Non-Captive Automotive
Financing Lenders”
 
in the J.D. Power 2024 Canada Dealer Financing
 
Satisfaction Study. This marks 7 consecutive
years that TD Auto Finance (Canada) has
 
been ranked #1 in Dealer Satisfaction among
 
Non-Captive Non-Prime
Lenders with Retail Credit
14
Deepen customer relationships by
delivering OneTD and growing
across underrepresented products
and markets
●
 
Maintained strong market share
15
 
positions and gained momentum across
 
the businesses:
–
 
#1 market share in Personal Non-Term deposits
–
 
#2 market share in RESL business with year-over-year
 
market share gains
–
 
Record credit card spend and loan volumes
 
supported by record active accounts, which
 
surpassed 8 million for the
first time
●
 
The Bank continued to execute on its OneTD
 
strategies, with a focus on delivering joint
 
strategic initiatives between
Business Banking and Wealth, including the expansion
 
of its co-location strategy with Senior Private
 
Bankers in
Commercial Banking Centers and the TD Auto
 
Finance, National Real Estate and
 
Commercial National Accounts groups
Execute with speed and impact,
taking only those risks we can
understand and manage
●
 
Continued to transform the way TD works, leveraging
 
AI and implementing other improvements
 
to increase speed and
efficiency:
–
 
Continued to leverage Next Evolution of Work (NEW),
 
an agile operating model, designed
 
to reduce complexity,
streamline decision making, improve customer
 
experience, and reduce cycle times
–
 
Invested in core technologies to improve the
 
customer and colleague experience, including
 
a new credit platform,
servicing platform, and customer relationship
 
management software
–
 
Improved RESL underwriting process
 
and productivity, reducing time to final mortgage approval, and
 
delivering a
faster, more streamlined experience for customers
●
 
Continued to provide personalized payment
 
experiences and rewards to customers through
 
strategic credit card
relationships, including:
–
 
Our relationship with Amazon that enables
 
customers to redeem TD Rewards points through
 
Amazon Shop with
Points
–
 
Expanded TD’s Loyalty ecosystem and providing additional
 
value to customers through enhancements
 
to strategic
collaborations with the Toronto Blue Jays and Vancouver Canucks
 
9
 
TD Canada Trust shared in the Customer Service Excellence award in the 2024
 
Ipsos Study.
10
 
TD Canada Trust shared in the Branch Banking Excellence award in the 2024 Ipsos
 
Study.
11
 
TD Canada Trust shared in the Automated Telephone
 
Banking Excellence award in the 2024 Ipsos Study.
12
 
Big 5 Banks consist of Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada,
 
Scotiabank, and The Toronto
 
-Dominion Bank.
13
 
Ipsos 2024 Financial Service Excellence Awards are based on ongoing quarterly Customer Service Index
 
(CSI) survey results. Ipsos announces annual winners across 11
 
categories in
October after fielding for the final quarter-ends in September.
14
TD Auto Finance received the highest score in the retail non
‐
captive non
‐
prime segment and the retail non
‐
captive prime segment in the J.D. Power 2024 Canada Dealer Financing
Satisfaction Study, which measure Canadian auto dealers’
 
satisfaction with their auto finance providers. Visit jdpower.com/awards
 
for more details.
15
Market share ranking is based on most current data available from OSFI for Personal Non-term deposits
 
and RESL as of August 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 25
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN 2024
Innovate with purpose for our
customers and colleagues, and
shape the future of banking in the
digital age
●
 
Recognized as Best Consumer Digital Bank
 
for North America by Global Finance Magazine
 
for the fourth consecutive
year
16
:
–
 
Won an industry-leading 6 categories in North America,
 
including Best Bill Payment & Presentment,
 
Best
Information Security and Fraud Management,
 
Best in Lending, Best in Innovation, Best
 
Open Banking APIs, and
Best in Transformation
●
 
Continued to rank #1 for average digital reach
 
of any bank in Canada based on ComScore
17
●
 
The TD Mobile App continued to rank #1
 
for average smartphone monthly active
 
users in Canada according to Sensor
Tower for the eleventh consecutive year
18
●
 
Further scaled targeted RESL acquisition programs
 
across Retail and Mobile Mortgage Specialists,
 
creating a connected
advice experience across our highest quality daily
 
digital leads, e-mail programs, and digital
 
touch points in EasyWeb
and Mobile
●
 
Introduced new features to evolve and enhance
 
the mobile customer experience with capabilities
 
to increase customer
self-serve opportunities:
–
 
Features include new navigation bar and quick
 
actions providing one-touch access to
 
commonly used features and
capabilities to provide past due account information
 
and flexible repayment options
–
 
Enabled customers to renew the fixed portion
 
of their Home Equity Line of Credit (HELOC)
 
through their EasyWeb
profile or mobile banking app 120 days before
 
maturity, delivering a convenient, self-serve option for customers
Be recognized as an extraordinary
place to work where diversity and
inclusiveness are valued
●
 
Canadian Personal and Commercial Banking
 
is committed to advancing diversity and
 
inclusion across all dimensions of
its business:
–
 
Personal Banking continued to offer the Sponsorship
 
in Action Program for high performing colleagues
 
from
underrepresented groups to support career advancement
 
through intentional sponsorship opportunities
 
with senior
leaders
–
 
In Business Banking, the Women at TD – Power Leadership
 
Development Circle continued to support
 
the
advancement of talented women into Executive
 
positions through sponsorship and development
 
programs
–
 
Enterprise programs for Indigenous Peoples,
 
colleagues from the 2SLGBTQ+ community, and Persons with
Disabilities are in place to support colleagues
 
with leadership aspirations,
 
along with enhanced onboarding support
for all colleagues in these communities
Contribute to the well-being of our
communities
●
To
support diverse customer needs, branches
 
can serve customers in over 80 languages,
 
and over 200 languages can
be served through phone translation services
●
 
The National Real Estate Group (NREG)
 
continued to participate in the Canada
 
Mortgage and Housing Corporation
(CMHC) mortgage loan insurance (MLI) Select
 
program, a multi-unit MLI product focused on
 
affordability, accessibility
and climate compatibility
●
 
The Indigenous Banking Group continued investing
 
to support TD’s aim to be the Bank of choice
 
for Indigenous
Peoples, businesses, organizations and
 
communities
KEY PRIORITIES FOR
 
2025
●
 
Enhance customer experience through end-to-end
 
omnichannel distribution, providing seamless
 
and integrated experiences across all channels
●
 
Accelerate growth through a relentless
 
focus on the customer, acquiring new customers and leveraging
 
OneTD to deepen customer relationships
 
through
personalized advice that meets their unique needs
●
 
Improve speed, capacity, and efficiency by leveraging NEW with a goal
 
to deliver faster, with better outcomes and operate at
 
the intersection of digital, data,
technology, and customer experience
●
 
Continue to attract and retain top talent, emphasize
 
talent diversity, and enable excellence through process simplification
 
and learning and development
●
 
In alignment with the Environmental, Social and
 
Governance (ESG) enterprise strategy, focus on enhancing financial
 
inclusion and strengthening Financial
Health and Education for colleagues and customers
●
 
Actively monitor the macroeconomic
 
environment and key risk indicators across
 
the franchise, and continue to strengthen our
 
risk, control and governance
foundations
TABLE 16: CANADIAN PERSONAL AND COMMERCIAL BANKING
(millions of Canadian dollars, except as noted)
2024
2023
Net interest income
$
15,697
$
14,192
Non-interest income
4,093
4,125
Total revenue
19,790
18,317
Provision for (recovery of) credit losses – impaired
1,555
1,013
Provision for (recovery of) credit losses – performing
200
330
Total provision for (recovery of) credit losses
1,755
1,343
Non-interest expenses
8,010
7,700
Provision for (recovery of) income taxes
2,806
2,586
Net income
$
7,219
$
6,688
Selected volumes and ratios
Return on common equity
1
33.4
%
36.8
%
Net interest margin (including on securitized assets)
2.82
2.77
Efficiency ratio
40.5
42.0
Number of Canadian Retail branches at period end
1,060
1,062
Average number of full-time equivalent staff
28,678
28,961
1
 
Capital allocated to the business segment was increased to 11.5%
 
CET1 Capital effective fiscal 2024 compared with 11%
 
in the prior year.
REVIEW OF FINANCIAL PERFORMANCE
 
Canadian Personal and Commercial
 
Banking net income for the year was $7,219
 
million, an increase of $531 million, or 8%,
 
compared with last year, reflecting
higher revenue, partially offset by higher PCL and non-interest
 
expenses. ROE for the year was 33.4%,
 
compared with 36.8% last year.
16
Global Finance World’s Best Digital Bank 2024 Press Release (October 1, 2024).
17
ComScore MMX® Multi-Platform, Financial Services – Banking, Total
 
audience, 3-month average ending June 2024, Canada.
18
Sensor Tower - average monthly mobile
 
active users for the 11-year period ending September
 
2024.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 26
Revenue for the year was $19,790 million, an increase
 
of $1,473 million, or 8%, compared with
 
last year. Net interest income was $15,697 million, an
 
increase
of $1,505 million, or 11%, reflecting volume growth and higher deposit
 
margins, partially offset by lower loan margins. Average
 
loan volumes increased $33 billion,
or 6%, reflecting 6% growth in personal loans
 
and 7% growth in business loans. Average deposit
 
volumes increased $19 billion, or 4%, reflecting
 
6% growth in
personal deposits and 1% growth in business
 
deposits. Net interest margin was 2.82%,
 
an increase of 5 bps from last year, primarily due to higher
 
margins on
deposits, partially offset by changes to balance
 
sheet mix reflecting the transition of Bankers’
 
Acceptances (BAs) to Canadian Overnight
 
Repo Rate Average
(CORRA)-based loans,
 
and lower margins on loans. Non-interest
 
income was $4,093
 
million, a decrease of $32
 
million, or 1%, compared with last year.
PCL for the year was $1,755 million,
 
an increase of $412 million compared
 
with last year. PCL – impaired was $1,555 million, an increase
 
of $542 million, or
54%, reflecting credit migration in the consumer
 
and commercial lending portfolios.
 
PCL – performing was $200 million, a decrease
 
of $130 million. The current
year performing provisions largely reflect
 
current credit conditions, including credit
 
migration in the commercial and consumer
 
lending portfolios, and volume
growth. Total PCL as an annualized percentage of credit volume was 0.31%, an
 
increase of 6 bps compared with last
 
year.
Non-interest expenses for the year were
 
$8,010 million, an increase of $310 million, or
 
4%, compared with last year. The increase primarily reflects
 
higher
spend supporting business growth, including
 
technology costs, employee-related expenses,
 
and marketing costs, partially offset by lower
 
non-credit provisions.
The efficiency ratio for the year was 40.5%, compared
 
with 42.0% last year.
OPERATING ENVIRONMENT AND OUTLOOK
After recording two years of anemic growth,
 
the Canadian economy is expected to pick
 
up modestly in fiscal 2025. Consumer
 
and business spending is expected
to benefit from further gradual cuts to
 
the Bank of Canada’s policy rate as inflation continues
 
to converge on the 2% target. Within the
 
housing market, sales and
prices are expected to gain traction on
 
the back of lower borrowing rates as well as the
 
upcoming federal changes to mortgage rules
 
that will expand homebuyer
qualification eligibility. In Q1 2025, while many factors can impact
 
margins, including
 
further Bank of Canada rate cuts, competitive
 
market dynamics, and deposit
reinvestment rates and maturity profiles,
 
we expect net interest margin to remain relatively
 
stable.
19
 
Some increase in PCL is expected in
 
fiscal 2025, reflective of
volume growth and some further pressure
 
on credit as we move through this credit
 
cycle. Canadian Personal and Commercial
 
Banking is focused on continuing to
manage expenses prudently, while investing in distribution capabilities
 
to serve more customers and enhance
 
their experience, in technology and
 
platforms to
purposefully build for the future to meet evolving
 
needs of customers, colleagues and
 
communities, and to further enhance our risk,
 
compliance and controls
infrastructure.
 
While the macro economic environment is expected
 
to be supportive to overall revenue growth,
 
with declining interest rates and continued
 
business
investment, we expect some compression
 
in operating leverage. We believe TD’s customer
 
centric and digitally enabled Canadian Personal
 
and Commercial
Banking franchise is well-positioned to execute
 
on its growth opportunities.
19
 
The Bank’s Q1 2025 net interest margin expectations for the segment are based on the Bank’s assumptions regarding factors such as Bank of Canada rate cuts, competitive market dynamics, and
deposit reinvestment rates and maturity profiles, and are subject to inherent risks and uncertainties, including those set out in the “Risk Factors That May Affect Future Results” section of this document.
 
 
 
 
 
 
 
 
 
 
ex992p27i1 ex992p27i0 ex992p27i2
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 27
BUSINESS SEGMENT ANALYSIS
U.S. Retail
20
Operating under the TD Bank, America’s Most Convenient Bank
®
 
brand, the U.S. Retail Bank offers a full range of financial
products and services to over 10 million customers in the Bank’s U.S. personal and business banking operations, including
wealth management. U.S. Retail includes an investment in Schwab.
TABLE 17: REVENUE – Reported
1
(millions of dollars)
Canadian dollars
U.S. dollars
2024
2023
2024
2023
Personal Banking
$
8,466
$
7,934
$
6,219
$
5,884
Business Banking
4,331
4,259
3,181
3,159
Wealth
 
483
474
355
351
Other
2
433
1,623
319
1,202
Total
$
13,713
$
14,290
$
10,074
$
10,596
1
Excludes equity in net income of an investment in Schwab.
2
Other revenue consists primarily of revenue from the Schwab IDA Agreement and from investing activities.
KEY PRODUCT GROUPS
Personal Banking
●
 
Personal Deposits – chequing, savings, and
 
Certificates of Deposit products and payment
 
solutions for retail customers offered through
 
multiple delivery
channels.
 
●
 
Consumer Lending – financing products,
 
including residential mortgages, home
 
equity and unsecured lending solutions
 
for retail customers.
●
 
Credit Cards Services – TD-branded credit
 
cards for retail customers, private label and
 
co-brand credit cards, and point-of-sale revolving
 
and instalment
financing solutions for customers of leading
 
U.S. retailers delivered through nationwide partnerships.
 
●
 
Retail Auto Finance – indirect retail financing
 
through a network of auto dealers, and
 
real-time payment solutions for auto dealers.
Business Banking
●
 
Commercial Banking – borrowing, deposit
 
and cash management solutions for
 
U.S. businesses and governments across a
 
wide range of industries.
 
●
 
Small Business Banking – borrowing, deposit
 
and cash management solutions for small businesses
 
including merchant services and TD-branded
 
credit cards.
Wealth
 
●
 
Wealth Advice – wealth management advice, financial
 
planning solutions, estate and trust planning,
 
and insurance and annuity products for
 
mass affluent, high
net worth and institutional clients, delivered
 
by store-based financial advisors, a robo-advisory
 
platform, and a multi-custodial securities-based
 
collateral lending
platform.
20
 
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview”
 
section of this
document.
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 28
INDUSTRY PROFILE
The U.S. personal and business banking industry
 
is highly competitive and includes
 
several very large financial institutions, as
 
well as regional banks, small
community and savings banks, finance companies,
 
credit unions, and other providers of
 
financial services. The wealth management
 
industry includes national and
regional banks, insurance companies, independent
 
mutual fund companies, brokers, and independent
 
asset management companies. The personal
 
and business
banking and wealth management industries
 
also include non-traditional competitors, ranging
 
from start-ups to established non-financial
 
companies expanding into
financial services. These industries serve individuals,
 
businesses, and governments and offer products
 
including deposits, lending, cash management,
 
financial
advice, and asset management. Products
 
may be distributed through a single distribution
 
channel or across multiple channels, including
 
physical locations, ATMs,
and telephone and digital and mobile channels.
 
Certain businesses also serve customers through
 
indirect channels. Traditional competitors are embracing
 
new
technologies and strengthening their focus on
 
the customer experience. Non-traditional
 
competitors including direct banks,
 
financial technology companies and
private lending companies have gained momentum
 
and are increasingly collaborating with
 
banks to develop new products and
 
services, and enhance the
customer experience. The keys to profitability
 
continue to be attracting and retaining customer
 
relationships with legendary service and
 
convenience, offering
products and services across multiple distribution
 
channels to meet customers’ evolving needs,
 
optimizing funding sources and costs, investing
 
strategically while
maintaining expense discipline, and
 
managing risk prudently.
STRATEGIC OBJECTIVES, ACCOMPLISHMENTS
 
AND PRIORITIES
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN
 
2024
Remediate our AML Program and
strengthen our Governance and
Control Infrastructure
●
 
Made progress on our U.S. BSA/AML program
 
remediation,
 
which is organized under five core pillars:
 
(i) people and
talent, (ii) governance and structure, (iii) policy
 
and risk assessment, (iv) process and
 
control, and (v) data and
technology
●
 
Refer to “Significant Events – Global Resolution
 
of the Investigations into the Bank’s U.S. BSA/AML
 
Program”
 
for
additional information about the AML remediation
 
program
 
Key Enablers of Business Strategy
●
 
Recognized for leadership in diversity and inclusion:
 
-
 
Top score of 100 in the 2024 Disability Equality Index for the 10
th
 
consecutive year
-
 
In the top ten of America’s Best Employers
 
for Diversity by Forbes in 2024
-
 
One of America’s Best Employers for Veterans by Forbes for the
 
third consecutive year
-
 
Awarded “Best Employers: Excellence in Health and
 
Well-being”
 
by the Business Group on Health for
outstanding commitment to advancing employee
 
well-being through comprehensive and innovative
 
benefits
●
 
Certified as a Great Place to Work in the U.S.
 
for the 9
th
 
consecutive year
●
 
Earned an ‘Outstanding’
 
rating on the Community Reinvestment Act
 
exam from the Office of the Comptroller of the
Currency (OCC) for TD Bank USA, N.A. (TDBUSA),
 
the sixth consecutive exam for TDBUSA
 
or TD Bank, N.A.
(TDBNA) with an ‘Outstanding’
 
rating, reflecting our critical role in supporting
 
the needs of our local communities
 
●
 
Announced a 3-year, Community Impact Plan in January for
 
the benefit of diverse and underserved
 
communities,
supporting with Mortgage lending, community
 
development, Small Business lending, and
 
a commitment to open new
stores in Low-
 
and Moderate-Income areas and/or majority
 
minority markets
-
 
Formed a National Community Advisory Board
 
comprised of a diverse set of talented leaders
 
from
organizations in the Bank’s footprint to help ensure
 
the Community Impact Plan initiatives
 
meet local needs
and held inaugural meeting of this advisory
 
board
●
 
Delivered sustainable productivity savings
 
to reinvest in our AML remediation program
 
and Governance and Control
investments
Advance Our Digital and Mobile
Leadership
●
 
Continued to invest in everyday digital and
 
mobile banking capabilities to enhance the
 
customer experience, with
implemented improvements to date resulting
 
in a positive response from our customers
 
●
 
Surpassed 5 million active mobile customers
 
while continuing to deliver new capabilities designed
 
to enhance
customer experience, upgrade product bundling
 
and credit card pre-delinquency messaging,
 
and enhanced
 
Direct
Deposit alerts. Reached 57% digital adoption,
 
up 154 basis points year-over-year
Transform Distribution and Enable
Wealth Offering Across TD Bank,
America’s Most Convenient Bank
®
●
 
Opened six new stores with four new stores
 
in majority minority communities including
 
two stores in low-
 
and
moderate-income areas to ensure more residents
 
have neighbourhood access to a bank and
 
financial services
●
 
Renovated over 100 stores with refreshed
 
exteriors and interiors as well as dedicated
 
offices for financial advisors to
facilitate deeper conversations about advice,
 
education, and financial literacy to
 
meet customers’ evolving needs
●
 
Assets under Management (AUM) were
 
US$8 billion as at October 31, 2024, an increase
 
of US$2 billion, or 33%,
compared with the fourth quarter last year, reflecting net asset
 
growth
●
 
Continued enhancement of OneTD partnerships,
 
yielding approximately one hundred thousand
 
referrals during the
year, up 16% year-over-year:
●
 
Increased 3:1 store-to-advisor coverage model
 
in high opportunity areas, with the goal
 
of driving better advice-based
conversations with our customers in renovated
 
next generation stores; strengthened employee
 
training to help
identify Wealth opportunities
●
 
Launched TD Wealth Portal, providing an integrated
 
360-degree view of customer relationships
 
across Retail and
Wealth businesses on digital and mobile platforms
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 29
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN
 
2024
Invest in Our Cards Franchise
●
 
Enhancements to our Bankcard product in 2023,
 
including the launch of TD Clear and
 
TD FlexPay and refreshed
benefits to TD Cash and Double Up cards,
 
has resonated with customers and deepened
 
relationships, helping to
grow new accounts for fiscal 2024 by 7% year-over-year
 
and increase balances for fiscal 2024
 
by 13% year-over-
year
●
 
Bolstered digital acquisition capabilities, driving
 
increased digital share of Bankcard sales
 
for fiscal 2024 by 6% year-
over-year
●
 
Progressed on our journey to modernize our
 
Cards infrastructure with unified target platforms
 
that enable full
servicing and processing of co-brand partnerships
 
●
 
We extended our relationship with Nordstrom
 
through 2032 with greater control over customer
 
servicing and
migrated approximately 1.5 million Retail
 
Cards Services customers onto the unified platform
Strengthen Our Commercial
Franchise
●
 
Building on high-quality relationships,
 
delivered growth in middle market, business
 
loan volume of 12% since the
fourth quarter of 2023,
 
and 70% since the fourth quarter of
 
2021, reflecting strong originations and enhanced
 
go-to-
market approach including improved AMCB and
 
TD Securities interaction framework
●
 
Deepened OneTD collaboration with TDS and
 
TD Cowen to deliver a full suite of products
 
and services to our clients
●
 
Differentiated Small Business digital and mobile
 
capabilities with the introduction of Apple
 
Tap to Pay and Zelle for
small business, offering customers flexible and
 
convenient payment options
●
 
Ranked #1 in its footprint by total number of
 
approved U.S. Small Business Administration
 
(SBA) loan units for the 8
th
consecutive year and ranked as the #2 national
 
SBA lender
21
 
for the 3
rd
 
year in a row
Drive Profitable Core Deposits
●
 
Served over 10 million customers for our
 
personal banking, business banking,
 
and wealth businesses,
 
powered by
deepening relationships with customers in our
 
core franchise businesses and our commitment
 
to customer
satisfaction
●
 
Drove customer engagement and primacy with
 
the launch of TD Complete Checking and
 
provided access to direct
deposits up to two days earlier with Early
 
Pay
●
 
Our fee enhancements established over the
 
past two years continued with the elimination
 
of Insufficient Funds fees
for our business customers and have reduced
 
attrition and promoted balance consolidation
 
leading to stable core
deposits
KEY PRIORITIES FOR
 
2025
●
 
Our top priority remains remediating the
 
U.S. BSA/AML program and strengthening
 
the governance and control environment
22
. The Bank expects U.S.
BSA/AML remediation and related governance
 
and control investments of approximately
 
US$500 million pre-tax in fiscal 2025
23
.
●
 
In light of the U.S. Retail segment’s focus outlined
 
above, the previous guidance that the Bank
 
expects to open 150 stores in the U.S.
 
by 2027 has been
suspended
●
To
help ensure we can continue to support
 
customers’
 
financial needs in the U.S. while not exceeding
 
the limitation on the combined total assets
 
of the
U.S. Bank,
 
the Bank will focus on executing its balance
 
sheet restructuring activities. The Bank expects
 
to complete the U.S. investment portfolio
 
repositioning
no later than the first half of calendar 2025
24
 
and reduce its assets by approximately
 
10% from the asset level as of September
 
30, 2024 by the end of fiscal
2025
25
:
-
 
Following the announcement of the Global
 
Resolution on October 10, 2024, the Bank
 
sold approximately US$2.8 billion of bonds
 
from its U.S.
investment portfolio, resulting in a loss of US$226
 
million pre-tax and US$170 million after-tax
 
($311 million pre-tax and $234 million after-tax).
The sale is expected to result in a pre-tax
 
benefit of US$89 million to net interest
 
income for fiscal 2025.
 
-
 
As of December 4, 2024, the Bank has sold
 
an additional US$3.3 billion of bonds,
 
resulting in a loss of approximately US$236
 
million pre-tax and
US$177 million after tax ($330 million pre-tax and
 
$247 million after-tax). This sale is expected
 
to result in a benefit of US$80 million – US$90
million to net interest income for fiscal 2025.
-
 
The Bank intends to continue to reposition its
 
U.S. investment portfolio by continuing
 
to sell lower yielding investment securities
 
and reinvesting
the proceeds into a similar composition of
 
assets but yielding higher rates. In total,
 
the Bank expects to sell up to US$50 billion of
 
bonds and this
repositioning of the U.S. investment portfolio
 
is expected to be accretive to net interest
 
income over the next two to three years and
 
increase net
interest income by US$300 million – US$500
 
million pre-tax in fiscal 2025.
-
 
The Bank aims to reduce assets by approximately
 
10% from the asset level as of September
 
30, 2024, largely by selling or winding down
 
certain
non-scalable or non-core U.S. loan portfolios
 
that do not align with the U.S. Retail segment’s
 
focused strategy or have lower returns on
 
investment
such as the correspondent lending, residential
 
jumbo mortgage, export and import lending,
 
and commercial auto dealer portfolios.
 
This reduction
in assets combined with natural balance
 
sheet run-off, is expected to reduce net interest income
 
in the U.S. Retail segment by approximately
US$200 million to US$225 million pre-tax in
 
fiscal 2025.
 
In total, these collective balance sheet restructuring
 
actions are expected to result in a
loss up to US$1.5 billion after-tax, and impact
 
capital as executed.
 
-
 
During the fourth quarter, the Bank used proceeds from investment
 
maturities, plus cash on hand, to pay
 
down certain short-term borrowings.
Accordingly, as of October 31, 2024, the U.S. Bank’s assets were US$431
 
billion. In the first quarter of 2025, the Bank
 
paid down an additional
US$14 billion of bank borrowings using
 
mainly cash, which will contribute to a
 
further reduction in the U.S. Bank's assets.
●
 
Deliver productivity to create reinvestment
 
capacity for remediation and governance and
 
control investments
 
21
U.S. Small Business Administration (SBA) loan units in its Maine-to-Florida footprint for the SBA’s
 
2024
 
fiscal year.
22
 
Refer to the section entitled “Significant Events – Global Resolution of the Investigations into the Bank’s
 
U.S. BSA/AML Program” for further information about the terms of the Global
Resolution and impacts to the Bank.
23
 
The total amount expected to be spent on remediation and governance and control investments is subject to inherent
 
uncertainties and may vary based on the scope of work in the U.S.
BSA/AML remediation plan which could change as a result of additional findings that are identified as work progresses
 
as well as the Bank’s ability to successfully execute against the
U.S. BSA/AML remediation program in accordance with the U.S. Retail segment’s fiscal 2025 plan.
 
The Bank’s ability to successfully execute its U.S. BSA/AML remediation plan is
subject to inherent risks and uncertainties including the Bank’s ability to attract and retain key employees,
 
the ability of third parties to deliver on their contractual obligations, and the
successful development and implementation of required technology solutions. Furthermore, the execution of the
 
U.S. BSA/AML remediation plan will not be entirely within the Bank’s
control including because of (i) the requirement to obtain regulatory approval or non-objection before proceeding
 
with various steps, and (ii) the requirement for the various deliverables to
be acceptable to the regulators and/or the monitors. Refer to “Global Resolution of the Investigations into the Bank’s
 
U.S. BSA/AML Program” in the “Risk Factors That May Affect Future
Results” section for additional information about risks associated with the Global Resolution and the remediation
 
of the Bank’s U.S. BSA/AML program.
24
 
The amount of bonds that the Bank sells, and accordingly,
 
the loss incurred as well as the amount of net interest income benefit, is subject to risk and uncertainties
 
and is based on
assumptions regarding the timing of when such securities are sold, the interest rates at the time of sale
 
as well as other market factors and conditions which are not entirely within the
Bank’s control.
25
 
The Bank’s estimates regarding net interest income impacts are based on assumptions regarding the
 
timing of when such assets are sold, or wound-down. The Bank’s ability to
successfully dispose the assets is subject to inherent risks and uncertainty and there is no guarantee that the Bank
 
will be able to sell the assets in the timeline outlined. The ability to sell
the assets will depend on market factors and conditions and any sale will likely be subject to customary closing terms
 
and conditions which could involve regulatory approvals which are
not entirely within the Bank’s control.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 30
●
 
Relentlessly focus on talent acquisition,
 
development and retention
●
 
Execute on a limited and focused strategic investment
 
agenda focused on client sectors
 
where we have scale, market share and competitive
 
advantage, with
the objective of enhancing return on equity
 
over time, including:
-
 
Enhance our digital / mobile capabilities to better
 
serve our customers’
 
everyday needs
-
 
Transform Retail distribution model enabling Wealth and
 
Small Business franchises
-
 
Invest in our Cards business by unifying
 
cards platforms and reducing the cost to
 
serve
-
 
Strengthen our Commercial Franchise in partnership
 
with TDS, deepening Middle Market relationships
 
in our existing footprint
TABLE 18: U.S. RETAIL
(millions of dollars, except as noted)
Canadian Dollars
2024
2023
Net interest income
$
11,600
$
12,029
Non-interest income – reported
2,113
2,261
Non-interest income – adjusted
1.2
2,424
2,261
Total revenue – reported
13,713
14,290
Total revenue – adjusted
1,2
14,024
14,290
Provision for (recovery of) credit losses –
 
impaired
1,437
965
Provision for (recovery of) credit losses –
 
performing
95
(37)
Total provision for (recovery of) credit losses
1,532
928
Non-interest expenses – reported
12,615
8,079
Non-interest expenses – adjusted
1,3
7,940
7,735
Provision for (recovery of) income taxes – reported
200
658
Provision for (recovery of) income taxes – adjusted
1
386
743
U.S. Retail Bank net income – reported
(634)
4,625
U.S. Retail Bank net income – adjusted
1
4,166
4,884
Share of net income from investment in
 
Schwab
4,5
709
939
Net income – reported
$
75
$
5,564
Net income – adjusted
1
4,875
5,823
U.S. Dollars
Net interest income
 
$
8,520
$
8,919
Non-interest income – reported
1,554
1,677
Non-interest income – adjusted
1,2
1,780
1,677
Total revenue – reported
10,074
10,596
Total revenue – adjusted
1,2
10,300
10,596
Provision for (recovery of) credit losses –
 
impaired
1,056
715
Provision for (recovery of) credit losses –
 
performing
70
(28)
Total provision for (recovery of) credit losses
1,126
687
Non-interest expenses – reported
9,245
5,988
Non-interest expenses – adjusted
1,3
5,834
5,734
Provision for (recovery of) income taxes – reported
147
489
Provision for (recovery of) income taxes – adjusted
1
283
551
U.S. Retail Bank net income – reported
(444)
3,432
U.S. Retail Bank net income – adjusted
1
3,057
3,624
Share of net income from investment in
 
Schwab
4,5
523
695
Net income – reported
$
79
$
4,127
Net income – adjusted
1
3,580
4,319
Selected volumes and ratios
Return on common equity – reported
6
0.2
%
13.5
%
Return on common equity – adjusted
1,6
11.0
14.1
Net interest margin
1,7
2.95
3.15
Efficiency ratio – reported
91.8
56.5
Efficiency ratio – adjusted
1
56.6
54.1
Assets under administration (billions of U.S.
 
dollars)
8
$
43
$
40
Assets under management (billions of U.S.
 
dollars)
8,9
8
6
Number of U.S. retail stores
1,132
1,177
Average number of full-time equivalent staff
27,842
28,134
1
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
2
Adjusted non-interest income excludes the following item of note:
i.
 
U.S. balance sheet restructuring – 2024: $311 million or US$
 
226 million ($234 million or US$170 million after-tax).
 
3
Adjusted non-interest expenses exclude the following items of note:
i.
 
Charges related to the terminated First Horizon acquisition – 2023: $344 million or US$254 million ($259 million
 
or US$192 million after-tax);
 
ii.
 
FDIC special assessment
 
– 2024: $442 million or US$323 million ($333 million or US$243 million after-tax); and
iii.
 
Charges for the global resolution of the investigations into the Bank’s U.S. BSA/AML program – 2024:
 
$4,233 million or US$3,088 million (before and after-tax).
4
The Bank’s share of Schwab’s earnings is reported with a one-month lag. Refer to
 
Note 12 of the 2024
 
Consolidated Financial Statements for further details.
5
The after-tax amounts for amortization of acquired intangibles, the Bank’s
 
share of acquisition and integration charges associated with Schwab’s acquisition of TD Ameritrade
 
,
 
the Bank’s
share of Schwab’s restructuring charges, and the Bank’s share of Schwab’s FDIC
 
special assessment charge are recorded in the Corporate segment.
6
Capital allocated to the business segment was 11.5% CET1 effective
 
fiscal 2024 compared with 11% in the prior
 
year.
7
Net interest margin is calculated by dividing U.S. Retail segment’s net interest income by average interest
 
-earning assets excluding the impact related to sweep deposits arrangements
and the impact of intercompany deposits and cash collateral, which management believes better reflects segment
 
performance. In addition, the value of tax-exempt interest income is
adjusted to its equivalent before-tax value. Net interest income and average interest-earning assets used in the
 
calculation are non-GAAP financial measures. For additional information
about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP and Other Financial Measures”
 
in the “Financial Results Overview” section of this document.
8
For additional information about this metric, refer to the Glossary of this document.
9
Refer to “Business Focus” section of this document regarding alignment of certain asset management businesses
 
from the U.S. Retail segment to the Wealth Management and Insurance
segment.
REVIEW OF FINANCIAL PERFORMANCE
U.S. Retail reported net income for the
 
year was $75 million (US$79 million), a decrease
 
of $5,489 million (US$4,048 million), or 99%
 
(98% in U.S. dollars),
compared with last year. On an adjusted basis, net income
 
was $4,875 million (US$3,580 million), a
 
decrease of $948 million (US$739 million),
 
or 16% (17% in
U.S. dollars). The reported and adjusted ROE
 
for the year was 0.2% and 11.0%, respectively, compared with 13.5% and 14.1%, respectively, last year.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 31
U.S. Retail net income includes contributions
 
from the U.S. Retail Bank and the Bank’s investment
 
in Schwab. Reported net income
 
for the year from the Bank’s
investment in Schwab was $709 million (US$523
 
million) a decrease of $230 million (US$172
 
million), or 24% (25% in U.S. dollars).
U.S. Retail Bank reported net loss for the
 
year was $634 million (US$444
 
million), compared with reported net income
 
of $4,625 million (US$3,432 million) last
year, reflecting the impact of the charges for the global resolution
 
of the investigations into
 
the Bank’s U.S. BSA/AML program, the impact
 
of the FDIC special
assessment, higher PCL, lower net interest
 
income, and higher expenses, partially
 
offset by acquisition and integration-related charges
 
for the terminated First
Horizon transaction last year. U.S. Retail Bank adjusted net income
 
was $4,166 million (US$3,057 million), a
 
decrease of $718 million (US$567 million),
 
or 15%
(16% in U.S. dollars), reflecting higher PCL,
 
lower revenue, and higher non-interest
 
expenses.
Reported revenue for the year was US$10,074
 
million, a decrease of US$522 million, or 5%,
 
compared with last year. On an adjusted basis, revenue
 
for the
year was US$10,300 million, a decrease of
 
US$296 million, or 3%. Net interest income
 
of US$8,520 million, decreased US$399
 
million, or 4%, driven primarily by
lower investment income, and lower deposit
 
volumes, partially offset by higher deposit
 
margins, and higher loan volumes. Net interest
 
margin decreased 20 bps,
primarily due to maintaining elevated liquidity
 
levels, partially offset by higher deposit margins.
 
Reported non-interest income was US$1,554
 
million, a decrease of
US$123 million, or 7%, compared with last
 
year, reflecting the impact of U.S. balance sheet restructuring,
 
partially offset by fee income growth from increased
customer activity. On an adjusted basis, non-interest income was
 
US$1,780 million, an increase of US$103
 
million, or 6%, reflecting fee income growth from
increased customer activity.
Average loan volumes increased US$11 billion, or 6%, compared with last
 
year. Personal loans increased 8%, reflecting good mortgage
 
and auto originations.
Business loans increased 4%, reflecting good
 
originations and slower payment rates across
 
portfolios. Average deposit volumes decreased
 
US$22 billion, or 6%,
compared with last year, reflecting a 19% decrease in sweep
 
deposits and a 3% decrease in business
 
deposits, partially offset by a 2% increase in
 
personal
deposits. Excluding sweep deposits, average
 
deposits decreased 1%.
 
Assets under administration (AUA) were US$43
 
billion as at October 31, 2024, an increase
 
of US$3 billion, or 8%, compared with last
 
year, reflecting net asset
growth. Assets under management (AUM)
 
were US$8 billion as at October 31, 2024,
 
an increase of US$2 billion, or 33%,
 
compared with last year.
PCL for the year was US$1,126 million, an
 
increase of US$439 million compared
 
with last year. PCL – impaired was US$1,056 million, an increase
 
of
US$341 million, or 48%, reflecting credit
 
migration in the consumer and commercial lending
 
portfolios. PCL – performing was US$70
 
million, compared with a
recovery of US$28 million in the prior year. The current year
 
performing provisions largely reflect
 
current credit conditions, including credit migration,
 
and volume
growth. U.S. Retail PCL including only the
 
Bank’s share of PCL in the U.S. strategic cards portfolio,
 
as an annualized percentage of credit
 
volume, was 0.60%, an
increase of 22 bps, compared with last year.
Reported non-interest expenses for the year
 
were US$9,245 million, an increase of US$3,257
 
million, or 54%, compared with last year, reflecting the impact
 
of
the charges for the global resolution of the investigations
 
into the Bank’s U.S. BSA/AML program,
 
the impact of the FDIC special assessment,
 
higher legal and
regulatory expenses, costs associated
 
with the extension of our credit card program
 
agreement with Nordstrom, real estate
 
optimization costs, and a higher FDIC
assessment rate, partially offset by the impact of
 
the acquisition and integration-related charges
 
for the terminated First Horizon transaction
 
from last year. On an
adjusted basis, non-interest expenses increased
 
US$100 million, or 2%, reflecting costs associated
 
with the extension of our credit card program
 
agreement with
Nordstrom,
 
higher legal and regulatory expenses, and
 
higher operating expenses, partially offset
 
by ongoing productivity initiatives.
The reported and adjusted efficiency ratios for
 
the year were 91.8% and 56.6%, compared
 
with 56.5% and 54.1%, respectively, last year.
OPERATING ENVIRONMENT AND OUTLOOK
Fiscal 2025 is expected to be a challenging
 
year across the entire U.S. banking industry, with a declining rate
 
environment, continued regulatory pressures,
 
and
some further pressure on credit as we
 
move through this credit cycle. The U.S.
 
Retail Bank will also face pressure on net interest
 
income as the sweep portfolio
continues to wind down in line with the Schwab
 
IDA. However, the Bank expects core business activity to
 
remain strong driven by expected deposit
 
volume
stabilization. In Q1 2025, net interest
 
margin is expected to expand modestly driven
 
by balance sheet restructuring actions, partially offset
 
by deposit spread
compression driven by Fed rate actions and
 
competitive market dynamics
26
.
The U.S. Retail Bank’s top priority is the execution
 
of its AML remediation program and
 
the strengthening of its governance and control
 
infrastructure. The U.S.
Retail Bank will continue efforts to generate sustainable
 
productivity savings to create capacity
 
for these investments, which are expected
 
to increase into fiscal
2025, as we continue to prioritize the resources
 
needed to meet our remediation requirements.
 
Additionally, to meet the requirements of the consent orders
 
while
aiming to maintain a buffer to the asset limitation,
 
the U.S. Retail Bank will continue to restructure
 
the U.S. balance sheet to provide the flexibility
 
to continue to
meet our customers’ evolving needs. In light
 
of the AML remediation and governance
 
and control expenses, earnings in fiscal 2025
 
are expected to be lower than
earnings in fiscal 2024. However, return on equity is expected
 
to improve through fiscal 2025 and into
 
fiscal 2026, driven by the U.S. balance
 
sheet restructuring
actions
27
.
 
T
HE CHARLES SCHWAB
 
CORPORATION
Refer to Note 12 of the 2024 Consolidated Financial
 
Statements for further information on
 
Schwab.
26
 
The Bank’s Q1 2025 net interest margin expectations for the segment are based on the Bank’s
 
assumptions regarding interest rates, deposit reinvestment rates, average asset levels,
and other variables, and are subject to inherent risks and uncertainties, including those set out in the “Risk Factors
 
That May Affect Future Results” section of this document.
27
 
The Bank’s estimates regarding earnings and return on equity are based on assumptions regarding the
 
Bank’s ability to successfully execute against its strategies, including the U.S.
balance sheet restructuring actions resulting in the estimated net interest income benefits, and are therefore subject
 
to inherent risks and uncertainties, including those set out in the “Risk
Factors That May Affect Future Results” section of this document.
 
 
 
 
 
 
 
 
 
ex992p32i0 ex992p32i2 ex992p32i1
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 32
BUSINESS SEGMENT ANALYSIS
Wealth Management and
 
Insurance
2829
Wealth Management and Insurance provides wealth solutions and insurance protection to approximately 6 million customers
in Canada and asset management products to institutional clients in Canada and globally.
 
 
 
TABLE 19: REVENUE
 
(millions of Canadian dollars)
2024
2023
Wealth
$
6,042
$
5,401
Insurance
1,2
7,493
6,229
Total
$
13,535
$
11,630
1
 
Includes recoveries from reinsurers for catastrophe claims of $718 million (2023: nil).
2
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
KEY PRODUCT GROUPS
Wealth
●
 
Direct Investing – platforms and resources for
 
self-directed retail investors to facilitate
 
research, investment management and
 
trading in a range of investment
products through online, phone, and mobile
 
channels.
 
●
 
Wealth Advice – wealth management advice and financial
 
planning solutions for mass affluent, high net
 
worth and ultra high net worth clients, integrated
 
with
other Wealth businesses and the broader Bank.
●
 
Asset Management – public and private
 
market investment management capabilities
 
for retail and institutional clients, including
 
a diversified suite of investment
products designed to provide attractive risk-adjusted
 
returns.
Insurance
●
 
Property and Casualty – home, auto and
 
small business insurance provided through direct
 
channels and to members of affinity groups
 
such as professional
associations, post-secondary institutions
 
such as universities and colleges, and employer
 
groups.
●
 
Life and Health – credit protection for
 
Canadian Personal and Business Banking borrowing
 
customers, life and health insurance products,
 
credit card balance
protection, and travel insurance products, distributed
 
through customer-assisted and direct to consumer
 
channels
.
INDUSTRY PROFILE
The Canadian wealth management industry
 
includes banks, insurance companies, independent
 
asset managers, direct-to-consumer
 
providers, independent
financial advisors and planners, and full-service
 
and discount brokerages. Growth relies
 
on the ability to provide differentiated and
 
integrated wealth solutions and
holistic financial advice to retail and institutional
 
investors while keeping pace with technological
 
change and regulatory requirements. The property
 
and casualty
insurance industry in Canada is fragmented
 
and competitive, consisting of numerous
 
personal and commercial line writers
 
offering products through broker,
captive agent and direct distribution channels,
 
while the life and health insurance industry is
 
comprised of several large life and health
 
insurers, and also includes
several banks that provide life and health insurance.
 
We expect that providing innovative digital capabilities
 
and solutions will be a key differentiator for customers
buying and servicing their insurance policies
 
through direct channels.
28
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
29
 
Includes AUA administered by TD Investor Services, which is part of the Canadian Personal and Commercial Banking
 
segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 33
STRATEGIC OBJECTIVES, ACCOMPLISHMENTS
 
AND PRIORITIES
 
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN 2024
Deliver legendary experiences and
trusted advice to help our customers
feel confident about their financial
future
●
 
Continued to meet customer needs, resulting in
 
strong Legendary Experience Index (LEI) results:
–
 
Wealth continued to prioritize the client experience,
 
posting strong LEI results in Direct Investing
 
and Advice
–
 
TD Insurance delivered consistently
 
high LEI results in fiscal 2024
 
marking the best annual performance since
program inception despite the impact of
 
multiple severe weather-related events
●
 
Recognized with multiple awards in 2024, reflecting
 
the strength of our products and platforms:
–
 
TD Direct Investing was named the top online
 
brokerage in Canada in The Globe and
 
Mail’s annual Digital
Brokerage Ranking for the second consecutive
 
year
30
–
 
TD Asset Management (TDAM) was
 
recognized in five categories at the 2023 Canada
 
LSEG Lipper Fund
Awards for providing attractive risk-adjusted returns
 
relative to industry peers
31
–
 
TDAM received FundGrade A+ rating across
 
18 TDAM managed mutual funds, portfolios,
 
and Exchange-
Traded Funds (ETFs)
 
for outstanding performance in 2023, representing
 
the most FundGrade A+ Awards
received by investment funds managed by
 
TDAM in a single period
32
●
 
Introduced several new services, features
 
and capabilities to enhance the client
 
experience:
–
 
Launched TD Active Trader mobile app for iOS, offering
 
sophisticated trading capabilities for iOS users
–
 
Introduced real-time partial share trading
 
on all direct investing platforms, making investing
 
more accessible
for Canadians
–
 
Enabled cross-border client advisory with
 
the introduction
 
of U.S. licensing for investment advisors
–
 
Introduced capability to deliver financial plans
 
in languages other than English and
 
French, with simplified and
traditional Chinese language capabilities
–
 
TDAM broadened its product shelf, launching
 
6 new Mutual Funds and 7 ETFs, including
 
actively managed
Target Maturity Bond ETFs and a Cash Management ETF
–
 
Strengthened TD Insurance’s digital capabilities
 
by enhancing self-serve features, including
 
online quote for
Small Business Insurance, travel and accident
 
& sickness coverages for Quebec customers
–
 
Enhanced the client experience by launching
 
Auto Insurance Claims Tracker, making it easier for customers
to obtain updates on their claims at any time
–
 
Life and Health made significant digital investments,
 
making it easier for customers to top up travel
 
insurance
coverage online, and introduced balance
 
protection insurance on the MBNA Amazon
 
credit card portfolio
 
Leverage OneTD to deepen
customer relationships with solutions
that meet their unique financial needs
●
 
Maintained strong market share
positions and gained momentum across
 
our businesses:
–
 
#1 market share in direct investing revenues
 
and assets
33
–
 
Largest Canadian institutional money manager
 
and largest money manager in Canada
 
for pension assets
34
–
 
#2 market share in mutual fund and ETF assets
 
among the Big 5 Banks
35,36
–
 
Gained market share in TD Wealth Financial Planning
 
and Private Wealth Management businesses
37
–
 
Maintained #1 rank as Canada’s Leading Direct
 
Distribution personal lines insurer and leader in
 
the affinity
market in Canada
38
–
 
#3 personal home & auto insurer in Canada
●
 
Continued to work with partners to deliver OneTD:
–
 
Direct Investing partnered with TD Insurance
 
and Personal Banking partners to promote
 
the Direct Investing
brand to new customer segments
–
 
Advice continued to build strong relationships
 
with Personal and Business Banking, significantly
 
increasing the
flow of referrals across businesses
–
 
TDAM continued to partner with TD Securities
 
to win global institutional mandates in Asia-Pacific
 
and Europe
–
 
Deepened customer relationships across the
 
Bank by increasing colleague confidence in
 
engaging in
protected borrowing conversations with customers
–
 
Leveraged our market leading brand to provide
 
TD Real Estate Secured Lending customers
 
with TD home
insurance
–
 
TD Insurance Private Client Advice offered advice
 
and protection to high-net-worth TD Wealth
 
customers
 
30
 
2024 Globe and Mail Digital Brokerage Ranking: https://www.theglobeandmail.com/investing/article
 
-the-2024-globe-and-mail-digital-brokerage-ranking-who-rules-and-whos/.
31
 
2023 Canada LSEG Lipper Fund Awards: https://lipperfundawards.com/Awards/Canada/2023/Fund.
32
 
The FundGrade A+® rating is used with permission from Fundata Canada Inc., all rights reserved. Fundata is a
 
leading provider of market and investment funds data to the Canadian
financial services industry and business media. The FundGrade A+® rating identifies funds that have consistently demonstrated
 
the best risk-adjusted returns throughout an entire
calendar year. For more information on the rating system, please visit
 
www.Fundata.com/ProductsServices/FundGrade.aspx.
33
 
Market share ranking is based on most current data available from Investor Economics, a division of ISS Market Intelligence,
 
for TD Direct Investing revenue and asset rankings as at
June 2024.
34
 
Market share ranking is based on most current data available from Investor Economics, a division of ISS Market Intelligence,
 
for institutional money manager and pension asset money
manager rankings as at December 2023.
35
 
The Big 5 Banks consist of Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank,
 
and The Toronto-Dominion Bank.
36
 
Market share rankings from Investment Funds Institute of Canada as at September 2024.
37
 
Market share is based on most current data available from Investor Economics, a division of ISS Market Intelligence,
 
for TD Wealth Financial Planning and TD Wealth Private Wealth
Management assets under administration (AUA) from June 2023 to June 2024.
38
 
Rankings based on data available from OSFI, Insurers, Insurance Bureau of Canada, and Provincial Regulators
 
as at December 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 34
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN 2024
Innovate with purpose to enable our
colleagues to execute with speed and
impact and strengthen the foundation
of our business
●
 
TD Wealth joined TD Insurance, transitioning
 
to the Next Evolution of Work (NEW) operating
 
model, simplifying the
way we work to deliver innovative, customer-centric
 
capabilities to market faster
●
 
TD Wealth continued to transform operations
 
workflows, building industrial-grade technology
 
and process
innovation that helps drive advisor and
 
client value, enhance business efficiency and reduce
 
operational risk
●
 
Continued to mature our control environment
 
to help enhance governance and oversight
 
functions across both TD
Wealth and TD Insurance
 
Be an extraordinary place to work
where diversity and inclusiveness are
valued, and contribute to the well-
being of our communities
●
 
Remain committed to our efforts to build a more
 
inclusive and diverse culture at TD, aligning
 
to our purpose to
enrich the lives of our customers, colleagues,
 
and communities:
–
 
TD Wealth Leaders participated in two signature events
 
to build awareness around our 2SLGBTQ+
 
colleagues
and communities – TD Parents Speak
 
Out Event, highlighting wealth leaders
 
with trans/non-binary children
and TD Transgender Day of Visibility Event dedicated to recognizing
 
the achievements of the transgender
community and celebrating their contributions
 
to society
–
 
TD Insurance launched the Talent Advancement Pathway for Indigenous Peoples
 
wherein successful
applicants will take part in a 2-year rotational
 
program to gain critical leadership skills
 
and experience across
the Insurance business
KEY PRIORITIES FOR
 
2025
●
 
Deliver legendary experiences by advancing innovations
 
that are designed to help build and protect
 
the financial well-being of our clients
●
 
Maintain digital leadership while continuing
 
to enhance client and colleague experience
 
●
 
Strengthen the foundation of our business through
 
investments in data and analytics,
 
technology, and enhancements to governance and control functions
 
to
enable scalable growth
●
 
Accelerate growth by deepening relationships
 
leveraging the strength of OneTD, expanding
 
distribution, and enhancing productivity
●
 
Continue to position our brand as a diverse
 
and inclusive employer of choice, enabling
 
colleagues to achieve their full potential
 
●
 
Extend institutional leadership position in asset
 
management into retail and global markets,
 
leveraging breadth and depth of capabilities
 
●
 
Rapidly respond to emerging claims trends,
 
ensuring alignment to risk appetite and
 
supporting customers as they face the impacts
 
of climate change
 
●
 
Expand small business insurance offering to more
 
segments, leveraging digital capabilities
 
and marketing to continue growing
 
the business
TABLE 20: WEALTH MANAGEMENT AND INSURANCE
(millions of Canadian dollars, except as noted)
2024
2023
Net interest income
$
1,226
$
1,064
Non-interest income
1,2
12,309
10,566
Total revenue
1
13,535
11,630
Provision for (recovery of) credit losses – impaired
–
1
Provision for (recovery of) credit losses – performing
–
–
Total provision for (recovery of) credit losses
–
1
Insurance service expenses
1,3
6,647
5,014
Non-interest expenses
1
4,285
3,908
Provision for (recovery of) income taxes
1
648
706
Net income
1
$
1,955
$
2,001
Selected volumes and ratios
Return on common equity
1,4
31.8
%
34.9
%
Efficiency ratio
1
31.7
33.6
Efficiency ratio, net of ISE
1,5
62.2
59.1
Assets under administration (billions of Canadian dollars)
6
$
651
$
531
Assets under management (billions of Canadian dollars)
530
441
Average number of full-time equivalent staff
15,093
16,130
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
2
 
Includes recoveries from reinsurers for catastrophe claims of $718 million (2023: nil).
3
 
Includes estimated losses related to catastrophe claims of $1,223 million (2023: $307 million).
4
 
Capital allocated to the business segment was increased to 11.5%
 
CET1 Capital effective fiscal 2024 compared with 11%
 
in the prior year.
5
 
Efficiency ratio, net of ISE is calculated by dividing non-interest expenses by total revenue, net of ISE.
 
Total revenue, net of ISE
 
– 2024: $6,888 million, 2023: $6,616 million. Total
revenue, net of ISE is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” in the
 
“How We Performed” section and the Glossary of this document for
additional information about this metric.
6
 
Includes
AUA administered by TD Investor Services, which is part of the Canadian Personal and Commercial
 
Banking segment.
REVIEW OF FINANCIAL PERFORMANCE
 
Wealth Management and Insurance reported net income
 
for the year was $1,955 million, a decrease
 
of $46
 
million, or 2%, compared with last year, reflecting
higher estimated losses from catastrophe
 
claims and higher non-interest expenses,
 
partially offset by higher revenue. The ROE for
 
the year was 31.8%, compared
with 34.9% last year.
Revenue for the year was $13,535 million.
 
This represents an increase of $1,905 million, or
 
16%, compared with last year, of which $718 million,
 
or 6%, was
driven by reinsurance recoveries for catastrophe
 
claims. Non-interest income was $12,309
 
million. This represents an increase of $1,743
 
million, or 16%,
compared with last year, of which $718 million, or 7%, was
 
driven by reinsurance recoveries for catastrophe
 
claims. The remaining increase reflects
 
higher
insurance premiums, higher fee-based revenue,
 
and higher transaction revenue. Net interest
 
income was $1,226 million, an increase
 
of $162 million, or 15%,
compared with last year, reflecting higher deposit margins,
 
partially offset by lower deposit volumes.
 
AUA were $651 billion as at October 31, 2024,
 
an increase of $120 billion, or 23%, compared
 
with last year, reflecting market appreciation and net asset
growth. AUM were $530 billion as at October
 
31, 2024, an increase of $89 billion, or
 
20%, compared with last year, primarily reflecting market appreciation.
 
Insurance service expenses for the year
 
were $6,647 million. This represents an increase
 
of $1,633 million, or 33%, compared with last
 
year, of which $916
million, or 18%, was driven by estimated
 
losses from catastrophe claims. The
 
remaining increase reflects less favourable
 
prior years’ claims development and
increased claims severity.
 
Non-interest expenses for the year were
 
$4,285 million, an increase of $377 million, or
 
10%, compared with last year, reflecting higher variable
 
compensation,
higher technology spend supporting business
 
growth, and provisions related to litigation
 
matters.
 
 
 
 
 
 
 
 
 
 
 
 
ex992p35i2 ex992p35i1 ex992p35i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 35
The efficiency ratio for the year was 31.7%, compared
 
with 33.6% last year. The efficiency ratio, net of ISE for the
 
year was 62.2%, compared with 59.1% last
year.
OPERATING ENVIRONMENT AND OUTLOOK
The anticipated declining interest rate environment,
 
modest economic growth and market conditions
 
in Canada and the U.S. are expected to impact
 
Wealth
Management and Insurance results in
 
fiscal 2025. Our continued focus on our
 
strategic priorities and investments in leading
 
digital platforms are expected to help
offset headwinds from pressure on fees from rising
 
competition, increases in insurance claims
 
due to severe weather-related events and
 
claims severity. Our
businesses are focused on continuing
 
to deliver high-quality advice, educational
 
content and innovative financial products
 
to our customers, and investment in risk
and control infrastructure while exercising
 
disciplined expense management to help
 
navigate the changing environment.
BUSINESS SEGMENT ANALYSIS
Wholesale Banking
3940
Operating under the brand name TD Securities, Wholesale Banking offers capital markets and corporate and investment
banking services to corporate, government, and institutional clients in key global financial centres across North America,
Europe and Asia-Pacific.
TABLE 21: REVENUE
(millions of Canadian dollars)
2024
2023
Global markets
$
4,218
$
3,265
Corporate and investment banking
3,104
2,618
Other
(36)
(65)
Total
$
7,286
$
5,818
LINES OF BUSINESS
●
 
Global Markets – sales, trading and research,
 
debt and equity underwriting, client securitization,
 
prime services, and trade execution services
41
.
●
 
Corporate and Investment Banking – corporate
 
lending and syndications, debt and
 
equity underwriting, advisory services, trade
 
finance, cash
management, investment portfolios, and related
 
activities
.
 
●
 
Other – investment portfolios and other
 
accounting adjustments.
INDUSTRY PROFILE
 
The wholesale banking sector is a mature,
 
highly competitive market comprised of banks,
 
large global investment firms, and independent
 
niche dealers. Wholesale
Banking provides capital markets and
 
corporate and investment banking services
 
to corporate, government, and institutional
 
clients. Changing regulatory
requirements continue to impact strategy
 
and returns for the sector. Firms are responding by shifting
 
their focus to client-driven trading revenue
 
and fee income to
reduce risk, preserve capital, and are also investing
 
in technology to support growing levels
 
of electronic trading across all markets.
 
Competition is expected to
remain intense for transactions with high-quality
 
clients. Longer term, wholesale banks with a diversified
 
client-focused business model, a full suite of
 
products and
services, and the ability to manage costs and
 
capital effectively will be well-positioned to achieve
 
attractive returns for shareholders.
39
 
Includes the acquisition of Cowen Inc. effective March 1, 2023.
40
 
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview”
 
section of this
document.
41
 
Certain revenue streams are shared between Global Markets and Corporate and Investment Banking lines of business
 
in accordance
 
with an established agreement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 36
STRATEGIC OBJECTIVES, ACCOMPLISHMENTS
 
AND PRIORITIES
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN
 
2024
Become a Top 10 North American
Investment Bank with global reach
●
TD Securities and TD Cowen achieved
 
significant integration milestones including
 
the implementation of a unified
Investment Banking, Capital Markets and
 
Research platform, integrating coverage models,
 
and streamlining delivery
of capabilities for clients
●
TD began a multi-year investment in Global
 
Transaction Banking (GTB) to scale the business; GTB
 
corporate
deposits grew by 25% in 2024
●
Delivered client-focused ESG advisory
 
and financing solutions as demonstrated
 
by several marquee transactions and
recognition including:
–
 
Lead Manager on a US$1.5 billion Social Benchmark
 
for the International Finance Corporation (IFC)
 
to support
low-income communities in emerging
 
markets. This transaction was IFC’s largest ever
 
social bond
–
 
Lead Manager on KfW Development Bank AUD1.5
 
billion Green Bond. This transaction was KfW’s
 
largest ever
transaction
 
in the Australian market
–
 
Winner of Environmental Finance’s 2024 Sustainable
 
Debt Award for “Green Bond of the Year”, recognizing
TD’s 2023 Green Bond issuance
–
 
Awarded “Best Specialist ESG Research”
 
for 2024 by ESG Investing Awards, highlighting
 
the outstanding
dedication and commitment of TD Cowen’s research
 
to provide action-oriented and investable
 
research to ESG
and sustainability funds and institutional investors
●
Ranked #1 in Telecommunications and Media in the 2024 Extel Canada
 
Research Survey
 
●
Ranked #1 in Washington Research in the 2024 U.S.
 
Extel All-American Research Survey
 
●
Recognized in Euromoney Foreign Exchange
 
Awards 2024: World’s Best FX Bank for FX Data Management,
 
and
Canada’s Best FX Bank
In Canada, be a top-ranked
Investment Bank
●
Achieved top ranking across several major
 
products in the Canadian markets including:
–
 
#1 investment bank in Canadian M&A Announced
 
and Completed transactions
42
, and in Canadian Loan
Syndications
43
●
Delivered on several marquee and strategic
 
acquisitions and led notable transactions
 
in the Canadian market:
–
 
Advised the Special Committee of Nuvei on its
 
take-private by Advent International with the
 
support of Nuvei’s
multiple voting shareholders for an implied
 
enterprise value of US$6.3 billion
–
 
Advised Pembina Pipeline on its acquisition
 
of Enbridge’s interest in Alliance and Aux Sable
 
for $3.1 billion and
was lead left bookrunner on $1.3 billion bought
 
offering of subscription receipts financing
–
 
Advised Teck Resources on its sale of the steelmaking coal business, Elk
 
Valley Resources, to Glencore and
Nippon Steel Corporation for an implied enterprise
 
value of US$9.0 billion
 
–
 
Joint Bookrunner on TMX Group’s $1.1 billion
 
3 Tranche Debt Offering to finance the acquisition of
 
VettaFi
–
 
Served as Exclusive Financial Advisor to Advantage
 
Energy Ltd. on its $450 million acquisition
 
of the Charlie
Lake and Montney assets; TD also acted as Lead
 
Left Bookrunner on the concurrent bought
 
offering of
$125 million extendible convertible debentures,
 
$65 million subscription receipts and entered
 
the company’s
upsized bank syndicate
In the U.S., deliver value and
trusted advice in sectors where we
have competitive expertise
●
This quarter, TD Securities was joint lead on TD’s secondary
 
sale of Schwab shares in a US$2.5 billion
 
block trade,
one of the ten largest U.S. block trades since
 
2010
●
Demonstrated the strength of our combined
 
TD Securities and TD Cowen franchises
 
in the U.S.:
–
 
Acted as an Initial Underwriter, Joint Lead Arranger and
 
Joint Bookrunner on the US$9.2 billion
 
financing
package supporting the acquisition of Truist Insurance
 
Holdings by Stone Point Capital and Clayton,
 
Dubilier &
Rice; TD Securities also served as an
 
M&A advisor on this marquee US$15.5 billion
 
transaction
–
 
Joint Bookrunner on Arrowhead Pharmaceuticals’
 
US$450 million Underwritten Offering
–
 
Joint Bookrunner on Vera Therapeutics’
 
US$287.5 million Follow-On Offering
–
 
Lead Bookrunner for Avidity Biosciences’
 
US$461 million Follow-On Offering
–
 
Acting as financial advisor to Blue Owl Capital
 
Inc. on its pending acquisition
44
 
of IPI Partners, LLC for
approximately US$1.0 billion
●
E-trading market leader in Muni Bond trading
 
and expanded volume in Credit; TD ranking
 
for corporate credit trade
counts on MarketAxess increased notably
 
throughout 2024 to reach #2 in October 2024
In Europe and Asia-Pacific,
leverage our global capabilities to
build connected, sustainable
franchises
●
Continued strong success with global clients:
–
 
TD was Lead Manager on a US$5 billion
 
5-year Sustainable Development Bond
 
for the International
Development Association
 
–
 
Active bookrunner on EUR 5 billion dual-tranche
 
benchmark offering for KfW
–
 
Inaugural EUR-denominated 1.25 billion
 
benchmark bond for Province of Saskatchewan
 
–
 
Inaugural EUR 500 million preferred
 
senior benchmark for BayerLB
 
●
Launched cash equity trading desk in Singapore
 
●
Demonstrating continued strength in global
 
coverage for key clients, TD led all 5 Australian
 
dollar bond issuances for
Canadian provinces in 2024
42
Source: Refinitiv; Canadian target completed and announced transactions over the last twelve months ended October
 
31, 2024.
43
Source: Bloomberg; Calendar year-to-date through October 31, 2024.
44
Deal announced on October 7, 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 37
BUSINESS STRATEGY
BUSINESS HIGHLIGHTS IN
 
2024
Continue to unlock OneTD
opportunities to grow with and
support our TD Retail and Wealth
partners
●
In partnership with other TD businesses:
–
 
TD Securities and TD Wealth enabled fully paid
 
lending to enhance returns for Wealth clients
–
 
Launched real-time trading in partial shares
 
for U.S. and Canadian equities, enabling
 
investors to buy and sell a
fraction of stocks and ETFs, making investing
 
more accessible; TD became the first bank-owned
 
brokerage in
Canada to provide real-time partial shares capability
–
 
In partnership with TD Bank, America’s Most
 
Convenient Bank, TD Securities began to issue
 
equity-linked
certificates of deposit, broadening the
 
suite of products available to clients in the U.S.
–
 
Migrated U.S. retail order flow to internal
 
execution venue, making it fully accessible
 
to TD’s institutional clients,
resulting in exceptional execution for both retail
 
and institutional clients
Invest in an efficient and agile
infrastructure, innovation and data
capabilities, and risk & control
enhancements
●
Implemented T+1 settlements resulting in
 
shortened standard settlement cycle for
 
most trades in North American
securities (fixed income and equities)
●
Successfully transitioned all existing derivatives,
 
securities and loan agreements referencing
 
Canadian Dollar Offered
Rate (CDOR) to the alternative reference rate,
 
Canadian Overnight Repo Rate Average (CORRA)
Be an extraordinary and inclusive
place to work by attracting,
developing, and retaining the best
talent
●
Raised $2.1
 
million for children’s charities through the annual
 
Underwriting Hope campaign
●
Recognized in Euromoney Foreign Exchange
 
Awards 2024: World’s Best FX Bank for Diversity & Inclusion
KEY PRIORITIES FOR
 
2025
●
 
Drive growth to build a Top 10 North American investment bank with global reach
– Scale our advisory and capital markets businesses
 
through a focused client strategy
– Enhance our e-trading offerings across Global
 
Markets
 
– Continue to build an integrated prime brokerage
 
platform
– Progress a multi-year build to create a digitally
 
enabled North American treasury platform
●
 
Deliver an integrated investment bank and
 
deepen partnerships across the firm to realize
 
OneTD synergies
 
– Leverage Wholesale Banking’s full-service platform
 
and talent base to expand and deepen
 
client relationships
– Grow presence with financial sponsors
 
and expand offerings for corporate derivatives
 
– Partner with TD’s retail businesses to launch
 
new products,
 
as appropriate, to meet TD client needs
 
and realize synergies
●
 
Strengthen foundational capabilities to support
 
business growth
 
-
 
Enhance foundation for future growth through
 
investments in core infrastructure, risk and
 
control enhancements, process improvements,
 
and
automation
-
 
Maintain our focus on prudent risk management
-
 
Continue to be an extraordinary place to work
 
and attract top talent with a focus on
 
culture, inclusion, and diversity
TABLE 22: WHOLESALE BANKING
1
(millions of Canadian dollars, except
 
as noted)
2024
2023
Net interest income (TEB)
$
582
$
1,538
Non-interest income
6,704
4,280
Total revenue
7,286
5,818
Provision for (recovery of) credit losses –
 
impaired
247
16
Provision for (recovery of) credit losses –
 
performing
70
110
Total provision for (recovery of) credit losses
317
126
Non-interest expenses – reported
5,576
4,760
Non-interest expenses – adjusted
2,3
5,197
4,326
Provision for (recovery of) income taxes
 
(TEB) – reported
275
162
Provision for (recovery of) income taxes
 
(TEB) – adjusted
2
357
251
Net income – reported
$
1,118
$
770
Net income – adjusted
2
1,415
1,115
Selected volumes and ratios
Trading-related revenue (TEB)
4
$
2,782
$
2,360
Average gross lending portfolio (billions of Canadian
 
dollars)
5
96.7
94.7
Return on common equity – reported
6
7.1
%
5.4
%
Return on common equity – adjusted
2,6
8.9
7.9
Efficiency ratio – reported
76.5
81.8
Efficiency ratio – adjusted
2
71.3
74.4
Average number of full-time equivalent staff
7,042
7,143
1
 
Wholesale Banking results for 2023 include the acquisition of Cowen Inc. effective March 1, 2023.
 
2
 
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
 
3
Adjusted non-interest expenses exclude the acquisition and integration-related charges for the Cowen
 
acquisition – 2024: $379 million ($297 million after-tax), 2023: $434 million ($345
million after-tax).
4
 
Includes net interest income (loss) (TEB) of $(653) million (2023 – $615 million), and trading income
 
(loss) of $3,435
 
million (2023
 
– $1,745 million). Trading-related revenue (TEB) is a
non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” in the “Financial
 
Results Overview” section and the Glossary of this document for additional
information about this metric.
5
 
Includes gross loans and bankers’
 
acceptances (BA) relating to Wholesale Banking,
 
excluding letters of credit, cash collateral, credit default swaps, and allowance for credit losses.
6
 
Capital allocated to the business segment was increased to 11.5%
 
CET1 Capital effective fiscal 2024 compared with 11%
 
in the prior year.
REVIEW OF FINANCIAL PERFORMANCE
Wholesale Banking reported net income for
 
the year was $1,118
 
million, an increase of $348 million, or
 
45%, compared with the prior year, primarily reflecting
higher revenues, partially offset by higher non-interest
 
expenses and higher PCL. On an adjusted
 
basis, net income was $1,415 million, an
 
increase of
$300 million, or 27%.
 
Revenue for the period, including TD Cowen,
 
was $7,286 million, an increase of $1,468
 
million, or 25%, compared with the prior year, primarily reflecting
 
higher
lending revenue, trading-related revenue, underwriting
 
fees, and equity commissions.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 38
 
PCL was $317 million, an increase of $191
 
million compared with last year. PCL – impaired was $247
 
million, an increase of $231 million, primarily reflecting
 
a
small number of impairments across various
 
industries. PCL – performing was $70
 
million, a decrease of $40 million. The
 
current year performing provisions
largely reflect credit migration across various
 
industries.
 
Reported non-interest expenses for the period,
 
including TD Cowen, were $5,576 million,
 
an increase of $816 million, or 17%, compared
 
with the prior year,
primarily reflecting higher operating expenses,
 
variable compensation commensurate
 
with higher revenue, the impact of foreign
 
exchange translation and
payments related to the U.S. record keeping
 
and trading regulatory matters, partially
 
offset by lower acquisition and integration-related
 
costs. On an adjusted
basis, non-interest expenses were $5,197
 
million, an increase of $871 million, or 20%.
OPERATING ENVIRONMENT AND OUTLOOK
The operating environment remains challenging,
 
characterized by volatile markets, economic
 
uncertainty, geopolitical and ESG considerations, disruptive
technologies, intensifying competition, and evolving
 
capital and regulatory requirements.
 
These factors may affect corporate and investor
 
sentiment and market
and business conditions in a positive or negative
 
manner which makes capital markets results
 
difficult to forecast. TD Securities is confident
 
in its increasingly
diversified and client-focused business
 
model, and believes that the combined
 
TD Securities and TD Cowen franchise is
 
well positioned to help support future
growth. If market conditions are accommodating,
 
then, in fiscal 2025, the Bank expects that
 
these synergies will help fuel revenue
 
momentum above the average
$1.8 billion quarterly revenue seen in 2024 and
 
is targeting to deliver an average quarterly
 
adjusted net income after tax of between
 
$375 million and $425 million,
although results may vary from quarter
 
to quarter depending on operating and
 
market conditions
45
.
BUSINESS SEGMENT ANALYSIS
Corporate
Corporate segment is comprised of service and control functions. Certain costs relating to these functions are allocated to
operating business segments. The basis of allocation and methodologies are reviewed periodically to align with
management’s evaluation of the Bank’s business segments.
TABLE 23: CORPORATE
(millions of Canadian dollars)
2024
2023
Net (loss) – reported
$
(1,525)
$
(4,389)
Adjustments for items of note
Amortization of acquired intangibles
290
313
Acquisition and integration charges related to the Schwab
 
transaction
109
149
Share of restructuring and other charges from investment
 
in Schwab
49
35
Restructuring charges
566
363
Payment related to the termination of the FHN transaction
–
306
Impact from the terminated FHN acquisition-related capital hedging
 
strategy
242
1,251
Impact of retroactive tax legislation on payment card clearing services
–
57
Gain on sale of Schwab shares
(1,022)
–
Indirect tax matters
226
–
Civil matter provision/Litigation settlement
274
1,642
Less: impact of income taxes
CRD and federal tax rate increase for fiscal 2022
–
(585)
Other items of note
396
944
Net (loss) – adjusted
1
$
(1,187)
$
(632)
Decomposition of items included in net (loss) –
 
adjusted
Net corporate expenses
2
$
(1,641)
$
(942)
Other
454
310
Net (loss) – adjusted
1
$
(1,187)
$
(632)
Selected volumes
Average number of full-time equivalent staff
23,103
22,889
1
 
For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non-GAAP
 
and Other Financial Measures” in the “Financial Results Overview” section of this
document.
2
 
For additional information about this metric, refer to the Glossary of this document.
Corporate segment includes expenses related
 
to service and control functions, the impact
 
of treasury and balance sheet management
 
activities, certain enterprise
level tax items, and intercompany items such
 
as elimination of TEB and the retailer program
 
partners’ share of the results of the
 
U.S. strategic cards portfolio.
Corporate segment’s reported net loss for the year
 
was $1,525 million, compared with a net loss
 
of $4,389 million last year. The lower net loss primarily reflects
 
the
current year gain on sale of Schwab shares,
 
lower negative impacts from the hedging
 
strategy related to the terminated First Horizon
 
acquisition and lower civil
matter provision/litigation settlement, partially
 
offset by the higher restructuring charges
 
and the impact of the provision for indirect
 
tax matters in the current year.
Net corporate expenses increased $699
 
million compared to the prior year, primarily reflecting higher investments
 
in risk and control infrastructure.
 
Of the
segment’s net corporate expenses for the
 
current year, approximately $460 million (US$340 million) reflects
 
our U.S. governance and control investments,
including costs for U.S. BSA/AML remediation.
 
The adjusted net loss for the year was $1,187
 
million, compared with an adjusted net loss of
 
$632 million last year.
45
This paragraph contains forward-looking information, that is based on the Bank’s assumptions about
 
interest rates, market volatility, market engagement,
 
credit conditions, competition,
and productivity initiatives, and is subject to risks and uncertainties, including those identified in the paragraph,
 
as well as other risk factors identified in the “Risk Factors That May Affect
Future Results” section in this document, including global economic conditions, regulatory requirements and investor
 
sentiment.
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 39
2024 ACCOMPLISHMENTS AND FOCUS
 
FOR 2025
●
 
In 2024, the Corporate segment continued
 
to support the Bank’s business segments by executing
 
on enterprise and regulatory initiatives
 
and managing
the Bank’s balance sheet and funding activities.
 
●
 
In 2025, the Corporate segment’s service and
 
control functions are focused on continuing
 
to evolve to meet the complex and challenging
 
operating
environment and respond to changing expectations
 
of all our stakeholders.
●
 
The Corporate segment will also maintain its
 
focus on enhancing the processes, technologies
 
and regulatory controls that help enable the
 
Bank’s
businesses to operate efficiently, effectively and in compliance with all applicable
 
regulatory requirements.
2023 FINANCIAL RESULTS OVERVIEW
Summary of 2023 Performance
NET INCOME
Reported net income for the year was $10,634
 
million, a decrease of $6,795 million, or 39%,
 
compared with the prior year. The decrease reflects higher
 
non-
interest expenses, the impact of the terminated
 
First Horizon acquisition-related capital hedging
 
strategy, and higher PCL, partially offset by higher revenues. On
an adjusted basis, net income for the year
 
was $14,995 million, a decrease of $430 million,
 
or 3%, compared with prior year. The reported ROE
 
for the year was
9.9%, compared with 18.0% prior year. The adjusted ROE
 
for the year was 14.2%, compared with 15.9%
 
prior year.
Reported diluted EPS for the year was $5.52,
 
a decrease of 42%, compared with $9.47
 
prior year. Adjusted diluted EPS for the year was $7.91,
 
a decrease of
5%, compared with $8.36 prior year.
Reported revenue was $50,690 million, an
 
increase of $1,658 million, or 3%, compared
 
with prior year. Adjusted revenue was $52,037 million, an increase
 
of
$5,867 million, or 13%, compared with prior
 
year.
NET INTEREST INCOME
Reported net interest income for the year
 
was $29,944 million, an increase of $2,591
 
million, or 9%, compared with the prior year. The increase reflects
 
margin
growth in the personal and commercial banking
 
businesses and the impact of foreign exchange
 
translation, partially offset by lower net interest
 
income in
Wholesale Banking and lower sweep and other
 
deposit volumes in U.S. Retail. Adjusted
 
net interest income was $30,394 million,
 
an increase of $3,087 million, or
11%.
NON-INTEREST INCOME
Reported non-interest income for the year
 
was $20,746 million, a decrease of $933 million,
 
or 4%, compared with the prior
 
year, primarily reflecting the impact of
the terminated First Horizon acquisition-related
 
capital hedging strategy and gain in the
 
prior year on sale of Schwab shares. Adjusted
 
non-interest income was
$21,643 million, an increase of $2,780 million, or
 
15%, primarily reflecting higher equity
 
commissions, global transaction banking revenue,
 
advisory fees, and
equity underwriting fees in Wholesale Banking,
 
including TD Cowen, and higher insurance
 
revenue, partially offset by lower fee-based revenue
 
in the personal and
commercial banking and wealth businesses.
PROVISION FOR CREDIT LOSSES
PCL for the year was $2,933 million,
 
an increase of $1,866 million compared
 
with the prior year. PCL – impaired was $2,486 million, an
 
increase of $1,049 million,
reflecting some normalization of credit performance.
 
PCL – performing was $447 million,
 
compared with a recovery of $370
 
million in the prior year. This year’s
performing provisions were largely recorded
 
in the Canadian Personal and Commercial
 
Banking and Wholesale Banking segments,
 
reflecting credit conditions and
volume growth. Total PCL as an annualized percentage of credit volume
 
was 0.34%.
INSURANCE SERVICE EXPENSES
Insurance service expenses were $5,014
 
million, an increase of $2,114 million, or 73%, compared with the
 
prior year, reflecting presentation changes from the
adoption of IFRS 17 which resulted in a corresponding
 
decrease primarily in non-interest expenses,
 
the impact of changes in the discount
 
rate which resulted in a
similar increase in the fair value of investments
 
supporting claims liabilities reported in non-interest
 
income, increased claims severity and
 
higher estimated losses
from catastrophe claims.
NON-INTEREST EXPENSES
Reported non-interest expenses for the year
 
were $29,855 million, an increase of $5,214
 
million, or 21%, compared with the prior year, reflecting
 
higher employee-
related expenses, including TD Cowen, the
 
Stanford litigation settlement, and higher acquisition
 
and integration related charges, including
 
charges related to the
terminated First Horizon acquisition.
 
On an adjusted basis, non-interest expenses
 
were $26,517 million, an increase of $2,158
 
million, or 9%.
PROVISION FOR INCOME TAXES
Reported total income and other taxes decreased
 
by $631million, or 10.9%, compared with
 
the prior year, reflecting a decrease in income
 
tax expense of
$868 million, or 21.8%, partially offset by an
 
increase in other taxes of $237 million,
 
or 13.2%. Adjusted
 
total income and other taxes increased
 
by $293 million
from the prior year, or 5.4%, reflecting an increase
 
in income tax expense of $56 million,
 
or 1.6%, and an increase in other taxes of
 
$237 million, or 13.2%.
The Bank’s reported effective income tax rate was
 
24.2% for 2023, compared with 19.5%
 
in the prior year. The year-over-year increase
 
primarily reflects the
implementation of the Canada Recovery
 
Dividend and the 1.5% Canadian federal
 
tax rate increase beginning in 2022, the
 
impact of the terminated First Horizon
transaction, and favourable tax impacts in the
 
prior year associated with the sale of Schwab
 
shares, earnings mix and the recognition of unused
 
tax losses. For a
reconciliation of the Bank’s effective income
 
tax rate with the Canadian statutory income
 
tax rate, refer to Note 24 of the 2023 Consolidated
 
Financial Statements.
The Bank reported its investment in Schwab
 
using the equity method of accounting. Schwab’s
 
tax expense (2023: $279 million; 2022: $319
 
million) was not part
of the Bank’s effective tax rate.
BALANCE SHEET
Total assets
 
were $1,955 billion as at October 31, 2023,
 
an increase of $38 billion, from October
 
31, 2022. The impact of foreign exchange
 
translation from the
depreciation in the Canadian dollar increased
 
total assets by $16 billion. The increase in
 
total assets reflects an increase in loans,
 
net of allowances for loan losses
of $65 billion, securities purchased under
 
reverse repurchase agreements of $44 billion,
 
other assets of $15 billion, trading loans,
 
securities, and other of $8 billion,
financial assets designated at fair value through
 
profit or loss of $1 billion and investment in
 
Schwab of $1 billion. The increase was
 
partially offset by a decrease in
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 40
cash and interest-bearing deposits with
 
banks of $41 billion, debt securities at amortized
 
cost of $35 billion, derivative assets of $16
 
billion, and non-trading
financial assets at fair value through profit or loss
 
of $4 billion.
Total liabilities
 
were $1,843 billion as at October
 
31, 2023, an increase of $37 billion from
 
October 31, 2022. The impact of foreign exchange
 
translation from the
depreciation in the Canadian dollar increased
 
total liabilities by $17 billion. The increase in
 
total liabilities reflects an increase in obligations
 
related to securities
sold under repurchase agreements of $39 billion,
 
financial liabilities designated at fair value through
 
profit or loss of $29 billion, other liabilities of
 
$15 billion and
trading deposits of $7 billion. The increase
 
was partially offset by a decrease in deposits of $32
 
billion, derivative liabilities of $19 billion and
 
subordinated notes
and debentures $2 billion.
Equity
was $112 billion as at October 31, 2023, an increase of $1 billion from
 
October 31, 2022. The increase reflects
 
common shares issued with a 2% discount
under the dividend reinvestment plan, net of
 
share repurchases, and gains in accumulated
 
other comprehensive income, partially offset
 
by lower retained
earnings. The increase in accumulated other
 
comprehensive is primarily driven by the impact
 
of foreign currency translation. The retained
 
earnings decreased as
the net income for the year is offset by the dividends
 
paid and the premium on the repurchase
 
of common shares.
GROUP FINANCIAL CONDITION
 
Balance Sheet Review
TABLE 24: CONDENSED CONSOLIDATED
 
BALANCE SHEET ITEMS
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Assets
Cash and Interest-bearing deposits
 
with banks
$
176,367
$
105,069
Trading loans, securities, and other
175,770
152,090
Non-trading financial assets at fair value through
 
profit or loss
5,869
7,340
Derivatives
78,061
87,382
Financial assets designated at fair value through
 
profit or loss
6,417
5,818
Financial assets at fair value through other
 
comprehensive income
93,897
69,865
Debt securities at amortized cost, net of allowance
 
for credit losses
271,615
308,016
Securities purchased under reverse repurchase
 
agreements
208,217
204,333
Loans, net of allowance for loan losses
949,549
895,947
Investment in Schwab
9,024
8,907
Other
1
86,965
110,372
Total assets
1
$
2,061,751
$
1,955,139
Liabilities
Trading deposits
$
30,412
$
30,980
Derivatives
68,368
71,640
Financial liabilities designated at fair value
 
through profit or loss
207,914
192,130
Deposits
1,268,680
1,198,190
Obligations related to securities sold
 
under repurchase agreements
201,900
166,854
Subordinated notes and debentures
11,473
9,620
Other
1
157,844
173,654
Total liabilities
1
1,946,591
1,843,068
Total equity
1
115,160
112,071
Total liabilities and equity
1
$
2,061,751
$
1,955,139
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
Total assets
 
were $2,062 billion as at October 31, 2024,
 
an increase of $107 billion, from October
 
31, 2023. The impact of foreign exchange
 
translation from the
depreciation in the Canadian dollar increased
 
total assets by $3 billion.
The increase in total assets reflects an increase
 
in cash and interest-bearing deposits with banks
 
of $71 billion, loans, net of allowances
 
for loan losses of
$53 billion, trading loans, securities, and other
 
of $24 billion, financial assets at fair value
 
through other comprehensive income
 
of $24 billion, securities purchased
under reverse repurchase agreements of $4
 
billion and financial assets designated
 
at fair value through profit or loss of $1 billion.
 
The increase was partially offset
by a decrease in debt securities at amortized
 
cost of $37 billion, other assets of $23 billion,
 
derivative assets of $9 billion and non-trading
 
financial assets at fair
value through profit or loss of $1 billion.
Cash and interest-bearing deposits with
 
banks
increased $71 billion primarily reflecting
 
cash management activities.
 
Trading loans, securities, and other
increased $24 billion primarily in equity securities,
 
securitized mortgages and commodities held
 
for trading, partially offset
by government securities held for trading.
Non-trading financial assets at fair
 
value through profit or loss
decreased $1 billion primarily reflecting
 
maturities and sales.
Derivative
assets
decreased $9 billion primarily reflecting changes
 
in mark-to-market values of foreign exchange
 
and interest rate contracts.
Financial assets designated at fair value
 
through profit or loss
 
increased $1 billion primarily reflecting purchases,
 
partially offset by maturities and sales.
Financial assets at fair value through other
 
comprehensive income
 
increased $24 billion primarily reflecting new
 
investments, partially offset by maturities
 
and
sales.
Debt securities at amortized cost, net
 
of allowance for credit losses
 
decreased $37 billion primarily reflecting
 
maturities and sales of government securities,
partially offset by new investments and the impact
 
of risk management activities.
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 41
Securities purchased under reverse repurchase
 
agreements
increased $4 billion
primarily
reflecting an increase in volume.
Loans, net of allowance for loan losses
 
increased $53 billion reflecting volume growth
 
in business and government loans, including
 
the impact of bankers’
acceptances
 
transitioned to business and government loans
 
following the cessation of CDOR, volume
 
growth in residential real estate secured lending,
 
and the
impact of foreign exchange translation.
Investment in Schwab
remains relatively flat as the impact of
 
the Bank’s share of Schwab’s other comprehensive
 
income and net income is offset by the
reduction in the Bank’s ownership interest in
 
Schwab with the sale of 40.5 million shares.
Other
 
assets decreased $23 billion primarily
 
reflecting the impact of the cessation of
 
CDOR on customer’s liabilities under acceptances
 
and decrease in amounts
receivable from brokers, dealers and clients
 
due to lower volumes of pending trades.
Total liabilities
 
were $1,947 billion as at October 31, 2024,
 
an increase of $104 billion from October 31,
 
2023. The impact
 
of foreign exchange translation from the
depreciation in the Canadian dollar increased
 
total liabilities by $3 billion.
The increase in total liabilities reflects an
 
increase in deposits of $71 billion, obligations
 
related to securities sold under repurchase
 
agreements of $35 billion,
financial liabilities designated at fair value
 
through profit or loss of $16 billion and subordinated
 
notes and debentures of $2 billion.
 
The increase was partially offset
by a decrease in other liabilities of $16 billion,
 
derivative liabilities of $3 billion and trading
 
deposits of $1 billion.
Trading deposits
decreased $1 billion primarily reflecting
 
maturities, partially offset by new issuances.
Derivative
liabilities
decreased $3 billion primarily reflecting
 
changes in mark-to-market values of foreign
 
exchange and interest rate contracts.
Financial liabilities designated at fair value
 
through profit or loss
 
increased $16 billion primarily reflecting
 
new issuances, partially offset by maturities.
Deposits
increased $71 billion reflecting higher
 
volumes in business and government, bank
 
and personal deposits and the impact of
 
foreign exchange translation.
Obligations related to securities sold
 
under repurchase agreements
increased $35 billion primarily reflecting
 
an increase in volume.
Subordinated notes and debentures
 
increased $2 billion primarily reflecting
 
new issuances, partially offset by redemptions.
Other
 
liabilities decreased $16 billion primarily
 
reflecting the impact of the cessation of
 
CDOR on acceptances and a volume decrease
 
in obligations related to
securities sold short and amounts payable
 
to brokers, dealers and clients, partially offset by increase
 
in securitization liabilities at fair value and
 
liabilities related to
structured entities.
Equity
was $115 billion as at October 31, 2024, an increase of $3 billion from
 
October 31, 2023. The increase reflects gains
 
in accumulated other comprehensive
income,
 
partially offset by lower retained earnings.
 
The increase in accumulated other comprehensive
 
income is primarily driven by gains on
 
cash flow hedges and
the Bank’s share of the other comprehensive
 
income from investment in Schwab.
 
The retained earnings decreased as the net
 
income for the year is more than
offset by the dividends paid and the premium on the
 
repurchase of common shares.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 42
GROUP FINANCIAL CONDITION
Credit Portfolio Quality
AT A GLANCE OVERVIEW
●
Loans and acceptances, net of allowance
 
for loan losses were $950 billion,
 
an increase of $36 billion compared
 
with last year.
 
●
Impaired loans net of Stage 3 allowances
 
were $3,407 million, an increase of $1,130
 
million compared with last year.
●
Provision for credit losses was $4,253
 
million, compared with $2,933 million
 
last year.
 
●
Total allowance for credit losses including off-balance sheet
 
positions increased by $952 million to $9,141
 
million.
LOAN PORTFOLIO
The Bank increased its loans and acceptances
 
net of allowance for loan losses by $36
 
billion, or 4%, from the prior year, primarily reflecting volume
 
growth in the
real estate secured lending and business
 
and government portfolios, and the impact
 
of foreign exchange.
While the majority of the Bank’s credit risk exposure
 
is related to loans and acceptances,
 
the Bank also engaged in activities that have
 
off-balance sheet credit
risk. These include credit instruments
 
and derivative financial instruments, as explained
 
in Note 30 of the 2024 Consolidated Financial
 
Statements.
CONCENTRATION OF CREDIT RISK
The Bank’s loan portfolio continued to be concentrated
 
in Canadian and U.S. consumer lending,
 
comprised of residential mortgages, consumer
 
instalment and
other personal loans, and credit card loans,
 
representing 63% of total loans net of Stage
 
3 allowances, flat compared with 2023.
 
During the year, these portfolios
increased by $24 billion, or 4%, and totalled $600
 
billion at year end. Residential mortgages
 
represented 35% of total loans net of Stage
 
3 allowances in 2024, flat
compared with 2023. Consumer instalment and
 
other personal loans, and credit card loans
 
were 28% of total loans net of Stage 3 allowances
 
in 2024, flat
compared with 2023.
The Bank’s business and government loan portfolio
 
was 37% of total loans net of Stage 3 allowances,
 
flat compared with 2023. The largest business
 
and
government sector concentrations in Canada
 
were the Real estate and Financial sectors,
 
which comprised 6% and 2% of net loans, respectively. Real estate
 
and
Financial sectors were the largest U.S. sector
 
concentrations in 2024, representing 4% and
 
3% of net loans, respectively.
Geographically, the credit portfolio remained concentrated in
 
Canada. In 2024, the percentage of loans
 
net of Stage 3 allowances held in Canada
 
was 66%, flat
compared with 2023. The largest Canadian regional
 
exposure was in Ontario, which represented
 
39% of total loans net of Stage 3 allowances
 
for 2024, flat
compared to the prior year.
The remaining credit portfolio was predominantly
 
in the U.S., which represented 33% of loans
 
net of Stage 3 allowances, flat compared
 
with 2023. Exposures to
other geographic regions were relatively
 
small. The largest U.S. regional exposures
 
were in New York and New England which represented 6% and 5% of
 
total
loans net of Stage 3 allowances, respectively, and consistent
 
with the prior year.
Under IFRS 9,
Financial Instruments
 
(IFRS 9), the Bank calculates allowances
 
for expected credit losses (ECLs) on debt
 
securities at amortized cost (DSAC)
and debt securities at fair value through
 
other comprehensive income (FVOCI). The
 
Bank has $361 billion in such debt securities
 
of which $361 billion are
performing securities (Stage 1 and 2) and none
 
are impaired.
 
The allowance for credit losses on DSAC and
 
debt securities at FVOCI was $3 million
 
and $1 million,
respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 43
TABLE 25: LOANS AND ACCEPTANCES, NET OF STAGE 3 ALLOWANCE FOR LOAN LOSSES
 
BY INDUSTRY SECTOR
1,2
(millions of Canadian dollars, except as noted)
Percentage of total
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Stage 3
allowances for
Gross
loan losses
Net
Net
loans
impaired
loans
loans
Canada
Residential mortgages
$
273,069
$
28
$
273,041
$
263,709
28.6
%
28.7
%
Consumer instalment and other personal
HELOC
3
123,036
31
123,005
117,587
12.9
12.8
Indirect Auto
29,837
98
29,739
28,721
3.1
3.1
Other
19,885
48
19,837
18,548
2.1
2.0
Credit card
20,510
90
20,420
18,746
2.0
2.0
Total personal
466,337
295
466,042
447,311
48.7
48.6
Real estate
Residential
 
27,874
7
27,867
27,782
2.9
3.0
Non-residential
 
25,962
25
25,937
24,820
2.7
2.7
Total real estate
53,836
32
53,804
52,602
5.6
5.7
Agriculture
11,218
7
11,211
9,892
1.2
1.1
Automotive
10,389
84
10,305
9,384
1.1
1.0
Financial
20,233
36
20,197
18,873
2.1
2.1
Food, beverage, and tobacco
3,387
96
3,291
3,059
0.3
0.3
Forestry
854
4
850
829
0.1
0.1
Government, public sector entities, and education
3,577
8
3,569
4,190
0.4
0.5
Health and social services
9,922
58
9,864
9,822
1.0
1.1
Industrial construction and trade contractors
6,180
16
6,164
5,607
0.6
0.6
Metals and mining
2,935
14
2,921
2,400
0.3
0.3
Oil and gas
2,265
11
2,254
2,288
0.2
0.2
Power and utilities
8,526
–
8,526
8,299
0.9
0.9
Professional and other services
5,733
43
5,690
5,716
0.6
0.6
Retail sector
5,020
66
4,954
4,564
0.5
0.5
Sundry manufacturing and wholesale
4,648
37
4,611
4,070
0.5
0.4
Telecommunications, cable, and media
5,325
6
5,319
4,294
0.6
0.5
Transportation
4,099
25
4,074
3,602
0.4
0.4
Other
 
5,811
12
5,799
6,345
0.6
0.7
Total business and government
163,958
555
163,403
155,836
17.0
17.0
Total Canada
630,295
850
629,445
603,147
65.7
65.6
United States
Residential mortgages
58,580
32
58,548
56,515
6.1
6.1
Consumer instalment and other personal
HELOC
3
11,525
22
11,503
10,566
1.3
1.2
Indirect Auto
42,981
58
42,923
41,012
4.5
4.5
Other
1,099
5
1,094
897
0.1
0.1
Credit card
20,123
288
19,835
19,596
2.1
2.1
Total personal
134,308
405
133,903
128,586
14.1
14.0
Real estate
Residential
 
13,727
10
13,717
11,956
1.4
1.2
Non-residential
 
28,152
25
28,127
28,514
2.9
3.0
Total real estate
41,879
35
41,844
40,470
4.3
4.2
Agriculture
1,182
–
1,182
1,173
0.1
0.1
Automotive
13,119
–
13,119
10,843
1.4
1.2
Financial
25,418
–
25,418
22,292
2.7
2.4
Food, beverage, and tobacco
4,584
1
4,583
4,396
0.5
0.5
Forestry
573
–
573
746
0.1
0.1
Government, public sector entities, and education
17,405
15
17,390
17,017
1.8
1.8
Health and social services
15,252
6
15,246
16,200
1.6
1.8
Industrial construction and trade contractors
2,555
4
2,551
2,413
0.3
0.3
Metals and mining
1,906
–
1,906
1,853
0.2
0.2
Oil and gas
1,586
5
1,581
1,594
0.2
0.2
Power and utilities
6,421
66
6,355
7,831
0.7
0.9
Professional and other services
18,434
24
18,410
17,518
1.9
1.9
Retail sector
6,199
8
6,191
6,318
0.6
0.7
Sundry manufacturing and wholesale
9,696
6
9,690
10,516
1.0
1.1
Telecommunications, cable, and media
7,748
45
7,703
9,175
0.8
1.0
Transportation
5,046
1
5,045
5,083
0.5
0.6
Other
 
4,104
6
4,098
2,746
0.4
0.3
Total business and government
183,107
222
182,885
178,184
19.1
19.3
Total United States
317,415
627
316,788
306,770
33.2
33.3
International
Personal
25
–
25
19
–
–
Business and government
10,138
65
10,073
10,024
1.1
1.1
Total international
10,163
65
10,098
10,043
1.1
1.1
Total excluding other loans
957,873
1,542
956,331
919,960
100.0
100.0
Other loans
Acquired credit-impaired loans
4
–
–
–
85
–
–
Total other loans
–
–
–
85
–
–
Total
$
957,873
$
1,542
$
956,331
$
920,045
100.0
%
100.0
%
Stage 1 and Stage 2 allowance for loan losses – performing
Personal, business and government
6,552
6,108
Total, net of allowance
$
949,779
$
913,937
Percentage change over previous year – loans and acceptances, net of Stage 3 allowance for loan
 
losses (impaired)
3.9
%
7.1
%
Percentage change over previous year – loans and acceptances, net of allowance
3.9
7.1
1
 
Primarily based on the geographic location of the customer’s address.
2
 
Includes loans that are measured at FVOCI.
3
 
Home equity line of credit.
4
 
Includes FDIC covered loans and other ACI loans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 44
TABLE 26: LOANS AND ACCEPTANCES, NET OF STAGE 3 ALLOWANCE FOR LOAN LOSSES
 
BY GEOGRAPHY
1,2
(millions of Canadian dollars, except
 
as noted)
 
As at
Percentage of total
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Stage 3
allowances for
loan losses
Gross loans
impaired
Net loans
Net loans
Canada
Atlantic provinces
$
14,500
$
18
$
14,482
$
13,662
1.5
%
1.5
%
British Columbia
3
103,107
63
103,044
96,010
10.8
10.4
Ontario
3
375,521
662
374,859
355,619
39.2
38.7
Prairies
3
84,753
72
84,681
88,417
8.8
9.6
Québec
52,414
35
52,379
49,439
5.5
5.4
Total Canada
630,295
850
629,445
603,147
65.8
65.6
United States
Carolinas (North and South)
17,943
21
17,922
17,983
1.9
2.0
Florida
27,841
49
27,792
26,709
2.9
2.9
New England
4
49,097
43
49,054
47,988
5.1
5.2
New Jersey
27,814
51
27,763
26,043
2.9
2.8
New York
 
59,422
95
59,327
56,821
6.2
6.2
Pennsylvania
17,513
18
17,495
18,731
1.8
2.0
Other
5
117,785
350
117,435
112,495
12.3
12.2
Total United States
317,415
627
316,788
306,770
33.1
33.3
International
Europe
5,506
65
5,441
5,843
0.6
0.6
Other
 
4,657
–
4,657
4,200
0.5
0.5
Total international
10,163
65
10,098
10,043
1.1
1.1
Total excluding other loans
957,873
1,542
956,331
919,960
100.0
100.0
Other loans
–
–
–
85
–
–
Total
 
$
957,873
$
1,542
$
956,331
$
920,045
100.0
%
100.0
%
Stage 1 and Stage 2 allowances
6,552
6,108
Total, net of allowance
$
949,779
$
913,937
Percentage change over previous year – loans and
 
acceptances,
net of Stage 3 allowances for loan losses (impaired)
2024
2023
Canada
4.4
%
6.5
%
United States
3.3
12.2
International
0.5
(46.4)
Other loans
(100.0)
(23.4)
Total
3.9
%
7.1
%
1
Primarily based on the geographic location of the customer’s address.
2
 
Includes loans that are measured at FVOCI.
3
 
The territories are included as follows: Yukon is included in British Columbia; Nunavut
 
is included in Ontario; and Northwest Territories
 
is included in the Prairies region.
4
 
The states included in New England are as follows: Connecticut, Maine, Massachusetts, New Hampshire, and Vermont.
5
 
Includes loans attributable to other states/regions including those outside TD’s core U.S. geographic
 
footprint.
REAL ESTATE SECURED LENDING
Retail real estate secured lending includes
 
mortgages and lines of credit to North American
 
consumers to satisfy financing needs including
 
home purchases and
refinancing. While the Bank retains first lien
 
on the majority of properties held as security, there is a small
 
portion of loans with second liens, but
 
most of these are
behind a TD mortgage that is in first
 
position. In Canada, credit policies are designed
 
so that the combined exposure of all uninsured
 
facilities on one property does
not exceed 80% of the collateral value at origination.
 
Lending at a higher loan-to-value ratio
 
is permitted by legislation but requires
 
default insurance. This
insurance is contractual coverage for the life
 
of eligible facilities and protects the
 
Bank’s real estate secured lending portfolio against
 
potential losses caused by
borrowers’ default. The Bank may also purchase
 
default insurance on lower loan-to-value
 
ratio loans. The insurance is provided
 
by either government-backed
entities or approved private mortgage insurers.
 
In the U.S., for residential mortgage originations,
 
mortgage insurance is usually obtained from either
 
government-
backed entities or approved private mortgage
 
insurers when the loan-to-value exceeds 80%
 
of the collateral value at origination.
The Bank regularly performs stress tests
 
on its real estate lending portfolio as part
 
of its overall stress testing program. This is
 
done with a view to determine the
extent to which the portfolio would be vulnerable
 
to a severe downturn in economic conditions.
 
The effect of severe changes in house prices,
 
interest rates, and
unemployment levels are among the factors
 
considered when assessing the impact
 
on credit losses and the Bank’s overall profitability. A variety
 
of portfolio
segments, including dwelling type and geographical
 
regions, are examined during the exercise
 
to determine whether specific vulnerabilities exist.
TABLE 27: CANADIAN REAL ESTATE
 
SECURED LENDING
1,2
(millions of Canadian dollars)
As at
Amortizing
Non-amortizing
Total
Residential
Home equity
Total amortizing real
Home equity
Mortgages
lines of credit
estate secured lending
lines of credit
October 31, 2024
Total
$
273,069
$
89,369
$
362,438
$
33,667
$
396,105
October 31, 2023
Total
$
263,733
$
86,943
$
350,676
$
30,675
$
381,351
1
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
 
designated at FVTPL for which no allowance is recorded.
2
 
Amortizing includes loans where the fixed contractual payments are no longer sufficient to cover the
 
interest based on the rates in effect at October 31, 2024
 
and October 31, 2023,
respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 45
TABLE 28: REAL ESTATE SECURED
 
LENDING
1,2
(millions of Canadian dollars, except as noted)
As at
Residential mortgages
Home equity lines of credit
Total
Insured
3
Uninsured
Insured
3
Uninsured
Insured
3
Uninsured
October 31, 2024
Canada
 
Atlantic provinces
$
2,445
0.9
%
$
4,753
1.7
%
$
158
0.1
%
$
2,207
1.8
%
$
2,603
0.7
%
$
6,960
1.8
%
British Columbia
4
8,311
3.0
48,362
17.7
804
0.7
22,840
18.6
9,115
2.3
71,202
18.0
Ontario
4
21,943
8.1
126,294
46.3
2,734
2.2
67,567
54.9
24,677
6.2
193,861
48.9
Prairies
4
17,685
6.5
22,120
8.1
1,499
1.2
12,459
10.1
19,184
4.8
34,579
8.7
Québec
6,616
2.4
14,540
5.3
509
0.4
12,259
10.0
7,125
1.8
26,799
6.8
Total Canada
57,000
20.9
%
216,069
79.1
%
5,704
4.6
%
117,332
95.4
%
62,704
15.8
%
333,401
84.2
%
United States
1,517
57,063
–
11,525
1,517
68,588
Total
$
58,517
$
273,132
$
5,704
$
128,857
$
64,221
$
401,989
October 31, 2023
Canada
 
Atlantic provinces
$
2,561
1.0
%
$
4,557
1.7
%
$
181
0.2
%
$
1,938
1.6
%
$
2,742
0.7
%
$
6,495
1.7
%
British Columbia
4
8,642
3.3
46,003
17.4
920
0.8
21,642
18.4
9,562
2.5
67,645
17.7
Ontario
4
22,559
8.6
118,882
45.1
3,126
2.7
64,095
54.4
25,685
6.8
182,977
48.1
Prairies
4
18,621
7.1
20,385
7.7
1,746
1.5
11,956
10.2
20,367
5.3
32,341
8.5
Québec
7,221
2.7
14,302
5.4
590
0.5
11,424
9.7
7,811
2.0
25,726
6.7
Total Canada
59,604
22.7
%
204,129
77.3
%
6,563
5.7
%
111,055
94.3
%
66,167
17.3
%
315,184
82.7
%
United States
1,439
55,169
–
10,591
1,439
65,760
Total
$
61,043
$
259,298
$
6,563
$
121,646
$
67,606
$
380,944
1
Geographic location is based on the address of the property mortgaged.
2
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
 
designated at FVTPL for which no allowance is recorded.
3
Default insurance is contractual coverage for the life of eligible facilities whereby the Bank’s exposure
 
to real estate secured lending, all or in part, is protected against potential losses
caused by borrower default. It is provided by either government-backed entities or other approved private mortgage
 
insurers.
4
The territories are included as follows: Yukon is included in British Columbia; Nunavut
 
is included in Ontario; and the Northwest Territories
 
is included in the Prairies region.
The following table provides a summary
 
of the period over which the Bank’s residential
 
mortgages would be fully repaid based on
 
the amount of the most recent
payment received. All figures are calculated
 
based on current customer payment amounts,
 
including voluntary payments larger than
 
the original contractual
amounts and/or other voluntary prepayments.
 
The most recent customer payment amount
 
may exceed the original contractual amount
 
due.
Balances with a remaining amortization longer
 
than 30 years primarily reflect Canadian
 
variable rate mortgages where prior interest rate
 
increases relative to
current customer payment levels have resulted
 
in a longer current amortization period.
 
At renewal, the amortization period for
 
Canadian mortgages reverts to the
remaining contractual amortization, which
 
may require increased payments.
 
TABLE 29: RESIDENTIAL MORTGAGES
 
BY REMAINING AMORTIZATION
1,2,3
As at
<=5
>5 – 10
>10 – 15
>15 – 20
>20 – 25
>25 – 30
>30 – 35
>35
years
years
years
years
years
years
years
years
Total
October 31, 2024
Canada
 
0.8
%
2.7
%
6.4
%
16.8
%
33.3
%
28.9
%
2.4
%
8.7
%
100.0
%
United States
2.3
1.3
3.4
7.6
14.2
70.2
0.5
0.5
100.0
Total
1.0
%
2.5
%
5.9
%
15.1
%
29.9
%
36.2
%
2.1
%
7.3
%
100.0
%
October 31, 2023
Canada
 
0.8
%
2.7
%
5.7
%
14.1
%
31.5
%
24.6
%
1.4
%
19.2
%
100.0
%
United States
5.3
1.4
3.8
7.8
10.6
69.5
1.1
0.5
100.0
Total
1.6
%
2.5
%
5.3
%
13.0
%
27.8
%
32.6
%
1.4
%
15.8
%
100.0
%
1.
 
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
 
designated at FVTPL for which no allowance is recorded.
2.
 
Percentage based on outstanding balance.
3.
 
$15.6 billion or 6% of the mortgage portfolio in Canada (October 31, 2023: $37.4 billion or 14%) relates to mortgages
 
in which the fixed contractual payments are no longer sufficient to
cover the interest based on the rates in effect at October 31, 2024 and October 31, 2023, respectively.
TABLE 30: UNINSURED AVERAGE
 
LOAN-TO-VALUE – Newly Originated and Newly
 
Acquired
1,2,3
For the 12 months ended
October 31, 2024
October 31, 2023
Residential
Home equity
Residential
Home equity
mortgages
lines of credit
4,5
Total
mortgages
lines of credit
4,5
Total
Canada
 
Atlantic provinces
69
%
67
%
68
%
70
%
68
%
69
%
British Columbia
6
66
61
64
66
61
64
Ontario
6
67
61
64
66
61
64
Prairies
6
73
69
71
73
70
72
Québec
69
68
69
69
69
69
Total Canada
68
63
66
67
63
65
United States
73
61
68
74
62
71
Total
69
%
63
%
66
%
68
%
63
%
66
%
1
Geographic location is based on the address of the property mortgaged.
2
Excludes loans classified as trading as the Bank intends to sell the loans immediately or in the near term, and loans
 
designated at FVTPL for which no allowance is recorded.
3
Based on house price at origination.
4
HELOC loan-to-value includes first position collateral mortgage if applicable.
5
HELOC fixed rate advantage option is included in loan-to-value calculation.
6
The territories are included as follows: Yukon is included in British Columbia; Nunavut
 
is included in Ontario; and the Northwest Territories
 
is included in the Prairies region.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 46
SOVEREIGN RISK
The following table provides a summary
 
of the Bank’s direct credit exposures outside
 
of Canada and the U.S. (Europe excludes
 
United Kingdom).
 
TABLE 31: TOTAL NET EXPOSURE BY
 
REGION AND COUNTERPARTY
(millions of Canadian dollars)
As at
 
Loans and commitments
1
Derivatives, repos, and securities lending
2
Trading and investment portfolio
3
Total
 
Corporate
 
Sovereign
 
Financial
 
Total
 
Corporate
 
Sovereign
 
Financial
 
Total
 
Corporate
 
Sovereign
 
Financial
 
Total
 
Exposure
4
October 31, 2024
Region
Europe
$
8,490
$
8
$
5,050
$
13,548
$
4,847
$
2,117
$
8,145
$
15,109
$
1,157
$
24,124
$
2,660
$
27,941
$
56,598
United Kingdom
8,462
3,124
2,661
14,247
3,490
1,172
13,536
18,198
866
1,691
1,104
3,661
36,106
Asia
241
30
2,412
2,683
519
533
2,739
3,791
290
10,486
893
11,669
18,143
Other
5
209
–
598
807
370
416
2,481
3,267
218
1,012
3,187
4,417
8,491
Total
$
17,402
$
3,162
$
10,721
$
31,285
$
9,226
$
4,238
$
26,901
$
40,365
$
2,531
$
37,313
$
7,844
$
47,688
$
119,338
October 31, 2023
Region
Europe
$
7,577
$
7
$
5,324
$
12,908
$
3,763
$
1,945
$
6,736
$
12,444
$
777
$
25,015
$
2,001
$
27,793
$
53,145
United Kingdom
8,928
7,965
2,131
19,024
2,759
490
13,431
16,680
491
596
257
1,344
37,048
Asia
254
20
2,167
2,441
262
706
2,640
3,608
325
10,728
830
11,883
17,932
Other
5
233
8
517
758
233
720
2,883
3,836
209
1,205
3,443
4,857
9,451
Total
$
16,992
$
8,000
$
10,139
$
35,131
$
7,017
$
3,861
$
25,690
$
36,568
$
1,802
$
37,544
$
6,531
$
45,877
$
117,576
1
 
Exposures, including interest-bearing deposits with banks, are presented net of impairment charges where applicable.
2
 
Exposures are calculated on a fair value basis and presented net of collateral. Derivatives are presented as net
 
exposures where there is an International Swaps and Derivatives
Association master netting agreement.
3
 
Trading exposures are net of eligible short positions.
 
4
 
In addition to the exposures identified above, the Bank also has $35.5 billion (October 31, 2023 – $40.8 billion)
 
of exposure to supranational entities.
5
 
Other regional exposure largely attributable to Australia.
IMPAIRED LOANS
A loan is considered impaired and migrates
 
to Stage 3 when it is 90 days or more past due
 
for retail exposures, rated borrower
 
risk rating (BRR) 9 for non-retail
exposures, or when there is objective evidence
 
that there has been a deterioration of credit
 
quality to the extent that the Bank no longer has
 
reasonable assurance
as to the timely collection of the full amount
 
of principal and interest. Gross impaired loans
 
excluding ACI loans increased $1,650 million,
 
or 50%, compared with
the prior year.
In Canada, impaired loans net of Stage 3 allowances
 
increased by $352 million, or 45% in 2024.
 
Residential mortgages, consumer instalment and
 
other
personal loans, and credit cards, had net
 
impaired loans of $512 million, an increase
 
of $136 million, or 36%, compared
 
with the prior year, reflecting credit
migration. Business and government impaired
 
loans net of Stage 3 allowances were $622
 
million, an increase of $216 million, compared
 
with $406 million in the
prior year, reflecting an increase in the commercial and Wholesale
 
lending portfolios as new formations
 
outpaced resolutions.
 
In the U.S., impaired loans net of Stage 3
 
allowances increased by $753 million, or 50%
 
in 2024. Residential mortgages, consumer
 
instalment and other
personal loans, and credit cards, had net
 
impaired loans of $1,118 million, an increase of $133 million, or
 
14%, compared with the prior year, reflecting credit
migration. Business and government net impaired
 
loans were $1,130 million, an increase
 
of $620 million, compared with $510
 
million in the prior year, reflecting an
increase in the commercial lending portfolios
 
as new formations outpaced resolutions,
 
and the impact of foreign exchange.
Geographically, 33% of total net impaired loans were located in
 
Canada and 66% in the U.S. The largest
 
regional concentration of net impaired loans in
 
Canada
was in Ontario, representing 24% of total
 
net impaired loans, compared with 23% in
 
the prior year. The largest regional concentration of net impaired
 
loans in the
U.S. was in New York, representing 23% of total net impaired loans,
 
compared with 21% in the prior year.
TABLE 32: CHANGES IN GROSS IMPAIRED
 
LOANS AND ACCEPTANCES
1,2,3
(millions of Canadian dollars)
2024
2023
Personal, Business and Government Loans
Impaired loans as at beginning of period
$
3,299
$
2,503
Classified as impaired during the period
8,655
5,885
Transferred to performing during the period
(1,094)
(931)
Net repayments
(1,801)
(1,351)
Disposals of loans
(158)
–
Amounts written off
(3,984)
(2,846)
Exchange and other movements
32
39
Impaired loans as at end of year
$
4,949
$
3,299
1
 
Includes customers’
 
liability under acceptances.
2
 
Excludes ACI loans.
 
3
 
Includes loans that are measured at FVOCI.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 47
TABLE 33: IMPAIRED LOANS NET OF
 
STAGE 3 ALLOWANCE FOR
 
LOAN LOSSES BY INDUSTRY
 
SECTOR
1,2,3,4
(millions of Canadian dollars, except as noted)
As at
Percentage of total
Oct. 31
Oct. 31
Oct. 31
Oct. 31
2024
2023
2024
2023
Stage 3
Gross
allowances for
Net
Net
impaired
loan losses
impaired
impaired
loans
impaired
loans
loans
Canada
Residential mortgages
$
275
$
28
$
247
$
162
7.2
%
7.1
%
Consumer instalment and other
personal
HELOC
185
31
154
117
4.5
5.1
Indirect auto
132
98
34
30
1.0
1.4
Other
72
48
24
21
0.7
0.9
Credit card
5
143
90
53
46
1.6
2.0
Total personal
807
295
512
376
15.0
16.5
Real estate
Residential
 
53
7
46
6
1.4
0.3
Non-residential
 
100
25
75
62
2.2
2.7
Total real estate
153
32
121
68
3.6
3.0
Agriculture
56
7
49
13
1.5
0.5
Automotive
160
84
76
14
2.2
0.6
Financial
47
36
11
3
0.3
0.1
Food, beverage, and tobacco
126
96
30
19
0.9
0.8
Forestry
11
4
7
2
0.2
0.1
Government, public sector entities,
and education
12
8
4
4
0.1
0.2
Health and social services
138
58
80
102
2.4
4.5
Industrial construction and trade
contractors
43
16
27
12
0.8
0.5
Metals and mining
22
14
8
15
0.2
0.7
Oil and gas
11
11
–
1
–
–
Power and utilities
–
–
–
–
–
–
Professional and other services
74
43
31
24
0.9
1.1
Retail sector
144
66
78
61
2.3
2.7
Sundry manufacturing and wholesale
100
37
63
14
1.8
0.6
Telecommunications, cable, and
media
10
6
4
13
0.1
0.6
Transportation
45
25
20
16
0.6
0.7
Other
 
25
12
13
25
0.4
1.1
Total business and government
1,177
555
622
406
18.3
17.8
Total Canada
1,984
850
1,134
782
33.3
34.3
United States
Residential mortgages
490
32
458
399
13.5
17.5
Consumer instalment and other
personal
HELOC
282
22
260
213
7.6
9.4
Indirect auto
309
58
251
215
7.4
9.4
Other
10
5
5
2
0.1
0.1
Credit card
5
432
288
144
156
4.2
6.9
Total personal
1,523
405
1,118
985
32.8
43.3
Real estate
Residential
 
201
10
191
79
5.6
3.5
Non-residential
 
409
25
384
203
11.3
8.9
Total real estate
610
35
575
282
16.9
12.4
Agriculture
2
–
2
3
0.1
0.1
Automotive
4
–
4
3
0.1
0.1
Financial
1
–
1
1
–
–
Food, beverage, and tobacco
11
1
10
3
0.3
0.1
Forestry
–
–
–
–
–
–
Government, public sector entities,
and education
62
15
47
2
1.4
0.1
Health and social services
55
6
49
35
1.4
1.6
Industrial construction and trade
contractors
38
4
34
18
1.0
0.8
Metals and mining
2
–
2
–
0.1
–
Oil and gas
4
4
–
1
–
–
Power and utilities
98
67
31
–
0.9
–
Professional and other services
165
24
141
52
4.1
2.3
Retail sector
54
8
46
27
1.3
1.2
Sundry manufacturing and wholesale
48
6
42
48
1.2
2.1
Telecommunications, cable, and
media
150
45
105
18
3.1
0.8
Transportation
13
1
12
6
0.4
0.3
Other
 
35
6
29
11
0.9
0.5
Total business and government
1,352
222
1,130
510
33.2
22.4
Total United States
2,875
627
2,248
1,495
66.0
65.7
International
90
65
25
–
0.7
–
Total
$
4,949
$
1,542
$
3,407
$
2,277
100.0
%
100.0
%
Net impaired loans as a % of common equity
3.27
%
2.25
%
1
Includes customers’ liability under acceptances.
2
Primarily based on the geographic location of the customer’s address.
3
 
Includes loans that are measured at FVOCI.
4
 
Excludes ACI loans, debt securities classified as loans under IAS 39
, Financial Instruments: Recognition and Measurement
 
and DSAC and debt securities at FVOCI under IFRS 9.
5
 
Credit cards are considered impaired when they are 90 days past due and written off at 180 days past due.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 48
TABLE 34: IMPAIRED LOANS NET OF STAGE 3
ALLOWANCE FOR LOAN LOSSES BY GEOGRAPHY
1,2,3,4,5
(millions of Canadian dollars, except as noted)
As at
 
Percentage of total
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Stage 3
Gross
allowances for
Net
Net
impaired
loan losses
impaired
impaired
loans
impaired
loans
loans
Canada
Atlantic provinces
$
39
$
18
$
21
$
22
0.6
%
1.0
%
British Columbia
6
193
63
130
59
3.8
2.5
Ontario
6
1,463
662
801
533
23.5
23.4
Prairies
6
208
72
136
128
4.0
5.6
Québec
81
35
46
40
1.4
1.8
Total Canada
1,984
850
1,134
782
33.3
34.3
United States
Carolinas (North and South)
122
21
101
74
3.0
3.2
Florida
291
49
242
206
7.1
9.1
New England
7
275
43
232
177
6.8
7.8
New Jersey
311
51
260
150
7.6
6.6
New York
 
865
95
770
486
22.6
21.3
Pennsylvania
141
18
123
56
3.6
2.5
Other
870
350
520
346
15.3
15.2
Total United States
2,875
627
2,248
1,495
66.0
65.7
Total International
90
65
25
–
0.7
–
Total
$
4,949
$
1,542
$
3,407
$
2,277
100.0
%
100.0
%
Net impaired loans as a % of net loans
0.36
%
0.25
%
1
 
Includes customers’
 
liability under acceptances.
2
 
Primarily based on the geographic location of the customer’s address.
3
 
Includes loans that are measured at FVOCI.
 
4
 
Excludes ACI loans.
 
5
Credit cards are considered impaired when they are 90 days past due and written off at 180 days past
 
due.
6
 
The territories are included as follows: Yukon is included in British Columbia; Nunavut
 
is included in Ontario; and the Northwest Territories
 
is included in the Prairies region.
7
 
The states included in New England are as follows: Connecticut, Maine, Massachusetts, New Hampshire, and Vermont.
 
ALLOWANCE FOR CREDIT LOSSES
 
The allowance for credit losses including
 
off-balance sheet positions of $9,141 million as
 
at October 31, 2024, was comprised of Stage
 
3 allowance for impaired
loans of $1,553 million, Stage 2 allowance of
 
$4,675 million, and Stage 1 allowance
 
of $2,909 million, and allowance for debt
 
securities of $4 million. The Stage 1
and 2 allowances are for performing loans and
 
off-balance sheet instruments.
Stage 3 allowances (impaired)
The Stage 3 allowance for loan losses increased
 
$517 million, or 50%, compared
 
with last year, largely reflected in the Business and Government
 
lending
portfolios, and the impact of foreign exchange.
Stage 1 and Stage 2 allowances (performing)
As at October 31, 2024, the performing allowance
 
was $7,584 million, up from $7,149 million
 
as at October 31, 2023. The increase this year
 
largely reflected credit
conditions, including credit migration, volume
 
growth, and the impact of foreign exchange.
 
The allowance increase included $12 million
 
attributable to the partners’
share of the U.S. strategic cards portfolios.
 
The performing allowance for debt securities
 
is flat compared with last year.
Forward-looking information, including
 
macroeconomic variables deemed to be
 
predictive of ECLs based on the Bank’s experience,
 
is used to determine ECL
scenarios and associated probability weights
 
to determine the probability-weighted ECLs.
 
Each quarter, all base forecast macroeconomic variables
 
are refreshed,
resulting in new upside and downside
 
macroeconomic scenarios. The probability
 
weightings assigned to each ECL scenario
 
are also reviewed each quarter and
updated as required, as part of the Bank’s ECL governance
 
process. As a result of periodic reviews
 
and quarterly updates, the allowance
 
for credit losses may be
revised to reflect updates in loss estimates
 
based on the Bank’s recent loss experience and
 
its forward-looking views. The Bank
 
periodically reviews the
methodology and has performed certain additional
 
quantitative and qualitative portfolio and
 
loan level assessments of significant increase
 
in credit risk. Refer to
Note 3 of the Bank’s 2024 Consolidated Financial
 
Statements for further details on forward-looking
 
information.
 
The probability-weighted allowance for
 
credit losses reflects the Bank’s forward-looking
 
views. To the extent that certain anticipated effects cannot be fully
incorporated into quantitative models, management
 
continues to exercise expert credit judgment
 
in determining the amount of ECLs.
 
Refer to Note 3 of the Bank’s
2024 Consolidated Financial Statements
 
for additional detail.
PROVISION FOR CREDIT
 
LOSSES
The PCL is the amount charged to income
 
to bring the total allowance for credit
 
losses, including both Stage 1 and 2 allowances
 
(performing) and Stage 3
allowance (impaired), to a level that management
 
considers adequate to absorb expected and
 
incurred credit-related losses in
 
the Bank’s loan portfolio. Provisions
are reduced by any recoveries in the year.
In Canada, PCL – impaired related to residential
 
mortgages, consumer instalment and other personal
 
loans, and credit card loans was $1,158
 
million, an
increase of $347 million, or 43%, compared
 
to 2023 reflecting credit migration. PCL –
 
impaired related to business and government
 
loans was $445 million, an
increase of $246 million, compared to $199
 
million in the prior year, reflecting credit migration.
In the U.S., PCL – impaired related to residential
 
mortgages, consumer instalment and other personal
 
loans, and credit card loans was $1,712
 
million, an
increase of $433 million, or 34%, compared
 
to 2023, reflecting credit migration
 
and the impact of foreign exchange. PCL – impaired
 
related to business and
government loans was $457 million, an increase
 
of $260 million, compared to $197
 
million in the prior year, largely reflecting credit migration and
 
the impact of
foreign exchange.
Geographically, the largest regional concentration of PCL – impaired
 
in Canada was in Ontario. The largest
 
regional concentration of PCL – impaired in
 
the U.S.
was in New York.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 49
The following table provides a summary
 
of provisions charged to the Consolidated
 
Statement of Income.
 
TABLE 35: PROVISION FOR CREDIT LOSSES
1
(millions of Canadian dollars)
2024
2023
Provision for credit losses – Stage 3 (impaired)
Canadian Personal and Commercial
 
Banking
$
1,555
$
1,013
U.S. Retail
1,437
965
Wealth Management and Insurance
–
1
Wholesale Banking
247
16
Corporate
2
638
491
Total provision for credit losses – Stage 3
 
3,877
2,486
Provision for credit losses – Stage 1 and
 
Stage 2 (performing)
Canadian Personal and Commercial
 
Banking
200
330
U.S. Retail
95
(37)
Wealth Management and Insurance
–
–
Wholesale Banking
70
110
Corporate
2
11
44
Total provision for credit losses – Stage 1 and
 
2
 
376
447
Provision for credit losses
 
$
4,253
$
2,933
1
 
Includes PCL for off-balance sheet instruments.
2
 
Includes PCL on the retailer program partners’
 
share of the U.S. strategic cards portfolio.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 50
TABLE 36: PROVISION FOR CREDIT LOSSES
 
BY INDUSTRY SECTOR
1,2
(millions of Canadian dollars, except as noted)
For the years ended
Percentage of total
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Stage 3 provision for credit losses (impaired)
Canada
Residential mortgages
$
9
$
9
0.2
%
0.4
%
Consumer instalment and other personal
HELOC
7
8
0.2
0.3
Indirect auto
396
227
10.2
9.1
Other
244
188
6.3
7.6
Credit card
502
379
12.9
15.2
Total personal
1,158
811
29.8
32.6
Real estate
Residential
2
1
–
–
Non-residential
19
12
0.5
0.5
Total real estate
21
13
0.5
0.5
Agriculture
7
1
0.2
–
Automotive
69
14
1.8
0.6
Financial
37
–
1.0
–
Food, beverage, and tobacco
81
16
2.1
0.6
Forestry
3
–
0.1
–
Government, public sector entities, and education
–
–
–
–
Health and social services
18
40
0.4
1.6
Industrial construction and trade contractors
24
14
0.6
0.6
Metals and mining
4
–
0.1
–
Oil and gas
–
(1)
–
–
Power and utilities
–
–
–
–
Professional and other services
30
19
0.8
0.8
Retail sector
44
11
1.1
0.4
Sundry manufacturing and wholesale
63
8
1.6
0.3
Telecommunications, cable, and media
3
4
0.1
0.2
Transportation
31
5
0.8
0.2
Other
 
10
55
0.3
2.2
Total business and government
445
199
11.5
8.0
Total Canada
1,603
1,010
41.3
40.6
United States
Residential mortgages
(2)
(2)
(0.1)
(0.1)
Consumer instalment and other personal
HELOC
3
(2)
0.1
(0.1)
Indirect auto
355
205
9.2
8.2
Other
233
222
6.0
9.0
Credit card
1,123
856
29.0
34.4
Total personal
1,712
1,279
44.2
51.4
Real estate
Residential
 
13
2
0.3
0.1
Non-residential
 
89
80
2.3
3.2
Total real estate
102
82
2.6
3.3
Agriculture
1
–
–
–
Automotive
4
3
0.1
0.1
Financial
1
(2)
–
(0.1)
Food, beverage, and tobacco
10
–
0.3
–
Government, public sector entities, and education
17
–
0.5
–
Health and social services
6
5
0.2
0.2
Industrial construction and trade contractors
18
5
0.5
0.2
Metals and mining
–
(1)
–
–
Oil and gas
–
–
–
–
Power and utilities
65
–
1.7
–
Professional and other services
47
16
1.2
0.6
Retail sector
29
9
0.7
0.4
Sundry manufacturing and wholesale
39
36
1.0
1.5
Telecommunications, cable, and media
53
16
1.4
0.6
Transportation
9
4
0.2
0.2
Other
 
56
24
1.4
1.0
Total business and government
457
197
11.8
8.0
Total United States
2,169
1,476
56.0
59.4
International
105
–
2.7
–
Total excluding other loans
3,877
2,486
100.0
100.0
Other loans
Debt securities at amortized cost and FVOCI
–
–
–
–
Acquired credit-impaired loans
3
–
–
–
–
Total other loans
–
–
–
–
Total Stage 3 provision for credit losses (impaired)
$
3,877
$
2,486
100.0
%
100.0
%
Stage 1 and 2 provision for credit losses
Personal, business, and government
$
376
$
447
Debt securities at amortized cost and FVOCI
–
–
Total Stage 1 and 2 provision for credit losses
376
447
Total provision for credit losses
$
4,253
$
2,933
1
Primarily based on the geographic location of the customer’s address.
2
Includes loans that are measured at FVOCI.
3
 
Includes all FDIC covered loans and other ACI loans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 51
TABLE 37: PROVISION FOR CREDIT LOSSES
 
BY GEOGRAPHY
1,2,3
(millions of Canadian dollars, except
 
as noted)
For the years ended
Percentage of total
October 31
October 31
October 31
October 31
2024
2023
2024
2023
Canada
Atlantic provinces
$
63
$
49
1.5
%
1.7
%
British Columbia
4
186
116
4.4
4.0
Ontario
4
938
551
22.0
18.8
Prairies
4
276
203
6.5
6.9
Québec
140
91
3.3
3.1
Total Canada
1,603
1,010
37.7
34.5
United States
Carolinas (North and South)
93
68
2.2
2.3
Florida
242
173
5.7
5.9
New England
5
186
135
4.4
4.6
New Jersey
158
109
3.7
3.7
New York
328
262
7.7
9.0
Pennsylvania
79
53
1.8
1.8
Other
6
1,083
676
25.5
23.0
Total United States
2,169
1,476
51.0
50.3
International
105
–
2.5
–
Total excluding other loans
3,877
2,486
91.2
84.8
Other loans
7
–
–
–
–
Total Stage 3 provision for credit losses (impaired)
3,877
2,486
91.2
84.8
Stage 1 and 2 provision for credit losses
376
447
8.8
15.2
Total provision for credit losses
$
4,253
$
2,933
100.0
%
100.0
%
Provision for credit losses as a % of average
 
October 31
October 31
net loans and acceptances
6
2024
2023
Canada
Residential mortgages
–
%
–
%
Credit card, consumer instalment and other personal
0.62
0.46
Business and government
0.25
0.12
Total Canada
0.25
0.17
United States
Residential mortgages
–
–
Credit card, consumer instalment and other personal
2.43
1.96
Business and government
0.28
0.13
Total United States
0.75
0.54
International
2.49
–
Total excluding other loans
0.42
0.28
Other loans
–
–
Total Stage 3 provision for credit losses (impaired)
0.42
0.28
Stage 1 and 2 provision for credit losses
0.04
0.05
Total provision for credit losses as a % of average net loans
 
and acceptances
0.46
%
0.34
%
1
 
Primarily based on the geographic location of the customer’s address.
2
 
Includes loans that are measured at FVOCI.
3
 
Includes customers’
 
liability under acceptances.
4
 
The territories are included as follows: Yukon is included in British Columbia; Nunavut
 
is included in Ontario; and Northwest Territories
 
is included in the Prairies region.
5
 
The states included in New England are as follows: Connecticut, Maine, Massachusetts, New Hampshire, and Vermont.
 
6
 
Includes PCL attributable to other states/regions including those outside TD’s core U.S. geographic
 
footprint.
 
7
 
Other loans include ACI.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 52
GROUP FINANCIAL CONDITION
Capital Position
TABLE 38: CAPITAL STRUCTURE
 
AND RATIOS – Basel III
(millions of Canadian dollars, except
 
as noted)
2024
2023
Common Equity Tier 1 Capital
Common shares plus related contributed
 
surplus
 
$
25,543
$
25,522
Retained earnings
 
70,826
73,044
Accumulated other comprehensive income
 
7,904
2,750
Common Equity Tier 1 Capital before
 
regulatory adjustments
 
104,273
101,316
Common Equity Tier 1 Capital regulatory adjustments
 
Goodwill (net of related tax liability)
(18,645)
(18,424)
Intangibles (net of related tax liability)
 
(2,921)
(2,606)
Deferred tax assets excluding those arising
 
from temporary differences
 
(212)
(207)
Cash flow hedge reserve
 
3,015
5,571
Shortfall of provisions to expected losses
 
–
–
Gains and losses due to changes in own
 
credit risk on fair valued liabilities
 
(193)
(379)
Defined benefit pension fund net assets (net
 
of related tax liability)
 
(731)
(908)
Investment in own shares
 
(21)
(21)
Non-significant investments in the capital of
 
banking, financial, and insurance entities,
 
net of eligible
short positions (amount above 10% threshold)
(1,835)
(1,976)
Significant investments in the common
 
stock of banking, financial, and insurance
 
entities
that are outside the scope of regulatory
 
consolidation, net of eligible short positions
(amount above 10% threshold)
–
–
Equity investments in funds subject to
 
the fall-back approach
(32)
(49)
Other deductions or regulatory adjustments
 
to CET1 as determined by OSFI
16
–
Total regulatory adjustments to Common
 
Equity Tier 1 Capital
(21,559)
(18,999)
Common Equity Tier 1 Capital
82,714
82,317
 
Additional Tier 1 Capital instruments
Directly issued qualifying
 
Additional Tier 1 instruments plus stock
 
surplus
10,887
10,791
Additional Tier 1 Capital instruments before
 
regulatory adjustments
10,887
10,791
 
Additional Tier 1 Capital instruments
 
regulatory adjustments
Non-significant investments in the capital of
 
banking, financial, and insurance entities,
 
net of eligible
short positions (amount above 10% threshold)
(3)
(6)
Significant investments in the capital of banking,
 
financial, and insurance entities that are
 
outside
 
the scope of regulatory consolidation, net of
 
eligible short positions
(350)
(350)
Total regulatory adjustments to
 
Additional Tier 1 Capital
(353)
(356)
Additional Tier 1 Capital
10,534
10,435
Tier 1 Capital
93,248
92,752
 
Tier 2 Capital instruments and provisions
Directly issued qualifying Tier 2 instruments
 
plus related stock surplus
11,273
9,424
Collective allowances
1,512
1,964
Tier 2 Capital before regulatory adjustments
12,785
11,388
Tier 2 regulatory adjustments
Investment in own Tier 2 instruments
–
–
Non-significant investments in the capital of
 
banking, financial, and insurance entities,
 
net of eligible
short positions (amount above 10% threshold)
1
(224)
(196)
Non-significant investments in the other
 
TLAC-eligible instruments issued by G-SIBs
 
and Canadian
D-SIBs, where the institution does not own more
 
than 10% of the issued common share
 
capital
of the entity: amount previously designated
 
for the 5% threshold but that no longer meets
 
the
conditions
(64)
(136)
Significant investments in the capital of banking,
 
financial, and insurance entities that are
 
outside
 
the scope of regulatory consolidation, net of
 
eligible short positions
 
–
(160)
Total regulatory adjustments to Tier
 
2 Capital
(288)
(492)
Tier 2 Capital
12,497
10,896
Total Capital
$
105,745
$
103,648
Risk-weighted assets
$
630,900
$
571,161
Capital Ratios and Multiples
Common Equity Tier 1 Capital (as percentage
 
of risk-weighted assets)
13.1
%
14.4
%
Tier 1 Capital (as percentage of risk-weighted assets)
14.8
16.2
Total Capital (as percentage of risk-weighted
 
assets)
16.8
18.1
Leverage ratio
2
4.2
4.4
1
Includes other TLAC-eligible instruments issued by global systemically important banks (G-SIBs) and
 
Canadian domestic systemically important banks (D-SIBs) that are outside the
scope of regulatory consolidation, where the institution does not own more than 10% of the issued common share
 
capital of the entity.
 
2
The Leverage ratio is calculated as Tier 1 Capital divided by leverage exposure, as defined
 
in the “Regulatory Capital” section of this document.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 53
THE BANK’S CAPITAL MANAGEMENT OBJECTIVES
The Bank’s capital management objectives are:
●
 
To maintain an adequate level of capital based on the Bank’s risk profile
 
as determined by:
–
 
the Bank’s Risk Appetite Statement (RAS);
–
 
capital requirements defined by relevant
 
regulatory authorities; and
–
 
the Bank’s internal assessment of capital requirements,
 
including stress test analysis, consistent
 
with the Bank’s risk profile and risk tolerance levels.
●
 
Manage capital levels, in order to:
–
 
insulate the Bank from unexpected loss events;
–
 
maintain stakeholder confidence in the Bank;
–
 
establish that the Bank has adequate capital
 
under a severe but plausible stress event;
 
and
 
–
 
support and facilitate business growth and/or
 
strategic deployment consistent with the
 
Bank’s strategy and risk appetite.
●
 
To have the most economic weighted-average cost of capital achievable, while
 
preserving the appropriate mix of
 
capital elements to meet targeted
capitalization levels.
●
 
To support strong external debt ratings, in order to manage the Bank’s overall cost
 
of funds and to maintain access to required
 
funding (in the event of
unexpected loss or business growth).
●
 
To maintain a robust capital planning process and framework to support capital
 
funding decisions such as issuances, redemptions
 
and distributions which in
turn support the Bank’s capital adequacy.
These objectives are applied in a manner
 
consistent with the Bank’s overall objective of providing
 
a satisfactory return on shareholders’
 
equity.
CAPITAL SOURCES
The Bank’s capital is primarily derived from common
 
shareholders and retained earnings. Other
 
sources of capital include the Bank’s preferred
 
shareholders,
limited recourse capital noteholders,
 
perpetual subordinated capital noteholders,
 
and holders of the Bank’s subordinated debt.
CAPITAL MANAGEMENT
The Treasury and Balance Sheet Management (TBSM)
 
group manages capital for the Bank and
 
is responsible for forecasting and
 
monitoring compliance with
capital targets, recommending capital
 
management actions, managing the internal
 
capital adequacy assessment process (ICAAP),
 
and developing and
maintaining capital management policies. Oversight
 
of capital management is provided by Risk
 
Management and the Asset/Liability and Capital
 
Committee
(ALCO). The Board of Directors (the Board)
 
is ultimately responsible for oversight
 
of capital adequacy risk management.
The Bank continues to hold sufficient capital levels
 
to provide flexibility to support organic growth
 
and strategic priorities.
 
Strong capital ratios are the result of
the Bank’s internal capital generation,
 
management of the balance sheet, and periodic
 
issuance of capital securities.
ECONOMIC CAPITAL
 
Economic capital,
 
an internal measure of capital requirements,
 
is a key component of the Bank’s internal assessment
 
of capital adequacy. The Economic capital
framework requires assessment of all
 
material risks to the Bank and determination
 
of the amount of risk-based capital required
 
to cover unexpected losses from
the Bank’s business operations in a manner consistent
 
with the Bank’s capital management objectives.
 
The internal models used to perform this
 
assessment are
described in the “Managing Risk” section of
 
this document.
 
The Bank operates its capital regime under
 
the Basel Capital Framework. Consequently, in addition to addressing
 
Pillar 1 risks covering credit risk, market
 
risk,
and operational risk, the Bank’s economic
 
capital framework captures other material
 
Pillar 2 risks including non-trading
 
market risk (interest rate risk in the banking
book), additional credit risk due to concentration
 
(commercial and wholesale portfolios),
 
and “Other risks”, such as business
 
risk, insurance risk, and risks
associated with significant investments.
 
The framework also captures diversification
 
benefits across risk types and business
 
segments.
Please refer to the “Economic Capital and
 
Risk-Weighted Assets by Segment”
 
section for a business segment breakdown
 
of the Bank’s economic capital.
REGULATORY CAPITAL
Capital requirements established by the Basel
 
Committee on Banking Supervision (BCBS)
 
are commonly referred to as Basel
 
III. Under Basel III, Total Capital
consists of three components, namely CET1,
 
Additional Tier 1, and Tier 2 Capital. Risk sensitive regulatory
 
capital ratios are calculated by dividing
 
CET1, Tier 1,
and Total Capital by risk-weighted assets
(RWA), inclusive of any minimum requirements outlined
 
under the regulatory floor. Basel III also introduced a non-risk
sensitive leverage ratio to act as a supplementary
 
measure to the risk-sensitive capital requirements.
 
The leverage ratio is calculated by dividing
 
Tier 1 Capital by
leverage exposure which is primarily comprised
 
of on-balance sheet assets with adjustments
 
made to derivative and securities financing
 
transaction exposures,
and credit equivalent amounts of off-balance sheet
 
exposures. TD manages its regulatory capital
 
in accordance with OSFI’s implementation of
 
the Basel III Capital
Framework.
OSFI’s Capital Requirements under Basel
 
III
OSFI’s CAR and LR guidelines detail how
 
the Basel III capital rules apply to Canadian
 
banks.
 
 
The Domestic Stability Buffer (DSB) level increased
 
from 3% to 3.5% as of November 1, 2023.
 
The 50 bps increase reflects OSFI’s view of
 
appropriate actions to
enhance the resilience of Canada’s largest banks.
 
Currently, the DSB can range from 0 to 4%, with the effective level
 
adjusted by OSFI in response to
developments in Canada’s financial system and
 
the broader economy.
 
On February 1, 2023, OSFI implemented revised
 
capital rules that incorporate the Basel III reforms
 
with adjustments to make them suitable
 
for domestic
implementation. These revised rules
 
include changes to the calculation of credit risk
 
and operational risk requirements, and
 
amendments to the LR Guideline to
include a requirement for domestic systemically
 
important banks (D-SIBs) to hold a
 
leverage ratio buffer of 0.50% in addition
 
to the regulatory minimum
requirement of 3.0%. The LR buffer requirement also
 
applies to the TLAC leverage ratio. On
 
November 1, 2023, OSFI implemented
 
the second and final phase of
the Basel III reforms relating to the calculation
 
of credit valuation adjustment (CVA) and market risk RWA requirements. In addition,
 
effective November 1, 2023,
the regulatory capital floor transitioned
 
to 67.5% of RWA for fiscal 2024 from 65% of RWA in fiscal 2023.
On November 1, 2023, the Bank implemented
 
OSFI’s Parental Stand-Alone (Solo)
 
Total Loss Absorbing Capacity
 
(TLAC) Framework for D-SIBs, which
establishes a risk-based measure intended
 
to ensure that a non-viable D-SIB has sufficient loss
 
absorbing capacity on a stand-alone, legal
 
entity basis to support
its resolution. The Bank is compliant
 
with the requirements set out in this framework.
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 54
The table below summarizes OSFI’s published
 
regulatory minimum capital targets
 
for the Bank as at October 31, 2024.
 
REGULATORY CAPITAL
 
AND TLAC TARGET RATIOS
Capital
 
Pillar 1
Pillar 1 & 2
Conservation
 
D-SIB / G-SIB
Regulatory
Regulatory
Minimum
Buffer
Surcharge
1
Target
2
DSB
Target
CET1
4.5
%
2.5
%
1.0
%
8.0
%
3.5
%
11.5
%
Tier 1
6.0
2.5
1.0
9.5
3.5
13.0
Total Capital
8.0
2.5
1.0
11.5
3.5
15.0
Leverage
3.0
n/a
3
0.5
3.5
n/a
3.5
TLAC
18.0
2.5
1.0
21.5
3.5
25.0
TLAC Leverage
6.75
n/a
0.50
7.25
n/a
7.25
1
 
The higher of the D-SIB and G-SIB surcharge applies to risk weighted capital. The D-SIB surcharge is currently equivalent
 
to the Bank’s 1% G-SIB additional common equity requirement
for risk weighted capital. The G-SIB surcharge may increase above 1% if the Bank’s
 
G-SIB score increases above certain thresholds to a maximum of 4.5%. OSFI’s LR
 
Guideline
includes a requirement for D-SIBs to hold a leverage ratio buffer set at 50% of a D-SIB’s
 
higher loss absorbency risk-weighted requirements, effectively 0.50%. This buffer
 
also applies to
the TLAC Leverage ratio.
2
 
The Bank’s countercyclical buffer requirement is 0% as of October 31, 2024.
3
 
Not applicable.
Capital Position and Capital Ratios
The Basel framework allows qualifying banks
 
to determine capital levels consistent with
 
the way they measure, manage, and mitigate
 
risks. It specifies
methodologies for the measurement of credit,
 
trading market, and operational risks. The
 
Bank uses the Internal Ratings-Based
 
approaches to credit risk for all
material portfolios.
For accounting purposes, IFRS is followed
 
for consolidation of subsidiaries and joint ventures.
 
For regulatory capital purposes, all subsidiaries
 
of the Bank are
consolidated except for insurance subsidiaries
 
which are deconsolidated and follow prescribed
 
treatment as per OSFI’s CAR guidelines. Insurance
 
subsidiaries
are subject to their own capital adequacy reporting,
 
such as OSFI’s Minimum Capital Test for General Insurance and Life Insurance
 
Capital Adequacy Test for Life
and Health.
 
Some of the Bank’s subsidiaries are individually
 
regulated by either OSFI or other regulators.
 
Many of these entities have minimum capital
 
requirements which
may limit the Bank’s ability to repatriate or redeploy
 
capital or funds for other uses.
The impact to CET1 capital upon adoption
 
of IFRS 17 is immaterial to the Bank.
As at October 31, 2024, the Bank’s CET1, Tier 1, and Total Capital ratios were 13.1%, 14.8%, and
 
16.8%, respectively. The decrease in the Bank’s CET1 Capital
ratio from 14.4% as at October 31, 2023,
 
was primarily attributable to the charges
 
for the global resolution of the investigations
 
into the Bank’s U.S. BSA/AML
program, common shares repurchased
 
for cancellation, and RWA growth across various segments.
 
CET1 was also impacted by regulatory changes
 
related to the
Fundamental Review of the Trading Book and negatively
 
amortizing mortgages and the FDIC
 
special assessment booked in the fiscal year. The impact
 
of the
foregoing items was partially offset by internal
 
capital generation, the sale of TD’s common share
 
holdings in Schwab and First Horizon,
 
and the issuance of
common shares pursuant to the Bank’s dividend reinvestment
 
plan. In the fourth quarter of fiscal 2024: (i)
 
the operational risk RWA impact from the Bank’s
provisions for investigations into the Bank’s
 
U.S. BSA/AML program had a negative 35
 
basis point impact on the Bank’s CET1 ratio,
 
which is reported on a one-
quarter lag basis consistent with the Basel
 
III reforms; (ii) the Bank’s sale of 40.5 million Schwab
 
shares had a positive 54 basis point impact on
 
the Bank’s CET1
ratio; and (iii) U.S. balance sheet restructuring
 
activities had a negative 4 basis point impact
 
on the Bank’s CET1 ratio.
As at October 31, 2024, the Bank’s leverage ratio
 
was 4.2%. Compared with the Bank’s leverage ratio
 
of 4.4% at October 31, 2023, the decrease
 
was
attributable primarily to increased leverage
 
exposures across various segments, largely
 
driven by the expiration of the temporary
 
exclusion of central bank
reserves in determining leverage exposure,
 
common shares repurchased for cancellation,
 
and an increase in the goodwill and intangibles
 
deduction related to the
Cowen acquisition, partially offset by organic
 
capital growth and the issuance of common
 
shares pursuant to the Bank’s dividend reinvestment
 
plan.
 
Common Equity Tier 1 Capital
CET1 Capital was $82.7 billion as at
 
October 31, 2024. Capital management funding
 
activities during the year included common
 
share issuance of $0.6 billion
under the dividend reinvestment plan and
 
from stock option exercises,
 
offset by common shares repurchased
 
of $0.7 billion.
 
Tier 1 and Tier 2 Capital
Tier 1 Capital was $93.2 billion as at October 31, 2024,
 
consisting of CET1 Capital and Additional Tier 1 Capital of
 
$82.7 billion and $10.5 billion, respectively. The
Bank’s Tier 1 Capital management activities during the year
 
consisted of the issue and redemption of
 
Tier 1-qualifying capital instruments
 
as follows:
 
●
 
On April 30, 2024, the Bank redeemed all of
 
its 14 million outstanding Class A Preferred
 
Shares Series 22, at a redemption price
 
of $25.00 per share,
for a total redemption cost of $350 million.
●
 
On July 3, 2024, the Bank issued US$750
 
million Limited Recourse Capital Notes (LRCN) Series
 
4, which bear interest at a rate of 7.25
 
per cent
annually for the initial period ending July 31, 2029.
 
Thereafter, the interest rate will reset every five years at
 
the prevailing 5-year U.S. Treasury Rate
plus 2.977 per cent. LRCN Series 4 will mature
 
on July 31, 2084. Concurrently with
 
the issuance of the LRCNs, the Bank issued
 
750,000 Preferred
Shares Series 31. The Preferred Shares Series
 
31 are eliminated on the Bank’s consolidated financial
 
statements.
●
 
On July 31, 2024, the Bank redeemed all of
 
its 20 million outstanding Class A Preferred
 
Shares Series 3, at a redemption price of
 
$25.00 per share, for
a total redemption cost of approximately
 
$500 million.
●
 
On July 31, 2024, the Bank redeemed all of
 
its 18 million outstanding Class A Preferred
 
Shares Series 24, at a redemption price
 
of $25.00 per share,
for a total redemption cost of approximately
 
$450 million.
●
 
On July 10, 2024, the Bank issued SGD 310
 
million of Perpetual Subordinated Additional
 
Tier 1 Capital Notes (“Perpetual Notes”). The Perpetual
Notes will bear interest at a rate of 5.7 per
 
cent annually for the initial period ending
 
July 31, 2029. Thereafter, the interest rate will reset every five
years at a rate equal to the 5-year SORA-OIS
 
Rate plus 2.652 per cent. The Perpetual
 
Notes have no scheduled maturity or redemption
 
date.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 55
Tier 2 Capital was $12.5 billion as at October 31, 2024.
 
Tier 2 Capital management activities during the year
 
consisted of the issue and redemption of
 
Tier 2-
qualifying capital instruments
 
as follows:
 
●
 
On April 9, 2024, the Bank issued $1.75 billion
 
of 5.177% Subordinated Notes. The notes
 
bear interest at a fixed rate of 5.177% per
 
annum until April
9, 2029, and daily compounded CORRA
 
plus 1.53% thereafter until maturity on
 
April 9, 2034.
●
 
On July 25, 2024, the Bank redeemed all of
 
its outstanding $1.5 billion 3.224% Subordinated
 
Notes due July 25, 2029, at par plus accrued
 
and unpaid
interest.
●
 
On September 10, 2024, the Bank issued
 
US$1 billion of 5.164% Subordinated Notes.
 
The notes bear interest at a fixed rate of 5.146%
 
per annum
until September 10, 2029, and the 5-year
 
U.S. Treasury Rate plus 1.500% thereafter until maturity
 
on September 10, 2034.
●
 
On October 30, 2024, the Bank issued JPY 20
 
billion of 1.601% Subordinated Notes.
 
The notes bear interest at a fixed rate of 1.601%
 
per annum until
October 30, 2029, and at the 5-year Japanese
 
Government Bond rate plus 1.032% thereafter, until maturity
 
on October 30, 2034.
INTERNAL CAPITAL ADEQUACY ASSESSMENT PROCESS
The Bank’s Internal Capital Adequacy Assessment
 
Process (ICAAP) is an integrated enterprise-wide
 
process that encompasses the governance,
 
management,
and control of risk and capital functions within
 
the Bank. It provides a framework for relating
 
risks to capital requirements through
 
the Bank’s capital modelling and
stress testing practices which help inform the
 
Bank’s overall capital adequacy requirements.
The ICAAP is led by TBSM with support
 
from numerous functional areas who collectively
 
help assess the Bank’s internal capital adequacy. This assessment
evaluates the capacity to bear risk in alignment
 
with the Bank’s risk profile and RAS. TBSM assesses
 
and monitors the overall adequacy
 
of the Bank’s available
capital in relation to both internal and regulatory
 
capital requirements under normal and
 
stressed conditions.
NVCC Provision
If an NVCC trigger event were to occur, for all series of
 
Class A First Preferred Shares excluding
 
the preferred shares issued with respect
 
to LRCNs, the maximum
number of common shares that could be issued,
 
assuming there are no declared and unpaid
 
dividends on the respective series
 
of preferred shares at the time of
conversion, would be 0.8 billion in aggregate.
 
The LRCNs, by virtue of the recourse
 
to the preferred shares held in the Limited
 
Recourse Trust, include NVCC provisions. For LRCNs, if
 
an NVCC trigger were
to occur, the maximum number of common shares that
 
could be issued, assuming there are
 
no declared and unpaid dividends on the preferred
 
shares series
issued in connection with such LRCNs,
 
would be 1.3 billion in aggregate.
 
For NVCC subordinated notes and debentures
 
(including Perpetual Notes), if an NVCC
 
trigger event were to occur, the maximum number of common
 
shares
that could be issued, assuming there is no accrued
 
and unpaid interest on the respective
 
subordinated notes and debentures, would be
 
3.5 billion in aggregate.
DIVIDEND RESTRICTIONS
The Bank is prohibited by the
Bank Act (Canada)
 
from declaring dividends on its preferred
 
or common shares if there are reasonable
 
grounds for believing that the
Bank is, or the payment would cause the
 
Bank to be, in contravention of the capital adequacy
 
and liquidity regulations of the
Bank Act (Canada)
 
or directions of
OSFI. The Bank does not anticipate that this
 
condition will restrict it from paying dividends
 
in the normal course of business. In addition,
 
the ability to pay dividends
on common shares without the approval of
 
the holders of the outstanding preferred
 
shares is restricted unless all dividends on
 
the preferred shares have been
declared and paid or set apart for payment.
 
Currently, these limitations do not restrict the payment of dividends
 
on common shares or preferred shares.
DIVIDENDS
On December 4, 2024, the Board approved
 
a dividend in an amount of one dollar and
 
five cents ($1.05) per fully paid common
 
share in the capital stock of the
Bank for the quarter ending January 31, 2025,
 
payable on and after January 31, 2025,
 
to shareholders of record at the close of
 
business on January 10, 2025.
At October 31, 2024, the quarterly dividend
 
was $1.02 per common share. Common
 
share cash dividends declared and paid during
 
the year totalled $4.08 per
share (2023 – $3.84), representing a payout
 
ratio of 52.1%, slightly above the Bank’s target payout
 
range of 40-50% of adjusted earnings.
 
For cash dividends
payable on the Bank’s preferred shares, refer
 
to Note 20 of the 2024 Consolidated Financial
 
Statements. As at October 31, 2024, 1,750
 
million common shares
were outstanding (2023 – 1,791 million).
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan
 
for its common shareholders. Participation in
 
the plan is optional and under the terms of the
 
plan, cash dividends on
common shares are used to purchase additional
 
common shares. At the option of the Bank,
 
the common shares may be issued from treasury
 
at an average
market price based on the last five trading
 
days before the date of the dividend payment,
 
with a discount of between 0% to 5% at the Bank’s discretion
 
or
purchased from the open market at market
 
price.
During the year ended October 31, 2024, under
 
the dividend reinvestment plan, the Bank
 
issued 6.6 million common shares from
 
treasury with no discount.
During the year ended October 31, 2023, under
 
the dividend reinvestment plan, the Bank issued
 
3.7 million common shares from treasury
 
with no discount and
16.8 million common shares with a 2% discount.
NORMAL COURSE ISSUER BID
On August 28, 2023, the Bank announced
 
that the Toronto Stock Exchange (TSX) and OSFI approved a normal course issuer
 
bid (NCIB) to repurchase for
cancellation up to 90 million of its common
 
shares. The NCIB commenced on August 31,
 
2023, and during the year ended October
 
31, 2024, the Bank
repurchased 49.4 million common shares
 
under the NCIB at an average price of
 
$80.15 per share for a total amount of
 
$4.0 billion. From the commencement of
the NCIB to October 31, 2024, the Bank repurchased
 
71.4 million shares under the program.
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 56
RISK-WEIGHTED ASSETS
Based on Basel III, RWA are calculated for each of credit
 
risk, market risk, and operational risk.
 
Details of the Bank’s RWA are included in the following table.
 
TABLE 39: RISK-WEIGHTED ASSETS
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Credit risk
Retail
Residential secured
$
58,215
$
53,611
Qualifying revolving retail
40,186
39,834
Other retail
53,929
45,298
Non-retail
Corporate
222,370
211,479
Sovereign
12,929
13,656
Bank
11,555
14,080
Securitization exposures
16,524
16,652
Subordinated debt, equity, and other
 
capital instruments
37,986
34,655
Other assets
36,454
37,867
Exposures subject to standardized or Internal
 
Ratings-Based (IRB) approaches
490,148
467,132
Total credit risk
490,148
467,132
Market risk
20,676
16,952
Operational risk
1
120,076
87,077
Total
 
$
630,900
$
571,161
1
 
Increase in Operational Risk RWA is primarily driven by the charges for the global
 
resolution of the investigations into the Bank’s U.S. BSA/AML program as well as the
 
business growth.
ex992p57i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 57
ECONOMIC CAPITAL AND RISK-WEIGHTED ASSETS
 
BY SEGMENT
The following chart provides a breakdown of
 
the Bank’s RWA and economic
 
capital as at October 31, 2024. RWA reflects capital requirements
 
assessed based on
regulatory prescribed rules for credit risk,
 
trading market risk, and operational risk. Economic
 
capital reflects the Bank’s internal view of capital
 
requirements for
these risks as well as risks not captured
 
within the assessment of RWA as described in the “Economic
 
Capital” section of this document. The results
 
shown in the
chart do not reflect attribution of goodwill and
 
intangibles. For additional information
 
on the risks highlighted below, refer to the “Managing Risk”
 
section of this
document.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 58
TABLE 40: EQUITY AND
 
OTHER SECURITIES
1
(millions of shares/units and millions of Canadian
 
dollars, except as noted)
As at
October 31, 2024
October 31, 2023
Number of
Number of
shares/units
Amount
shares/units
Amount
Common shares
Common shares outstanding
1,750.3
$
25,373
1,791.4
$
25,434
Treasury – common shares
(0.2)
(17)
(0.7)
(64)
Total common shares
1,750.1
$
25,356
1,790.7
$
25,370
Stock options
 
 
 
 
Vested
5.4
5.1
Non-vested
9.3
9.0
Preferred shares – Class A
 
 
 
 
Series 1
2,3
20.0
$
500
20.0
$
500
Series 3
4
–
–
20.0
500
Series 5
20.0
500
20.0
500
Series 7
14.0
350
14.0
350
Series 9
8.0
200
8.0
200
Series 16
14.0
350
14.0
350
Series 18
14.0
350
14.0
350
Series 22
5
–
–
14.0
350
Series 24
6
–
–
18.0
450
Series 27
0.8
850
0.8
850
Series 28
0.8
800
0.8
800
91.6
$
3,900
143.6
$
5,200
Other equity instruments
7
 
 
 
 
Limited Recourse Capital Notes – Series 1
1.8
1,750
1.8
1,750
Limited Recourse Capital Notes – Series 2
1.5
1,500
1.5
1,500
Limited Recourse Capital Notes – Series 3
8
1.7
2,403
1.7
2,403
Limited Recourse Capital Notes – Series 4
8,9
0.7
1,023
–
–
Perpetual Subordinated Capital Notes – Series
 
2023-9
10
0.1
312
–
–
97.4
$
10,888
148.6
$
10,853
Treasury – preferred shares and other equity
 
instruments
(0.2)
(18)
(0.1)
(65)
Total preferred shares and other equity
 
instruments
97.2
$
10,870
148.5
$
10,788
1
 
For further details, including the conversion and exchange features, distributions, and significant terms and conditions,
 
refer to Note 20 of the Bank’s 2024 Consolidated Financial
Statements.
2
 
On September 23, 2024, TD announced that it does not intend to exercise its right to redeem all or any part of the
 
currently outstanding 20 million Non-Cumulative 5-Year
 
Rate Reset
Class A First Preferred Shares, Series 1 (Non-Viability Contingent Capital (NVCC)) (“Series 1 Shares”)
 
of TD on October 31, 2024.
3
 
On October 16, 2024, the Bank announced that none of its 20 million Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares, Series 1 NVCC (“Series 1 Shares”) would be
converted on October 31, 2024 into Non-Cumulative Floating Rate Class A First Preferred Shares, Series 2 NVCC
 
of TD. As previously announced on October 16, 2024, the dividend
rate for the Series 1 Shares for the 5-year period from and including October 31, 2024 to but excluding October
 
31, 2029 will be 4.97%.
4
 
On July 31, 2024, the Bank redeemed all of its 20 million outstanding Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares NVCC, Series 3 (“Series 3 Preferred Shares”), at
a redemption price of $25.00 per Series 3 Preferred Share, for a total redemption cost of approximately $500 million.
5
 
On April 30, 2024, the Bank redeemed all of its 14 million outstanding Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares NVCC, Series 22 (“Series 22 Preferred
Shares”), at a redemption price of $25.00 per Series 22 Preferred Share, for a total redemption cost of $350 million.
6
 
On July 31, 2024, the Bank redeemed all of its 18 million outstanding Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares NVCC, Series 24 (“Series 24 Preferred Shares”),
at a redemption price of $25.00 per Series 24 Preferred Share, for a total redemption cost of approximately $450
 
million.
7
 
For other equity instruments, the number of shares/units represents the number of notes issued.
8
 
For LRCNs – Series 3 and Series 4, the amount represents the Canadian dollar equivalent of the US dollar notional
 
amount.
9
 
On July 3, 2024, the Bank issued US$750 million 7.250% Fixed Rate Reset Limited Recourse Capital Notes, Series
 
4 NVCC (the “LRCNs”). The LRCNs will bear interest at a rate of
7.250 per cent annually, payable quarterly,
 
for the initial period ending on, but excluding, July 31, 2029. Thereafter, the interest
 
rate on the LRCNs will reset every five years at a rate
equal to the prevailing U.S. Treasury Rate plus 2.977 per cent. The LRCNs will mature
 
on July 31, 2084. Concurrently with the issuance of the LRCNs, the Bank issued 750,000 Non-
Cumulative 7.250% Fixed Rate Reset Preferred Shares, Series 31 NVCC (“Preferred Shares Series 31”). The Preferred
 
Shares Series 31 are eliminated on the Bank’s consolidated
financial statements.
10
 
On July 10, 2024, the Bank issued SGD 310 million of Fixed Rate Reset Perpetual Subordinated Additional Tier
 
1 Capital Notes, Series 2023-9 NVCC (the “AT1 Perpetual
 
Notes”). The
AT1 Perpetual Notes will bear interest at a rate of 5.700 per cent annually,
 
payable semi-annually, for the initial period ending on,
 
but excluding, July 31, 2029. Thereafter, the interest
rate on the AT1 Perpetual Notes will reset every five years
 
at a rate equal to the prevailing 5-year SORA-OIS Rate plus 2.652 per cent. The AT1
 
Perpetual Notes have no scheduled
maturity or redemption date. With the prior written approval of OSFI, the Bank may redeem the AT1
 
Perpetual Notes on July 31, 2029 and every January 31st and July 31st thereafter,
 
in
whole or in part, on not less than 10 nor more than 60 days’ prior notice to holders. For AT1
 
Perpetual Notes, the amount represents the Canadian dollar equivalent of the Singapore
dollar notional amount.
Future Regulatory Capital Developments
 
On July 5, 2024, OSFI announced a one-year
 
delay to the planned increase of the standardized
 
capital floor level. With this delay, the floor is expected to be
 
fully
transitioned in fiscal 2027. The standardized
 
capital floor subjects banks using internal
 
model-based approaches to a floor, with the floor calculated as
 
a
percentage of RWA under the standardized approach.
 
Global Systemically Important Banks
 
Designation and Disclosures
The Financial Stability Board (FSB), in
 
consultation with the BCBS and national authorities,
 
identifies G-SIBs. The G-SIB assessment
 
methodology is based on the
submissions of the largest global banks.
 
Twelve indicators are used in the G-SIB assessment methodology
 
to determine systemic importance. The
 
score for a
particular indicator is calculated by dividing
 
the individual bank value by the aggregate
 
amount for the indicator summed across all
 
banks included in the
assessment. Accordingly, an individual bank’s ranking is reliant on the
 
results and submissions of other global
 
banks.
 
The Bank is required to publish the twelve indicators
 
used in the G-SIB indicator-based assessment
 
framework. Public disclosure of financial
 
year-end data is
required annually, no later than the date of a bank’s first quarter public
 
disclosure of shareholder financial data
 
in the following year.
Public communications on G-SIB status are
 
issued annually each November. On November 22, 2019, the
 
Bank was designated as a G-SIB by the
 
FSB. The
Bank continued to maintain its G-SIB status
 
when the FSB published the 2024 list of G-SIBs
 
on November 26, 2024. As a result of this
 
designation, the Bank is
subject to an additional loss absorbency requirement
 
(CET1 as a percentage of RWA) of 1% under applicable
 
FSB member authority requirements; however, in
accordance with OSFI’s CAR guideline, the
 
higher of the D-SIB and G-SIB surcharges applies
 
to Canadian banks designated as a G-SIB.
 
As the D-SIB surcharge
is currently equal to the incremental 1%
 
G-SIB common equity ratio requirement,
 
the Bank’s G-SIB designation has no additional
 
impact on the Bank’s minimum
CET1 regulatory requirements. The G-SIB
 
surcharge may increase above 1% if
 
the Bank’s G-SIB score increases above certain
 
thresholds to a maximum of
4.5%.
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 59
As a result of the Bank’s G-SIB designation, the
 
U.S. Federal Reserve requires that TD Group
 
US Holding LLC (TDGUS), as TD’s U.S. Intermediate
 
Holding
Company (IHC), maintain a minimum amount
 
of TLAC and long-term debt.
 
GROUP FINANCIAL CONDITION
Securitization and Off
-
Balance Sheet Arrangements
In the normal course of operations, the Bank
 
engages in a variety of financial transactions
 
that, under IFRS, are either not recorded on
 
the Bank’s Consolidated
Balance Sheet or are recorded in amounts that
 
differ from the full contract or notional
 
amounts. These off-balance sheet arrangements
 
involve, among other risks,
varying elements of market, credit, and liquidity
 
risks
 
which are discussed in the “Managing
 
Risk” section of this document.
 
Off-balance sheet arrangements are
generally undertaken for risk management,
 
capital management, and funding management
 
purposes and include securitizations,
 
contractual obligations, and
certain commitments and guarantees.
STRUCTURED ENTITIES
TD carries out certain business activities
 
through arrangements with structured entities
 
(SEs). The Bank uses SEs to raise capital,
 
obtain sources of liquidity by
securitizing certain of the Bank’s financial assets,
 
to assist TD’s clients in securitizing their financial
 
assets, and to create investment products
 
for the Bank’s
clients. Securitizations are an important part
 
of the financial markets, providing liquidity
 
by facilitating investor access to specific
 
portfolios of assets and risks.
Refer to Notes 2, 9, and 10 of the 2024 Consolidated
 
Financial Statements for further information
 
regarding the Bank’s involvement with SEs.
Securitization of Bank-Originated Assets
The Bank securitizes residential mortgages,
 
credit card loans,
 
and business and government loans to enhance
 
its liquidity position, to diversify sources
 
of funding,
and to optimize the management of the balance
 
sheet.
The Bank securitizes residential mortgages
 
under the National Housing Act Mortgage-Backed
 
Securities (NHA MBS) program sponsored
 
by the CMHC. The
securitization of the residential mortgages
 
with the CMHC does not qualify for derecognition
 
and the mortgages remain on the Bank’s Consolidated
 
Balance Sheet.
Additionally, the Bank securitizes credit card loans by selling them
 
to Bank-sponsored SEs that are consolidated
 
by the Bank. The Bank also securitizes
 
U.S.
residential mortgages with U.S. government-sponsored
 
entities which qualify for derecognition
 
and are removed from the Bank’s Consolidated Balance
 
Sheet.
Refer to Notes 9 and 10 of the 2024 Consolidated
 
Financial Statements for further information.
Residential Mortgage Loans
The Bank securitizes residential mortgage
 
loans through significant unconsolidated
 
SEs and Canadian non-SE third parties.
 
Residential mortgage loans
securitized by the Bank may give rise
 
to full derecognition of the financial assets depending
 
on the individual arrangement of each transaction.
 
In instances where
the Bank fully derecognizes residential
 
mortgage loans, the Bank may be exposed
 
to the risks of transferred loans through
 
retained interests. As at
October 31, 2024, there were $24.0 billion of
 
securitized residential mortgage loans outstanding
 
through significant unconsolidated SEs (October
 
31, 2023 –
$21.0 billion), and $6.7 billion outstanding
 
through non-SE third parties (October
 
31, 2023
 
– $3.5 billion).
Credit Card Loans
 
The Bank securitizes credit card loans through
 
an SE. The Bank consolidates the
 
SE as it serves as a financing vehicle
 
for the Bank’s assets, the Bank has power
over the key economic decisions of the SE, and
 
the Bank is exposed to the majority of the residual
 
risks of the SE. As at October 31, 2024, the Bank
 
had
$3.0 billion of securitized credit card receivables
 
outstanding (October 31, 2023 – $1.5 billion).
 
Due to the nature of the credit card receivables,
 
their carrying
amounts approximate fair value.
Business and Government Loans
The Bank securitizes business and government
 
loans through Canadian non-SE third parties.
 
Business and government loans securitized
 
by the Bank may be
derecognized from the Bank’s balance sheet
 
depending on the individual arrangement
 
of each transaction. In instances where
 
the Bank fully derecognizes
business and government loans, the Bank
 
may be exposed to the risks of transferred loans
 
through retained interests. There are no ECLs
 
on the retained interests
of the securitized business and government
 
loans as the loans are all government insured.
 
As at October 31, 2024, the Bank had
 
$189 million of securitized
business and government loans outstanding
 
(October 31, 2023
 
– $401 million), with carrying value of retained
 
interests of $1 million (October 31, 2023
 
–
$3 million).
Securitization of Third-Party Originated
 
Assets
Significant Unconsolidated Special Purpose
 
Entities
Multi-Seller Conduits
The Bank securitizes third party-originated
 
assets through Bank-sponsored SEs, including
 
its Canadian multi-seller conduits which are
 
not consolidated. These
Canadian multi-seller conduits securitize
 
Canadian originated third-party assets.
 
The Bank administers multi-seller conduits
 
and provides liquidity facilities as well
as securities distribution services; it may
 
also provide credit enhancements. TD’s total
 
potential exposure to loss through the provision
 
of liquidity facilities for multi-
seller conduits was $16.8 billion as at October
 
31, 2024 (October 31, 2023
 
– $15.2 billion). As at October 31,
 
2024, the Bank had funded exposure of
 
$15.4 billion
under such liquidity facilities relating to outstanding
 
issuances of asset-backed commercial
 
paper (ABCP) (October 31, 2023 - $13.3 billion).
TABLE 41: FUNDED EXPOSURE TO THIRD-PARTY
 
ORIGINATED ASSETS SECURITIZED
 
BY BANK-SPONSORED UNCONSOLIDATED
 
CONDUITS
1
(millions of Canadian dollars, except
 
as noted)
As at
October 31, 2024
October 31, 2023
Residential mortgage loans
$
8,527
$
8,221
Automobile loans and leases
5,580
4,266
Equipment leases
1,246
102
Trade receivables
–
64
Investment loans
66
609
Total funded exposure
$
15,419
$
13,262
1
The Bank’s funded exposure through the provision of liquidity facilities only relates to outstanding issuances
 
of ABCP funding ‘AAA’ rated assets.
As at October 31, 2024, the Bank held $0.4
 
billion of ABCP issued by Bank-sponsored
 
multi-seller conduits recorded on its 2024
 
Consolidated Balance Sheet
(October 31, 2023 – $2.2 billion).
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 60
COMMITMENTS
The Bank enters into various commitments
 
to meet the financing needs of the Bank’s
 
clients,
 
to earn fee income,
 
and to lease premises and equipment.
 
Significant
commitments of the Bank include financial
 
and performance standby letters of credit,
 
documentary and commercial letters of
 
credit, commitments to extend credit,
and obligations under long-term non-cancellable
 
leases for premises and equipment.
 
These products may expose the Bank to liquidity, credit, and
 
reputational
risks. There are adequate risk management and
 
control processes in place to mitigate
 
these risks. Certain commitments still remain
 
off-balance sheet. Note 26 of
the 2024 Consolidated Financial Statements
 
provides detailed information about the
 
Bank’s commitments including credit-related
 
arrangements and long-term
commitments or leases.
GUARANTEES
In the normal course of business, the Bank
 
enters into various guarantee contracts
 
to support its clients. The Bank’s significant
 
types of guarantee products are
financial and performance standby letters of
 
credit, credit enhancements, and indemnification
 
agreements. Certain guarantees remain
 
off-balance sheet. Refer to
Note 26 of the 2024 Consolidated Financial
 
Statements for further information.
GROUP FINANCIAL CONDITION
Related
P
arty Transactions
TRANSACTIONS WITH KEY MANAGEMENT
 
PERSONNEL, THEIR CLOSE FAMILY MEMBERS,
 
AND THEIR RELATED ENTITIES
Key management personnel are those persons
 
having authority and responsibility
 
for planning, directing,
 
and controlling the activities of the Bank, directly
 
or
indirectly. The Bank considers certain of its officers and directors to be
 
key management personnel. The Bank
 
makes loans to its key management personnel,
 
their
close family members,
 
and their related entities on market
 
terms and conditions with the exception of
 
banking products and services for key
 
management
personnel, which are subject to approved policy
 
guidelines that govern all employees.
In addition, the Bank offers deferred share and
 
other plans to non-employee directors, executives,
 
and certain other key employees. Refer
 
to Note 22 of the 2024
Consolidated Financial Statements for more
 
details.
In the ordinary course of business, the Bank
 
also provides various banking services to associated
 
and other related corporations on
 
terms similar to those
offered to non-related parties.
TRANSACTIONS WITH SUBSIDIARIES,
 
SCHWAB, AND SYMCOR INC.
Transactions between the Bank and its subsidiaries
 
meet the definition of related party transactions.
 
If these transactions are eliminated on
 
consolidation, they are
not disclosed as related party transactions.
 
Transactions between the Bank, Schwab, and Symcor
 
Inc. (Symcor) also qualify as related party
 
transactions. There were no significant
 
transactions between
the Bank, Schwab, and Symcor during the
 
year ended October 31, 2024, other than as
 
described in the following sections and in
 
Note 12 of the 2024 Consolidated
Financial Statements.
i)
TRANSACTIONS WITH SCHWAB
 
The Bank has significant influence over Schwab
 
and accounts for its investment in Schwab
 
using the equity method. Pursuant to the
 
Stockholder Agreement in
relation to the Bank’s equity investment in Schwab,
 
subject to certain conditions, the Bank
 
has the right to designate two members of
 
Schwab’s Board of Directors
and has representation
 
on two Board Committees. As of October
 
31, 2024, the Bank’s designated directors
 
were the Bank’s Group President and Chief Executive
Officer and the Bank’s former Chair of the Board.
A description of significant
 
transactions between the Bank and its affiliates
 
with Schwab is set forth below.
Insured Deposit Account Agreement
 
During the year ended October 31, 2024, Schwab
 
exercised its option to buy down the remaining
 
$0.7 billion (US$0.5 billion) of the US$5
 
billion FROA permitted
and paid $32 million (US$23 million) in
 
termination fees to the Bank in accordance
 
with the 2023 Schwab IDA Agreement.
 
During the year ended
October 31, 2023, Schwab exercised its option
 
to buy down an initial $6.1 billion (US$4.5 billion)
 
of FROA and paid $305 million (US$227
 
million) in termination
fees to the Bank in accordance with the 2023
 
Schwab IDA Agreement.
 
As at October 31, 2024, deposits under
 
the Schwab IDA Agreement were $117 billion (US$84 billion) (October
 
31, 2023 – $133 billion (US$96 billion)).
 
The
Bank paid fees, net of the termination fees
 
received from Schwab, of $908 million during
 
the year ended October 31, 2024 (October
 
31, 2023 – $932 million) to
Schwab related to sweep deposit accounts.
 
The amount paid by the Bank is based on
 
the average insured deposit balance of $121
 
billion for the year ended
October 31, 2024 (October 31, 2023 – $147
 
billion) and yields based on agreed upon
 
market benchmarks, less the actual interest
 
paid to clients of Schwab.
As at October 31, 2024, amounts receivable
 
from Schwab were $12 million (October
 
31, 2023 – $38 million). As at October 31,
 
2024, amounts payable to
Schwab were $42 million (October 31, 2023
 
– $24 million).
ii) TRANSACTIONS WITH SYMCOR
The Bank has one-third ownership in Symcor, a Canadian
 
provider of business process outsourcing
 
services offering a diverse portfolio of integrated
 
solutions in
item processing, statement processing and
 
production, and cash management
 
services. The Bank accounts for Symcor’s
 
results using the equity method of
accounting. During the year ended October 31,
 
2024, the Bank paid $88 million (October
 
31, 2023 – $81 million)
 
for these services. As at October 31, 2024,
 
the
amount payable to Symcor was $6 million
 
(October 31, 2023 – $12
 
million).
 
The Bank and two other shareholder banks
 
have also provided a $100 million unsecured
 
loan facility to Symcor which was undrawn
 
as at October 31, 2024 and
October 31, 2023.
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 61
GROUP FINANCIAL CONDITION
Financial Instruments
As a financial institution, the Bank’s assets and
 
liabilities are substantially composed
 
of financial instruments. Financial assets
 
of the Bank include, but are not
limited to, cash, interest-bearing deposits, securities,
 
loans,
 
derivative instruments and securities purchased
 
under reverse repurchase agreements;
 
while financial
liabilities include, but are not limited to, deposits,
 
obligations related to securities sold
 
short, securitization liabilities, obligations
 
related to securities sold under
repurchase agreements, derivative instruments,
 
and subordinated debt.
The Bank uses financial instruments
 
for both trading and non-trading activities. The
 
Bank typically engages in trading activities
 
by the purchase and sale of
securities to provide liquidity and meet the needs
 
of clients and, less frequently, by taking trading positions with the
 
objective of earning a profit. Trading financial
instruments include,
 
but are not limited to, trading securities,
 
trading deposits, and trading derivatives.
 
Non-trading financial instruments include the
 
majority of the
Bank’s lending portfolio, non-trading securities,
 
hedging derivatives,
 
and the majority of the Bank’s financial
 
liabilities. In accordance with accounting
 
standards
related to financial instruments, financial assets
 
or liabilities classified as held-for-trading, non-trading
 
FVTPL, designated at FVTPL,
 
FVOCI,
 
and all derivatives are
measured at fair value in the Bank’s 2024 Consolidated
 
Financial Statements. DSAC, most loans,
 
and other liabilities are carried at amortized
 
cost using the
effective interest rate (EIR) method. For details on
 
how fair values of financial instruments
 
are determined, refer to the “Accounting
 
Judgments, Estimates, and
Assumptions”
 
– “Fair Value Measurements” section of this document.
 
The use of financial instruments allows
 
the Bank to earn profits in trading, interest,
 
and fee
income. Financial instruments also create
 
a variety of risks which the Bank
 
manages with its extensive risk management
 
policies and procedures. The key risks
include interest rate, credit, liquidity, market, and foreign exchange
 
risks. For a more detailed description on how
 
the Bank manages its risk, refer to the “Managing
Risk” section of this document.
RISK FACTORS AND
 
MANAGEMENT
Ri
sk Factors That
May
Affect Future Results
In addition to the risks described in the “Managing
 
Risk” section, there are numerous other
 
risk factors,
 
many of which are beyond the Bank’s control and
 
the
effects of which can be difficult to predict, that could
 
cause the Bank’s results to differ significantly from the
 
Bank’s plans, objectives, and estimates or
 
could impact
the Bank’s reputation or the sustainability of its business
 
model. All forward-looking statements, including
 
those in this MD&A, are, by their very nature,
 
subject to
inherent risks and uncertainties, general
 
and specific, which may cause the Bank’s actual results
 
to differ materially from the plan, objectives, estimates
 
or
expectations expressed in the forward-looking
 
statements. Some of these factors are discussed
 
below and others are noted in the “Caution
 
Regarding Forward-
Looking Statements” section of this
 
document.
TOP AND EMERGING RISKS
 
The Bank considers it critical to regularly assess
 
its operating environment and highlight
 
top and emerging risks. These are risks with
 
a potential to have a material
effect on the Bank and where the attention of
 
senior management is focused due to the potential
 
magnitude or immediacy of their impacts.
Risks are identified, discussed, and actioned
 
by senior management and reported quarterly
 
to the Risk Committee and the Board. Specific
 
plans to mitigate top
and emerging risks are prepared, monitored,
 
and adjusted as required.
General Business and Economic Conditions
The Bank and its customers operate
 
in Canada, the U.S., and, to a lesser extent,
 
in other countries. As a result, the Bank’s earnings
 
are significantly affected by
the general business and economic conditions
 
in these regions, which could have
 
an adverse impact on the Bank’s results, business,
 
financial condition or
liquidity, and could result in changes to the way the Bank operates.
 
These conditions include short-term and
 
long-term interest rates, inflation, declines
 
in
economic activity (recession), volatility in
 
financial markets, and related market liquidity, funding costs, real estate
 
prices, employment levels, consumer
 
spending
and debt levels, evolving consumer trends
 
and related changes to business models,
 
business investment and overall business
 
sentiment, government policy
including levels of government spending,
 
monetary policy, fiscal policy (including tax policy and rate changes),
 
exchange rates, sovereign debt risks and
 
the
effects of pandemics and other public health emergencies.
Geopolitical Risk
 
Government policy, international trade and political relations across
 
the globe may impact overall market and
 
economic stability, including in the regions where the
Bank operates, or where its customers operate.
 
While the nature and extent of risks may
 
vary, they have the potential to disrupt global economic growth, create
volatility in financial markets that may affect
 
the Bank’s trading and non-trading activities, market
 
liquidity, funding costs, interest rates, foreign exchange,
commodity prices, credit spreads, fiscal policy, and directly and indirectly
 
influence general business and economic conditions
 
in ways that may have an adverse
impact on the Bank and its customers. Geopolitical
 
risks in 2024 included ongoing global
 
tensions resulting in sanctions and
 
countersanctions and related
operational complexities, supply chain disruptions,
 
being subjected to heightened regulatory
 
focus on climate change and transition
 
to a low-carbon economy,
increased likelihood of cyber-attacks on critical
 
public and private infrastructure and networks,
 
the Russia-Ukraine war and the resulting tensions
 
between Russia
and other nations, social unrest and volatility in
 
the Middle East that have escalated due
 
to the ongoing conflict between Israel and
 
Hamas and Hezbollah,
 
political
and economic turmoil, threats of terrorism and
 
ongoing protectionism measures due
 
to a decline in global alignment and elections
 
in geopolitically significant
markets that have potential to generate regulatory
 
and policy uncertainty.
 
These risks are expected to continue in
 
the coming years, with an increased probability
of new tariffs or meaningful changes to trade
 
policies. For example, renegotiation of
 
the U.S.-Mexico-Canada Agreement
 
(USMCA) or tariffs imposed before its
renewal could result in negative impacts
 
for some industries or economies that the
 
Bank operates in.
Inflation, Interest Rates and Recession
 
Uncertainty
Fluctuating interest rates and inflation, together
 
with overall macroeconomic conditions, could
 
have adverse impacts on the Bank’s
 
cost of funding, result in
increased loan delinquencies or impairments
 
and higher credit losses due to deterioration
 
in the financial condition of the Bank’s customers
 
and may necessitate
further increases in the Bank’s provision for credit
 
losses and net charge offs, all of which could
 
negatively impact the Bank’s business, financial
 
condition, liquidity
and results of operations. Inflation has slowed
 
from peak levels, but households continue
 
to feel the effect of past price increases, which
 
have weighed on
confidence and reduced spending power. Heightened geopolitical
 
risk and the potential for increased tariffs and
 
trade barriers adds uncertainty to the outlook
 
for
inflation and interest rates. A reacceleration
 
in inflation could trigger a reversal in recent
 
interest rate declines and a tightening
 
in financial conditions, while a
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 62
deterioration in economic conditions, especially
 
within the labour market, could lead to
 
faster decline in interest rates. In addition, actual
 
stress levels experienced
by the Bank’s borrowers may differ from assumptions
 
incorporated in estimates or models used
 
by the Bank. The uncertain inflation and
 
interest rate environment
increases concerns around the possibility
 
of a recession in Canada, the U.S. and
 
other regions where the Bank and its
 
customers operate and continues to impact
the macroeconomic and business environment.
 
Such developments could have an adverse
 
impact on the Bank’s business, financial condition,
 
liquidity and results
of operations.
Global Resolution of the Investigations
 
into the Bank’s U.S. BSA/AML Program
On October
 
10, 2024,
 
the Bank
 
and certain
 
of its
 
U.S. subsidiaries
 
consented to
 
orders with
 
the Office
 
of the
 
Comptroller of
 
the Currency
 
(OCC), the
 
Federal
Reserve
 
Board
 
(FRB),
 
and
 
the
 
Financial Crimes
 
Enforcement Network
 
(FinCEN) and
 
entered
 
into
 
plea
 
agreements with
 
the
 
Department
 
of
 
Justice, Criminal
Division,
 
Money
 
Laundering
 
and
 
Asset
 
Recovery
 
Section
 
and
 
the
 
United
 
States
 
Attorney’s
 
Office
 
for
 
the
 
District
 
of
 
New
 
Jersey
 
(collectively,
 
the
 
“Global
Resolution”). The Global
 
Resolution includes a
 
number of limitations on
 
the Bank’s U.S.
 
business, including an
 
asset limit in
 
certain entities (TD
 
Bank, N.A. and
TD Bank USA, N.A.,
 
also referred to as the “U.S. Bank”) and more stringent approval
 
processes for new retail bank products, services, markets and
 
branches, that
could adversely affect the Bank’s business, operations, financial
 
condition, capital and credit ratings (some of which
 
were downgraded following the announcement
of
 
the
 
Global
 
Resolution),
 
cash
 
flows
 
and
 
funding
 
costs,
 
as
 
well
 
as
 
affect
 
or
 
restrict
 
the
 
ability
 
of
 
the
 
Bank’s
 
U.S.
 
business
 
to
 
compete
 
effectively.
 
Board
certifications will
 
be required
 
for dividend
 
distributions from
 
certain of
 
the Bank’s
 
U.S. subsidiaries,
 
namely TD
 
Bank, N.A.,
 
TD Bank
 
US Holding
 
Company, TD
Bank USA,
 
N.A. and
 
TD Group
 
US Holdings
 
LLC, to
 
help ensure
 
the Bank
 
continues to
 
prioritize the
 
U.S. Bank
 
Secrecy Act/Anti-Money
 
Laundering program
(U.S. BSA/AML program) remediation. More details on the terms of the Global Resolution are set out under the heading “Significant Events – Global Resolution of
the Investigations into the Bank’s U.S. BSA/AML
 
Program”.
 
The orders and plea agreements have a number
 
of short-term and long-term deliverables
 
and obligations, many of which are overlapping
 
and interdependent.
Additional information about these deliverables
 
and obligations are set out in the “Key
 
Terms of the Global Resolution” section of the “Significant Events” section.
Satisfying the terms of the Global Resolution,
 
including the requirement to remediate
 
the Bank’s U.S. BSA/AML program, is expected
 
to be a multi-year endeavor,
and will not be entirely
 
within the Bank’s control including because of (i)
 
the requirement to obtain regulatory
 
approval or non-objection before proceeding
 
with
various steps, and (ii) the requirement for
 
the various deliverables to be acceptable
 
to the regulators and/or the monitors. Some of
 
the terms of the Global
Resolution are unusual and without precedent,
 
which exposes the Bank to uncertainty regarding
 
how and when these terms will be satisfied
 
in full. The Bank, its
regulators or applicable law enforcement agencies
 
in various jurisdictions may also identify
 
other issues as the Bank remediates and
 
enhances its risk and control
infrastructure, which may result in additional
 
regulatory proceedings or requirements
 
in the United States or elsewhere, and
 
may result in significant additional
consequences. Furthermore, there is risk
 
that the remediation may not meet expectations
 
set by regulators and this may result in additional
 
actions against the
Bank. Until the deficiencies in the Bank’s U.S. BSA/AML
 
program are fully remediated,
 
the Bank faces potentially escalating consequences.
 
For example, if the
U.S. Bank does not achieve compliance
 
with all actionable articles in the OCC consent
 
orders (and for each successive year
 
that the U.S. Bank remains non-
compliant), the OCC may require the U.S.
 
Bank to further reduce total consolidated
 
assets by up to 7%. Furthermore, delays in
 
satisfying one regulatory
requirement could affect the Bank’s progress on others.
 
Failure to satisfy the requirements of the Global
 
Resolution on a timely basis could result
 
in additional
fines, penalties, business restrictions, limitations
 
on subsidiary capital distributions, increased
 
capital or liquidity requirements, enforcement actions,
 
increased
regulatory oversight, and other adverse consequences,
 
which could be significant. Compliance
 
with the terms of the Global Resolution, as
 
well as the
implementation of their requirements and
 
remediation of the U.S. BSA/AML program,
 
is expected to continue to increase
 
the Bank’s costs, require the Bank to
revise some of its business strategies
 
and plans and reallocate resources away
 
from managing its business and require the Bank
 
to undergo significant changes
to its business, operations, products and services,
 
and risk management practices. In particular, the remediation
 
process will expose the Bank to the
 
following risks
that are described in more detail below: (i)
 
Model Risk, as the Bank replaces and enhances
 
the portfolio of tools being used to detect, escalate,
 
investigate and
action financial crime risks, (ii) Technology and Data Risk, as the Bank implements
 
new technology and data solutions, (iii)
 
Third Party Risk, as the Bank engages
third party advisors and vendors to support
 
the Bank’s change objectives, and (iv) Operational
 
Risk, as the Bank introduces new organization
 
structures, creates
new roles, onboards new talent, enhances
 
the global control environment, and invests
 
in updated processes and procedures
 
to support financial crime risks. In
addition, as a result of a third-party review of
 
governance at the Bank, the Bank’s Board of
 
Directors may be required to make changes
 
in management and/or
directors.
 
As noted under “Significant
 
Events – Global Resolution of the Investigations
 
into the Bank’s U.S. BSA/AML Program”,
 
the Bank is also undertaking
certain remediation and enhancements of
 
the Enterprise AML program and
 
will be exposed to similar risks as noted above
 
in respect of such remediation and
enhancement process. In addition, as we
 
make such remediation and enhancements
 
to our Enterprise AML Program, we expect
 
an increase in identification of
reportable transactions and/or events. This
 
increase will add to the operational backlog
 
in our FCRM investigations processing that
 
the Bank currently faces, but is
working towards remediating, across the
 
enterprise.
The Global Resolution could have indirect
 
adverse effects on the Bank and its subsidiaries
 
and businesses, including subsidiaries
 
and businesses that are not
directly party to or subject to the orders and plea
 
agreements, including by jeopardizing
 
the status of certain regulatory qualifications,
 
permissions, or exemptions,
or by causing certain counterparties to seek
 
to terminate contracts or other relationships
 
with the Bank. For example, the plea agreements
 
have resulted in one
TD entity becoming disqualified from serving
 
as an investment adviser or underwriter
 
to registered investment companies in
 
the United States, and that TD entity
has applied for a waiver from such disqualification
 
from the U.S. Securities and Exchange
 
Commission (“SEC”). In addition, one TD
 
entity has become disqualified
from relying on the U.S. Department of Labor’s
 
“qualified professional asset manager”
 
exemption for purposes of providing asset
 
management services to
employee benefit plans subject to the
 
U.S. Employee Retirement Income Security
 
Act of 1974, and, as a result, TD has been
 
relying on alternative exemptions for
purposes of ERISA compliance and is expected
 
to continue to be required to rely on alternative
 
exemptions. In the future, the Bank
 
may be required to seek
additional waivers, consents, approvals or other
 
exemptions to continue operating its businesses
 
as presently conducted, and any failure to
 
obtain such waivers,
consents, approvals or other exemptions
 
could adversely affect the Bank’s results of operations or
 
financial condition.
 
Failure to comply with the terms of the plea
 
agreements with the DOJ during the five-year
 
term of probation, including by failing
 
to complete the compliance
undertakings, failing to cooperate or to report
 
alleged misconduct as required, or
 
committing additional crimes, could also
 
subject the Bank to further prosecution
and additional financial penalties and ongoing
 
compliance commitments, and could result
 
in an extension of the length of the term
 
of probation. In addition, the
Bank’s current or former directors, officers and employees,
 
as well as the current or former directors,
 
officers and employees of the U.S. Bank,
 
may become
subject to civil or criminal investigations or
 
enforcement proceedings in relation to
 
the Bank’s U.S. BSA/AML program, which could result in
 
claims against the
Bank for damages or indemnification,
 
further disruptions to the Bank’s personnel (including
 
negative impact on the morale of its personnel)
 
and its operations and
further damage to its reputation or to the
 
perceptions of the Bank among the Bank’s
 
customers, service providers and investors.
The Global Resolution (including the limitations
 
imposed on the Bank’s U.S. businesses
 
imposed by the terms of the Global
 
Resolution) have negatively affected
the Bank’s brand and reputation, which may be
 
further negatively affected if any of the Bank’s or U.S.
 
Bank’s former or current directors, officers or employees
become subject to civil or criminal investigations
 
or enforcement proceedings, or if the Bank
 
is unable to satisfy the terms of the Global
 
Resolution (including the
requirement to remediate the Bank’s U.S. BSA/AML
 
program) in a manner that is acceptable
 
to the regulators and/or the monitors. This negative
 
impact on the
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 63
Bank’s brand and reputation, as well as the limitations
 
imposed on the Bank’s U.S. businesses by
 
the Global Resolution, may adversely affect: (i)
 
the Bank’s ability
to attract and retain customers and employees;
 
(ii) the willingness of key third parties,
 
including service providers, vendors, financial
 
counterparties, government
agencies, and
 
other market participants, to transact
 
with the Bank; and (iii) the willingness of
 
investors to retain Bank securities in their
 
investment portfolios or to
acquire Bank securities. See also “Level of
 
Competition, Shifts in Consumer Attitudes,
 
and Disruptive Technology”, “Ability to Attract, Develop, and Retain Key
Talent”, “Third Party Risk”, and “Value and Market Price of our Common Shares and other Securities”,
 
below.
The value and trading price of the Bank’s securities
 
could be negatively affected by a number of
 
factors related to the terms of the Global Resolution
 
and the
remediation of the issues resulting in the investigations,
 
including if: (i) the Bank fails to satisfy
 
the terms of the Global Resolution (including
 
the requirement to
remediate the Bank’s U.S. BSA/AML program)
 
in a manner that is acceptable to the regulators
 
and/or the monitors; (ii) the impact of the non-monetary
 
penalties
imposed on the Bank are more negative
 
or sustained than anticipated, including
 
if the limitations imposed on the Bank’s
 
U.S. businesses weaken the Bank’s U.S.
franchise; (iii) the Bank becomes subject
 
to further prosecution or financial penalties
 
(which may occur if the Bank fails to comply
 
with the terms of the plea
agreements with the DOJ during the five-year
 
term of probation); (iv) the Bank’s or U.S. Bank’s
 
former or current directors, officers or employees
 
become subject
to civil or criminal investigations or enforcement
 
proceedings in relation to the Bank’s U.S. BSA/AML
 
program; (v) the impact on the Bank’s brand
 
and reputation is
more negative or sustained than anticipated;
 
and/or (vi) if any of the risks described
 
in this “Global Resolution of the Investigations
 
into the Bank’s U.S. BSA/AML
Program”
 
section materializes. The foregoing factors
 
may also lead to rating agencies further
 
downgrading the Bank’s credit ratings and outlooks.
 
See also “Value
and Market Price of our Common Shares
 
and other Securities” and “Downgrade,
 
Suspension or Withdrawal of Ratings Assigned
 
by any Rating Agency”, below.
See also the risks described under “Regulatory
 
Oversight and Compliance”.
Regulatory Oversight and Compliance
The Bank and its businesses are subject
 
to extensive regulation and oversight by
 
a number of different governments, regulators and
 
self-regulatory organizations
(collectively, “Bank regulators”) around the world. Regulatory and
 
legislative changes and changes in the
 
Bank’s regulators’ expectations occur in all jurisdictions
 
in
which the Bank operates.
Bank regulators around the world have demonstrated
 
an increased focus on capital,
 
liquidity,
 
and interest rate risk
 
(IRR) risk management; consumer protection;
data management;
 
conduct risk and internal risk and control
 
frameworks across the three lines of defense;
 
foreign interference; and financial crime
 
including
money laundering, terrorist financing and economic
 
sanctions risks and threats. There is heightened
 
focus by Bank regulators globally on the impact
 
of interest
rates and inflation on customers, as well as
 
on the Bank’s operations and its management
 
and oversight of risks associated with these
 
matters. In addition, these
risks continue to rapidly evolve, as a
 
result of new or emerging threats, including
 
geopolitical and those associated with use
 
of new, emerging and interrelated
technologies, artificial intelligence (AI), machine
 
learning, models and decision-making tools.
The content and application of laws, rules and
 
regulations affecting financial services institutions
 
may sometimes vary according to factors such
 
as the size of the
institution,
 
the jurisdiction in which it is organized or
 
operates, and other criteria. There can also
 
be significant differences in the ways that
 
similar regulatory
initiatives affecting the financial services industry are
 
implemented in Canada, the United States
 
and other countries and regions in
 
which the Bank does business.
For example, when adopting rules that are
 
intended to implement a global regulatory
 
standard, a national regulator may introduce
 
additional or more restrictive
requirements. Furthermore, some of the Bank’s regulators
 
have the discretion to impose additional requirements,
 
standards or guidance regarding the Bank’s risk,
capital and liquidity management, or other
 
matters within their regulatory scope, and in
 
some cases the Bank may be prohibited by
 
law from publicly disclosing
such additional requirements, standards or guidance.
 
Compliance with these additional requirements,
 
standards or guidance may increase the
 
Bank’s compliance
and operational costs, and could adversely
 
affect the Bank’s businesses and results of operations.
 
Regulators have indicated the potential for escalating
consequences for banks that do not timely
 
resolve open issues or have repeat issues.
 
Furthermore, delays in satisfying one regulatory
 
requirement could affect
the Bank’s progress on others. Failure to satisfy
 
regulatory requirements on a timely basis
 
could result in additional fines, penalties, business
 
restrictions,
limitations on subsidiary capital distributions,
 
increased capital or liquidity requirements,
 
enforcement actions, increased regulatory oversight,
 
and other adverse
consequences, which could be significant.
 
Compliance with any consent orders or
 
regulatory proceedings, as well as the implementation
 
of their requirements,
may increase the Bank’s costs, require the Bank
 
to reallocate resources away from managing
 
its business, negatively impact the Bank’s capital
 
and credit ratings,
cash flows and funding costs, require the Bank
 
to undergo significant changes to its business,
 
operations, products and services, and risk
 
management practices,
damage the Bank’s reputation, and subject the
 
Bank to other adverse consequences, including
 
additional financial penalties, restrictions
 
and limitations.
The Bank monitors and evaluates the potential
 
impact of applicable regulatory developments
 
(including enacted and proposed rules,
 
standards, public
enforcement actions, consent orders, and
 
regulatory guidance). However, while the Bank devotes
 
substantial compliance, legal, and operational
 
business
resources to facilitate compliance with these
 
developments by their respective effective dates,
 
and also to the consideration of other Bank
 
regulator expectations, it
is possible that: (i) the Bank may not be
 
able to accurately predict the impact of
 
regulatory developments, or the interpretation
 
or focus of enforcement actions
taken by governments, regulators and courts,
 
(ii) the Bank may not be able to develop
 
or enhance the platforms, technology, or operational procedures
 
and
frameworks necessary to comply with, or adapt
 
to, such rules or expectations in advance
 
of or by their effective dates; or (iii) regulators and
 
other parties could
challenge the Bank’s compliance. Also, it may be
 
determined that the Bank has not adequately, completely or addressed
 
on a timely basis regulatory
developments or other regulatory requirements,
 
including enforcement actions, to which it
 
is subject, in a manner which meets Bank regulator
 
expectations.
At any given time, the Bank is subject
 
to a significant number of legal and regulatory
 
proceedings and to numerous governmental
 
and regulatory examinations.
Additionally, the Bank has been subject to regulatory enforcement
 
proceedings and has entered into
 
settlement agreements with Bank regulators,
 
and the Bank
may continue to face a greater number or
 
wider scope of investigations, enforcement
 
actions and litigation. The Bank could also
 
be subject to negative regulatory
evaluation or examination findings not only
 
because of violations of laws and regulations,
 
but also due to failures, as determined by
 
its regulators, to have
adequate policies and procedures, or to remedy
 
deficiencies on a timely basis. Regulatory
 
and legislative changes and changes in expectations
 
will continue to
increase the Bank’s compliance and operational
 
risks and costs. In addition, legislative and
 
regulatory initiatives could require
 
the Bank to make significant
modifications to its operations in the relevant
 
countries or regions in order to comply
 
with those requirements. This could result in increased
 
costs as well as
adversely affect the Bank’s businesses and results of operations.
 
In the future, the Bank may be subject to additional
 
regulatory enforcement proceedings or
 
enter into future settlement arrangements
 
with Bank regulators, and it
may incur fines, penalties,
 
judgments or business restrictions not
 
in its favour associated with regulatory
 
non-compliance, all of which could also
 
lead to negative
impacts on the Bank’s financial performance, operational
 
changes including restrictions on offering certain
 
products or services or on operating in
 
certain
jurisdictions, and its reputation.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 64
See also the risks described under the heading
 
“Introduction of New and Changes
 
to Current Laws, Rules and Regulations” and
 
“Global Resolution of the
Investigations into the Bank’s U.S. BSA/AML
 
Program”.
Executing on Long-Term Strategies and Shorter-Term
 
Key Strategic Priorities
The Bank has a number of strategies and priorities,
 
including those detailed in each Segment’s
 
“Business Segment Analysis” section of
 
this document, which may
include large scale strategic or regulatory initiatives
 
that are at various stages of development
 
or implementation. Examples include organic
 
growth strategies;
integrating recently acquired businesses
 
(e.g., TD Cowen); implementing strategic
 
agreements; projects to meet new regulatory
 
requirements; building new
platforms, technology, and omnichannel capabilities; and enhancements
 
to existing technology. Strategies may adjust in response to
 
shifts in the internal and
external environment and/or changes in leadership.
 
Risk can be elevated due to the size, scope,
 
velocity, interdependency, and complexity of projects; limited
timeframes to complete projects; and competing
 
priorities for limited specialized resources.
 
The Global Resolution of the civil and criminal
 
investigations into the
Bank’s U.S. BSA/AML program, including the
 
limitations on the Bank’s U.S. business, has
 
impacted and could adversely affect the Bank’s ability
 
to achieve some
of its strategies and priorities.
The Bank regularly explores opportunities
 
which include acquisitions and dispositions of companies
 
or businesses, directly or indirectly, through its subsidiaries.
 
In
respect of acquisitions and dispositions,
 
the Bank undertakes transaction assessments
 
and due diligence before completing
 
a merger, acquisition or disposition to
confirm the transaction fits within the Bank’s
 
Risk Appetite, and closely monitors integration
 
activities and performance post-close.
 
However, the Bank’s ability to
successfully complete an acquisition or disposition
 
is often subject to regulatory and other
 
approvals, and the Bank cannot be certain
 
when, or if, or on what terms
and conditions, any required approvals
 
will be granted.
While there is significant management attention
 
on the governance, oversight, methodology, tools, and resources
 
needed to manage the Bank’s strategies and
priorities, the Bank’s ability to execute on them
 
is dependent on a number of assumptions
 
and factors. These include those set
 
out in the “Economic Summary and
Outlook”,
 
“Key Priorities for 2025”, “2024 Accomplishments
 
and Focus for 2025”, “Operating Environment
 
and Outlook”, and “Managing Risk” sections
 
of this
document, as well as disciplined resource
 
and expense management and the Bank’s ability
 
to implement (and the costs associated
 
with the implementation of)
programs to comply with new or enhanced
 
regulations or regulator demands, all of
 
which may not be in the Bank’s control and are difficult
 
to predict.
The Bank may not achieve its financial or
 
strategic objectives including anticipated
 
cost savings or revenue synergies, following
 
acquisition and integration
activities. In addition, from time to time, the Bank
 
may invest in companies without taking a
 
controlling position in those companies, which
 
may subject the Bank to
those companies’
 
operational and financial risks, the risk
 
that these companies may make decisions
 
the Bank does not agree with, and
 
the risk that the Bank may
have differing objectives than the companies in
 
which the Bank has interests.
If any of the Bank’s strategies, priorities, acquisition
 
and integration activities, dispositions
 
or investments are not successfully executed,
 
or do not achieve their
financial or strategic objectives,
 
there may be an impact on the Bank’s operations
 
and financial performance and the Bank’s earnings
 
could grow more slowly or
decline.
TD’s Schwab Equity Investment and Schwab
 
IDA Agreement Exposes the Bank to
 
Certain Risks
 
As at October 31, 2024, the Bank’s reported investment
 
in Schwab was approximately 10.1%
 
of the outstanding voting and non-voting
 
common shares of Schwab,
representing approximately 13.5% of TD’s market
 
capitalization. The Bank accounts for its
 
investment in Schwab using the equity
 
method, recognizing the Bank’s
share of Schwab’s earnings available to common shareholders,
 
which on an adjusted basis represented
 
6.2% of TD’s net income in fiscal 2024. Schwab’s
 
stock
price has historically experienced higher levels
 
of volatility than the TD stock, and
 
the size of the Schwab investment relative
 
to TD’s market capitalization exposes
TD to the risk of large declines in the value
 
of the investment and a corresponding impact
 
on TD’s market value. The value of the Bank’s investment
 
in Schwab
and its contribution to the Bank’s financial results are
 
also vulnerable to poor financial performance
 
or other adverse developments in Schwab’s business.
 
In
addition, the Bank has a Schwab IDA Agreement
 
with Schwab and it may be affected by actions taken
 
by Schwab, or if Schwab does not perform
 
its obligations,
pursuant to the Schwab IDA agreement (as
 
further described in the “Related Party
 
Transactions” section of this document).
Technology and Cyber Security Risk
Technology and cyber security risks for large financial institutions like the
 
Bank have increased in recent years, especially
 
due to heightened geopolitical tensions
and a challenging macroeconomic environment
 
that increase the risk of cyber-attacks.
 
The rising risk of attacks on critical infrastructure
 
and supply chains is due,
in part, to the proliferation, sophistication
 
and constant evolution of new technologies
 
and attack methodologies used by
 
threat actors, such as organized criminals,
nation states, sociopolitical entities and other
 
internal and external parties. Heightened
 
risks may also result from the size and
 
scale of a financial institution’s
operations, geographic footprint, the complexity
 
of its technology infrastructure, its reliance
 
on internet capabilities, cloud and telecommunications
 
technologies to
conduct financial transactions, such as the
 
continued development of mobile and internet
 
banking platforms, as well as opportunistic
 
threats by actors that have
accelerated exploitations of new weaknesses,
 
misconfigurations, or vulnerabilities.
 
The Bank’s technologies, systems and networks,
 
those of the Bank’s customers (including their
 
own devices), and those of third parties
 
providing services to the
Bank, continue to be subject to cyber-attacks,
 
and may be subject to disruption of
 
services, data security or other breaches (such
 
as loss or exposure of
confidential information, including customer
 
or employee information), identity theft and
 
corporate espionage, or other incidents.
 
The Bank has experienced service
disruptions due to technology failure or
 
connectivity issues triggered by a third party
 
and may be subject to service disruptions
 
in the future due to cyber-attacks
and/or technology failure or connectivity issues.
 
The Bank’s use of third-party service providers,
 
which are subject to these potential incidents,
 
increases the risk of
potential attack, breach or disruption; and
 
may delay our response as the Bank has less immediate
 
oversight and direct control over the third parties’
 
technology
infrastructure or information security.
The Bank may experience material loss or
 
damage in the future as a result of online attacks
 
on banking systems and applications,
 
supply chain attacks,
ransomware attacks, introduction of malicious
 
software, denial of service attacks, malicious insiders
 
or service provider exfiltration of data,
 
AI-assisted attacks, and
phishing attacks, among others. Any of these
 
attacks could result in fraud, unauthorized
 
disclosure or theft of data or funds, or the disruption
 
of the Bank’s
operations. Cyber-attacks may include attempts
 
by malicious insiders or service providers
 
of the Bank to disrupt operations, access
 
or disclose sensitive
information or other data of the Bank, its customers,
 
or its employees. Attempts to deceive employees,
 
customers, service providers, or other users
 
of the Bank’s
systems continue to occur, in an effort to obtain sensitive information,
 
gain access to the Bank’s or its customers’ or employees’
 
data or customer or Bank funds, or
to disrupt the Bank’s operations. While these deception
 
attempts have not resulted in materially adverse
 
impacts on the Bank thus far, there can be no assurance
that future deception attempts may not be successful,
 
especially as threats become more
 
sophisticated. In addition, the Bank’s customers
 
may use personal
devices, such as computers, smartphones, and
 
tablets, which limits the Bank’s ability to mitigate
 
certain risks introduced through these personal
 
devices.
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 65
The Bank regularly reviews external events
 
and assesses and may enhance its
 
controls and response capabilities as it considers
 
necessary to help mitigate
against the risk of cyber-attacks or data security
 
or other breaches in response to the
 
evolving threat environment, but these
 
activities may not mitigate all risks,
and the Bank may experience loss or damage
 
arising from such attacks or breaches.
 
As a result, the industry and the Bank are
 
susceptible to experiencing
potential financial and non-financial loss and/or
 
harm from these attacks or breaches.
 
The adoption of certain technologies, such as
 
cloud computing, AI, machine
learning, robotics, and process automation
 
call for continued focus and investment
 
to manage the Bank’s risks. It is possible that the
 
Bank, or those with whom the
Bank does business, have not anticipated or
 
implemented or may not anticipate or
 
implement effective measures against all
 
such cyber and technology-related
risks, particularly because the tactics, techniques,
 
and procedures used by threat actors
 
change frequently and risks can originate
 
from a wide variety of sources
that have also become increasingly sophisticated.
Furthermore, the Bank’s owned and operated applications,
 
platforms, networks, processes, products,
 
and services could be subject to failures
 
or disruptions, or
non-compliance with regulations as a result
 
of human error, natural disasters, utility or infrastructure disruptions,
 
pandemics or other public health emergencies,
malicious insiders or service providers, cyber-attacks
 
or other criminal or terrorist acts, which
 
may impact the Bank’s operations. Such adverse
 
effects could limit
the Bank’s ability to deliver products and services
 
to customers, and/or damage the Bank’s reputation,
 
which in turn could lead to financial loss.
 
While cyber
insurance premiums have stabilized, providers
 
continue to be concerned about systemic
 
cyber risk, causing coverage term changes
 
across the industry. This has
the potential to impact the Bank’s ability to mitigate
 
risks through cyber insurance and may limit
 
the amount of coverage available for financial
 
losses. As such, with
any cyber-attack, disruption of services, data,
 
security or other breaches (including loss or
 
exposure of confidential information), identity
 
theft, corporate espionage
or other compromise of technology or information
 
systems, hardware or related processes,
 
or any significant issues caused by weakness
 
in information technology
infrastructure and systems, the Bank
 
may experience, among other things, financial
 
loss; a loss of customers or business
 
opportunities; disruption to operations;
misappropriation or unauthorized disclosure
 
of confidential, financial or personal information;
 
damage to computers or systems of
 
the Bank and those of its
customers and counterparties; violations of
 
applicable laws; litigation; regulatory penalties
 
or intervention, remediation, investigation
 
or restoration costs; increased
costs to maintain and update the Bank’s operational
 
and security systems and infrastructure;
 
and reputational damage. If the Bank
 
were to experience such an
incident, it may take a significant amount of
 
time and resources to investigate the incident
 
to obtain information necessary to assess
 
the impact.
The Bank’s investments in its Technology and Cyber infrastructure, including the investment
 
in its risk and control environment, may be inadequate
 
to meet
regulatory expectations, remain competitive,
 
serve clients effectively, and avoid business disruptions
 
or operational errors.
Data Risk
Data risk is the risk associated with inadequate
 
or inappropriate use, management, or
 
protection of the Bank’s data assets, which
 
may adversely impact the Bank’s
operations, strategic objectives, reputation,
 
customer trust and financial results, and
 
may result in financial losses, regulatory investigations
 
and enforcement
proceedings, and legal proceedings.
Data use cases have increased due to process
 
automation and greater reliance on analytics
 
and business intelligence to support decision-making.
 
There is
heightened risk and expectations for managing
 
integrity and quality of customer data and
 
privacy. This risk highlights the importance of data usage, data
management, and access controls to
 
mitigate data risk and build and maintain the trust
 
of our customers, shareholders, and regulators.
 
Data risk spans broadly
across multiple risk categories and business
 
segments and typically arises out of
 
operational risks such as technology, cyber security, generative AI, fraud, and
third-party risks.
TD’s investments to improve its risk and control
 
environment, modernize its data and technology, and operating
 
model changes to further enhance data
management and protection may be inadequate
 
to meet regulatory expectations, remain competitive,
 
serve clients effectively, and avoid business disruptions or
operational errors.
Model Risk
Model Risk is the potential for adverse consequences
 
arising from decisions based on incorrect
 
or misused models and their outputs.
 
Model uncertainty remains
due to emerging risks (including elevated
 
inflation and interest rates over an extended
 
period of time), with model reliability impacted
 
across some business areas.
Short-
 
and long-term mitigants that were identified
 
and executed to help improve resilience
 
of models trained on historical data,
 
may become less relevant under
the current environment (e.g., in the case of
 
IFRS 9 and stress testing models),
 
and Management’s efforts to assess and update
 
models may not adequately or
successfully improve the resilience of such
 
models.
Fraud Activity
Fraud risk is the risk associated with acts designed
 
to deceive others, resulting in financial loss and
 
harm to shareholder value, brand, reputation,
 
employee
satisfaction and customers. Fraud Risk arises
 
from numerous sources, including potential or
 
existing customers, agents, third parties,
 
contractors, employees and
other internal or external parties, including
 
service providers to the Bank and the Bank’s
 
customers that store bank account
 
credentials and harvest data based on
customers’ web banking information and
 
activities. In deciding whether to extend credit
 
or enter into other transactions with
 
customers or counterparties, the Bank
may rely on information furnished by or on
 
behalf of such customers, counterparties
 
or other external parties, including financial
 
statements and financial
information and authentication information.
 
The Bank may also rely on the representations
 
of customers, counterparties, and other external
 
parties as to the
accuracy and completeness of such information.
 
Misrepresentation of this information potentially
 
exposes the Bank to increased fraud events
 
when transacting
with customers or counterparties. In order
 
to authenticate customers, whether
 
through the Bank’s phone or digital channels
 
or in its branches and stores, the Bank
may also rely on certain authentication
 
methods which could be subject to fraud.
 
Additionally, TD, and the industry as a whole, has experienced an
 
increase in attack levels year-over-year. Despite the Bank’s investments
 
in fraud prevention and
detection programs, capabilities, measures and
 
defences,
 
they have not fully mitigated,
 
and in the future may not successfully
 
mitigate,
 
against all fraudulent
activity which could result in financial loss or
 
disruptions in the Bank’s businesses. In addition
 
to the risk of material loss (financial loss,
 
misappropriation of
confidential information or other assets of
 
the Bank or its customers and counterparties)
 
that could result from fraudulent activity, the Bank could face legal
 
action
and customer and market confidence in the
 
Bank could be impacted.
Insider Risk
Insider risk is the potential for an individual
 
who has, or had, authorized access to
 
TD’s information, systems, premises, or people
 
to use their access, either
intentionally or unintentionally, to act in a way that could negatively
 
harm the Bank, including its customers,
 
employees, service providers, or other
 
stakeholders.
Insider risk exposure is inherent to the normal
 
course of operating TD’s businesses including activities
 
with our third parties.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 66
The financial industry continues to observe
 
an increased number of insider risk cases,
 
leading to new or emerging threats. These
 
cases can lead to data breaches,
intellectual property theft, fraud, operational
 
disruptions, and regulatory and compliance
 
risks.
 
The Bank closely monitors the internal
 
threat environment across all typologies and
 
continues to invest in TD’s insider risk management
 
program. Notwithstanding,
the Bank continues to be exposed to potential
 
adverse regulatory, financial, operational, legal, and reputational
 
impacts as a result of insider events.
Conduct Risk
Conduct risk is the risk
 
arising from employee conduct or business
 
practices causing unfair outcomes to persons
 
to whom we offer or sell our products or services,
or harm to market integrity. Conduct risk may arise from the
 
failure to comply with laws, regulatory requirements
 
and standards, or the TD Code of Conduct
 
and
Ethics.
 
Conduct risk is a risk across all industries
 
that can have significant impact to organizations,
 
including the Bank. From time to time,
 
some of the Bank’s employees
have failed, and may in the future fail, to
 
comply with applicable laws, regulatory requirements
 
and standards, and the TD Code of Conduct
 
and Ethics. Our
systems and procedures, including the
 
TD Code of Conduct and Ethics, may be inadequate
 
to ensure that our employees comply
 
with the law and operate with
integrity, leading to damage to our business and reputation, regulatory
 
action, or other potential adverse impacts
 
to the Bank.
 
Third-Party Risk
The Bank recognizes the value of using
 
third parties to support its businesses, as
 
they provide access to modern applications,
 
processes, products and services,
specialized expertise,
 
innovation, economies of scale, and operational
 
efficiencies. However, the Bank may become dependent on
 
third parties with respect to
continuity, reliability, and security, and their associated processes, people and facilities. As the financial services
 
industry and its supply chains become
 
more
complex, the need for resilient, robust, holistic,
 
and sophisticated controls, and ongoing
 
oversight increases.
The Bank also recognizes that the applications,
 
platforms, networks, processes, products,
 
and services from third parties could be
 
subject to failures or disruptions
impacting the delivery of services or products
 
to the Bank. These failures or disruptions could
 
be because of human error, natural disasters, utility or infrastructure
disruptions, changes in the financial condition
 
of such third parties, other general business and
 
economic conditions which may impact
 
such third parties,
pandemics or other public health emergencies,
 
malicious insiders or service providers,
 
cyber-attacks or other criminal or terrorist acts,
 
or non-compliance with
regulations. Such adverse effects could limit the Bank’s
 
ability to deliver products and services
 
to customers, lead to disruptions in the Bank’s businesses,
 
expose
the Bank to financial losses that the Bank is
 
unable to recover from such third parties,
 
and expose the Bank to legal, operational
 
and regulatory risks, including
those outlined under the headings “Global
 
Resolution of the Investigations into the Bank’s
 
U.S. BSA/AML Program”, “Regulatory Oversight
 
and Compliance”
 
and
“Legal Proceedings”, and/or damage the Bank’s reputation,
 
which in turn could result in an adverse impact
 
to the Bank’s operations, earnings or financial
condition.
Introduction of New and Changes to
 
Current Laws, Rules and Regulations
The financial services industry is highly regulated.
 
The Bank’s operations, profitability and reputation
 
could be adversely affected by the introduction of
 
new laws,
rules and regulations, amendments to, or
 
changes in interpretation or application of
 
current laws,
 
rules and regulations, issuance of judicial
 
decisions, and changes
in enforcement pace or activities. These adverse
 
effects could also result from the fiscal, economic,
 
and monetary policies of various central
 
banks, regulatory
agencies,
 
self-regulatory organizations and governments
 
in Canada, the U.S., the United Kingdom,
 
Ireland, Asia Pacific and other countries and regions,
 
and
changes in the interpretation or implementation
 
of those policies. Such adverse effects may include
 
incurring additional costs and devoting
 
additional resources to
address initial and ongoing compliance; limiting
 
the types or nature of products and services
 
the Bank can provide and fees it can charge; unfavourably
 
impacting
the pricing and delivery of products and services
 
the Bank provides; increasing the ability
 
of new and existing competitors to compete
 
on the basis of pricing,
products and services (including, in jurisdictions
 
outside Canada, the favouring of certain
 
domestic institutions); and increasing risks
 
associated with potential non-
compliance. In addition to the adverse impacts
 
described above, the Bank’s failure to comply
 
with applicable laws,
 
rules
 
and regulations could result in sanctions,
financial and non-financial penalties, and
 
changes including restrictions on offering certain products
 
or services or on operating in certain jurisdictions,
 
that could
adversely impact its earnings, operations and
 
reputation. See also the risks described
 
under the heading “Global Resolution of
 
the Investigations into the Bank’s
U.S. BSA/AML Program”
 
and “Regulatory Oversight and Compliance”.
The regulation of financial crime, including,
 
anti-money laundering, anti-terrorist financing
 
and economic sanctions,
 
continue to be a high priority globally, with an
increasing pace of regulatory change and geopolitical
 
events, along with heightened and evolving
 
regulatory standards in all the jurisdictions
 
in which the Bank
operates.
 
The global data and privacy landscape is dynamic
 
and regulatory expectations continue to evolve.
 
New and amended legislation is anticipated in
 
various
jurisdictions in which the Bank does business.
Canadian, U.S. and global regulators have
 
been increasingly focused on conduct, operational
 
resilience and consumer protection matters
 
and risks, which could
lead to investigations, remediation requirements,
 
and higher compliance costs.
 
Regulators have increased their focus on
 
ESG matters, including the impact of
 
climate change, greenwashing, sustainable finance,
 
financial and economic
inclusion and ESG-related policies and disclosure
 
regarding such matters, with significant new
 
legislation and amended legislation
 
anticipated
 
in some of the
jurisdictions in which the Bank does business.
In addition, there may be changes in interpretation
 
or application of current laws, rules and regulations
 
to incorporate ESG matters in ways that
 
were not previously
anticipated.
Despite the Bank’s monitoring and evaluation
 
of the potential impact of rules, proposals, public
 
enforcement actions, consent orders and
 
regulatory guidance,
unanticipated new regulations or regulatory interpretations
 
applicable
 
to the Bank may be introduced by governments
 
and regulators around the world and the
issuance of judicial decisions may result in
 
unanticipated consequences to the Bank.
 
Canada
In Canada, there are a number of government
 
and regulatory initiatives underway that
 
could impact financial institutions and initiatives
 
with respect to payments
evolution and modernization, open banking,
 
consumer protection, protection of customer
 
data, technology and cyber security, climate risk management
 
and
disclosure, greenwashing, dealing with vulnerable
 
persons, competitiveness of the financial
 
services industry, and anti-money laundering. For example, in
 
January
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
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2024, a new OSFI guideline took effect in relation
 
to technology and cyber risk management,
 
which establishes requirements for federally
 
regulated financial
institutions (FRFIs) as to governance and
 
risk management, technology operations
 
and resilience, and cybersecurity;
 
and a new OSFI guideline was released
requiring federally regulated financial institutions
 
to establish, implement, maintain and adhere
 
to policies and procedures that protect against
 
threats to integrity or
security. The implementation of these guidelines may result in increased
 
compliance costs to the Bank and impact
 
the Bank’s strategies, priorities, organizational
plans, policies, processes and standards.
 
In another example, the federal government
 
is implementing AML related requirements
 
as part of its mandated five-year
review of Canada’s AML Regime. Many of the provisions
 
are anticipated to have or will have short
 
coming into force dates throughout 2025. The
 
pace of this
change, the short timelines to implement
 
and the evolving risks could result in increased
 
costs and risk that may impact the Bank’s businesses,
 
operations and
results.
United States
In July 2023, the U.S. banking regulators
 
proposed regulations modifying U.S.
 
capital rules to effectuate certain Basel III standards (as
 
well as other changes). The
proposed rules, if finalized in the form proposed
 
in July 2023 would be expected to increase
 
capital requirements on large banks with
 
more than US$100 billion in
total assets and, based on estimates by The
 
Federal Reserve, would be expected
 
to increase relative common equity tier 1
 
(CET1) capital requirements by
approximately 14% for the “Category III”
 
or “Category IV” intermediate holding companies
 
of foreign banking organizations. These
 
changes would impact the
Bank’s intermediate holding company (which is
 
considered a “Category III”
 
intermediate holding company under applicable
 
Federal Reserve regulations) and its
subsidiary U.S. banks but would not have a
 
direct impact on the Bank’s CET1 ratios, which
 
are based on OFSI rules. The proposed
 
rule would eliminate the
Accumulated Other Comprehensive Income
 
opt-out following a three-year transition
 
period, which would require reflecting
 
unrealized losses and gains from
Available-for-sale securities in regulatory capital.
 
In addition, the Federal Reserve has, as part
 
of a separate proposed rule on a G-SIB
 
surcharge, proposed changes to the definition
 
of the “cross-jurisdictional
activity” risk-based indicator. The proposed change
 
would include cross-jurisdictional derivatives
 
exposures (which are currently excluded)
 
in the calculation of
cross-jurisdictional activity. The Federal Reserve estimates that
 
this change in approach would, if finalized
 
in the form proposed in July 2023, substantially
 
increase
the reported value of cross-jurisdictional
 
activity in the combined U.S. operations
 
(CUSO) and intermediate holding companies
 
of foreign banking organizations.
Exceeding US$75 billion in cross-jurisdictional
 
activity would result in treatment
 
as a “Category II” institution under the
 
Federal Reserve’s regulatory framework.
The Federal Reserve expects seven
 
large foreign banking organizations would
 
move into Category II based on this change
 
in approach, and it is likely that the
Bank would be impacted if such changes are
 
finalized in the form proposed in July 2023.
In September 2024, the Vice Chair for Supervision of
 
the Federal Reserve, indicated that he
 
intends to recommend that the Federal
 
Reserve re-propose the Basel
endgame and G-SIB surcharge rules, with
 
broad and material changes to the 2023 proposals.
 
However, the re-proposal effort has since stalled. It is also unclear
what the substance of the final rules, the timing
 
on finalization of the rules, and the time
 
frame for compliance, will be. It is likely that
 
the Bank will incur operational,
capital, liquidity and compliance costs resulting
 
from the changes in these rules.
 
The current U.S. regulatory environment
 
for banking organizations may be further impacted
 
by additional legislative or regulatory developments,
 
including resulting
from changes in U.S. executive administration,
 
congressional leadership and/or agency
 
leadership, and regulators focusing on
 
potential racial discrimination and
economic inequity, including fair lending and unfair, deceptive, or abuse acts or practices.
 
The U.S. banking regulators may pursue further
 
changes to the
regulation and supervision of banks in response
 
to bank failures in Spring 2023, which could
 
include changes to liquidity, interest rate risk and incentive
compensation as areas of focus. The ultimate
 
outcome of these developments and their
 
impact on the Bank remain uncertain.
 
Europe
In Europe, there remain a number of uncertainties
 
in connection with the future of the United
 
Kingdom – European Union relationship,
 
and reforms implemented
through the European Market Infrastructure
 
Regulation and the review of Markets in Financial
 
Instruments Directive and accompanying
 
Regulation could result in
higher operational and system costs and
 
potential changes in the types of products
 
and services the Bank can offer to customers in
 
the region.
Level of Competition, Shifts in Consumer
 
Attitudes, and Disruptive Technology
 
The Bank operates in a highly competitive industry
 
and its performance is impacted by the level
 
of competition. Customer acquisition and
 
retention can be
influenced by many factors, including
 
the Bank’s brand and reputation as well as the pricing,
 
market differentiation, and overall customer experience
 
of the Bank’s
products and services.
 
Enhanced competition from incumbents and
 
new entrants may impact the Bank’s pricing of
 
products and services and may cause it
 
to lose revenue and/or market
share. Increased competition requires the Bank
 
to make persistent short- and long-term investments
 
to modernize, remain competitive,
 
and continue delivering
differentiated value to its customers. In addition, the
 
Bank operates in environments where laws
 
and regulations that apply to it may
 
not universally or equitably
apply to its current and emerging competitors,
 
which could include the domestic institutions
 
in jurisdictions outside of Canada or the
 
U.S., or non-traditional
providers (such as Fintech or big technology
 
competitors) of financial products and services.
 
Non-depository or non-financial institutions
 
are often able to offer
products and services that were traditionally
 
banking products and compete with banks
 
in offering digital financial solutions (primarily
 
mobile or web-based
services), without facing the same regulatory
 
and capital requirements or oversight. These
 
competitors
 
may also operate at much lower costs relative
 
to revenue
or balances than traditional banks or offer financial
 
services at a loss to drive user growth or
 
to support their other profitable businesses.
 
These third-parties can
seek to acquire customer relationships, react
 
quickly to changes in consumer behaviours,
 
and disintermediate customers from their
 
primary financial institution,
which can also increase fraud and privacy risks
 
for customers and financial institutions in
 
general. The nature of disruption is such
 
that it can be difficult to
anticipate and/or respond to adequately or
 
quickly, representing inherent risks to certain Bank businesses, including
 
payments,
 
lending and self-directed investing.
As such, this type of competition could also
 
adversely impact the Bank’s earnings and competitive
 
positioning.
As described in the “Global Resolution of the
 
Investigations into the Bank’s U.S. BSA/AML
 
Program”
 
section above, on October 10, 2024, the Bank
 
and certain of
its U.S. subsidiaries consented to orders
 
with the OCC, the Federal Reserve Board
 
and FinCEN, and entered into plea agreements
 
with the U.S. DOJ. The
negative impact of such orders and plea
 
agreements on the Bank’s brand and reputation,
 
along with the number of limitations on the
 
Bank’s U.S. business
imposed by such orders, could adversely
 
affect our ability to attract and retain customers
 
in the U.S. or elsewhere
.
 
AI adoption by TD and by our third-party vendors,
 
including newer technologies such as
 
Generative AI, presents risks and challenges
 
such as regulatory and legal
uncertainty, the risk of biased results or unreliable outputs if
 
commercially implemented, compliance
 
risks, and operational risks including
 
sophisticated and scaled
fraud / scams, cyber, privacy, data-related, intellectual property, and third-party risks. Despite the
 
Bank’s efforts to evaluate such technologies before their
 
use,
these efforts may not successfully mitigate these
 
technologies’
 
inherent risks and challenges, which
 
could result in financial loss or disruption
 
to the Bank’s
businesses. In addition, the Bank could face
 
legal action and customer and market confidence
 
in the Bank could be impacted. Given the
 
risk of potential
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 68
disintermediation
 
from incumbents, new entrants and
 
Fintech / big technology competitors, the Bank
 
may be required to make significant incremental
 
investments
in its innovation strategies and frameworks
 
in order to remain competitive.
 
Environmental and Social Risk (including
 
Climate-Related Risk)
 
As a financial institution, the Bank is subject
 
to environmental and social (E&S) risk. E&S
 
risk is a transverse risk, driving financial and
 
non-financial risks. Drivers
of E&S risk are often multi-faceted and can originate
 
from the Bank’s internal environment, including
 
its operations, business activities, environmental
 
and social-
related commitments, products, clients, colleagues,
 
or suppliers. Drivers of E&S risk can
 
also originate from the Bank’s external environment,
 
including the
communities in which the Bank operates, as
 
well as second-order impacts of physical risks
 
and the transition to a low-carbon
 
economy.
Climate-related risk is the risk of reputational
 
damage and/or financial loss or other harm
 
resulting from the physical and transition
 
risks of climate change to the
Bank, its clients or the communities in which
 
the Bank operates. This includes physical risks
 
arising from the consequences of a
 
changing climate, including acute
physical risks stemming from extreme weather
 
events happening with increasing severity
 
and frequency (e.g., wildfires and floods),
 
and chronic physical risks
stemming from longer-term, progressive shifts
 
in climatic and environmental conditions
 
(e.g., rising sea levels and global
 
warming). Transition risks arise from the
process of shifting to a low-carbon economy, influenced by new and emerging
 
climate-related public policies,
 
potential litigation and litigation, changing societal
demands and preferences, technologies,
 
stakeholder and shareholder expectations,
 
and legal developments.
Social risk is the risk of financial loss or other
 
harm resulting from social factors, including,
 
but not limited to, adverse human rights
 
(e.g., discrimination, Indigenous
Peoples’ rights, modern slavery, and human trafficking), the social impacts
 
of climate change (e.g., poverty, and economic and physical displacement)
 
and the
health and wellbeing of employees (e.g., inclusion
 
and diversity, pay equity, mental health, equality, physical wellbeing, and workplace safety). Organizations,
including the Bank, are under increasing
 
scrutiny to address social and financial inequalities
 
among racialized and other marginalized
 
groups and are subject to
rules and regulations both locally and internationally.
 
E&S risks may have financial, reputational,
 
and/or other implications for both the Bank
 
and its stakeholders (including its customers,
 
suppliers, and shareholders)
over a range of timeframes. These risks
 
may arise from the Bank’s actual or perceived actions,
 
or inaction, in relation to climate change
 
and other E&S issues, its
progress against its E&S targets or commitments,
 
or its disclosures on these matters.
 
These risks could also result from E&S matters
 
impacting the Bank’s
stakeholders. The Bank’s participation in external
 
E&S-related organizations or commitments
 
may exacerbate these risks and subject the
 
Bank to increased
scrutiny from its stakeholders. In addition,
 
the Bank may be subject to legal and
 
regulatory risks relating to E&S matters, including
 
regulatory orders, fines, and
enforcement actions; financial supervisory
 
capital adequacy requirements; and legal action
 
by shareholders or other stakeholders,
 
including the risks described in
the “Other Risk Factors – Legal Proceedings”
 
section. Additionally, different stakeholder groups may have divergent
 
views on E&S-related matters. This
divergence increases the risk that any action,
 
or inaction, will be perceived negatively by
 
at least some stakeholders. In the U.S.,
 
there has been increased
legislative activity by state governments
 
that restricts the flow of capital and investment
 
by financial institutions in state governmental
 
entities. The Bank is
monitoring these trends and assessing their potential
 
impact in the context of TD’s ESG-related
 
practices and policies.
Limitations on the availability and reliability
 
of data and methodologies may also impact
 
the Bank’s ability to assess and evaluate E&S
 
risks. Although these
limitations are expected to improve over time
 
as the Bank continues to advance its data
 
capabilities by working with internal and external
 
subject matter experts,
leading to more robust and reliable E&S risk
 
monitoring, analysis, and reporting, these
 
efforts are not expected to eliminate all E&S risks.
Failure to successfully manage E&S-related
 
expectations across various divergent perspectives
 
may negatively impact the Bank’s reputation and
 
financial results.
“Greenwashing” and “social washing” can
 
occur where claims of E&S benefits are
 
made in relation to products or services or
 
corporate performance that are false,
give a misleading impression, or are not supported
 
or substantiated. These claims have accelerated
 
in focus inside and outside the Bank. Public
 
commitments,
new products and disclosures can potentially
 
expose financial institutions to risk
.
Prosecution of greenwashing claims has
 
occurred in jurisdictions in which the
Bank operates, including Canada, the U.S. and
 
Europe. The Bank continues to closely monitor
 
trends in E&S-related litigation.
 
OTHER RISK FACTORS
Legal Proceedings
Given the highly regulated and consumer-facing
 
nature of the financial services industry, the Bank is exposed
 
to significant regulatory, quasi-regulatory and self-
regulatory investigations and enforcement proceedings
 
related to its businesses and operations.
 
In addition, the Bank and its subsidiaries are
 
from time to time
named as defendants or are otherwise involved
 
in various class actions and other litigation
 
or disputes with third parties related
 
to their businesses and operations.
A single event involving a potential violation of
 
law or regulation may give rise to numerous
 
and overlapping investigations and proceedings
 
by multiple federal,
provincial, state or local agencies and officials in
 
Canada, the U.S. or other jurisdictions. In
 
addition, failure to satisfy settlement or
 
consent agreements could lead
to additional enforcement proceedings. For example,
 
failure to comply with the terms of the
 
U.S. BSA/AML related plea agreements
 
with the DOJ during the five-
year term of probation, including by failing
 
to complete the compliance undertakings,
 
failing to cooperate or to report alleged misconduct
 
as required, or committing
additional crimes, could also subject the Bank
 
to further prosecution and additional financial
 
penalties and ongoing compliance commitments,
 
and could result in
an extension of the length of the term probation.
 
Furthermore, if another financial institution
 
violates a law or regulation relating to a particular
 
business activity or
practice, this will often give rise to an investigation
 
by regulators and other governmental
 
agencies of the same or similar activity or
 
practice by the Bank.
Actions currently pending against the Bank,
 
or in which the Bank is otherwise involved,
 
may result in judgments, settlements,
 
fines, penalties, disgorgements,
injunctions, increased exposure to litigation,
 
business improvement orders, limitations
 
or prohibitions from engaging in business
 
activities, changes to the operation
or management of business activities, or other
 
results adverse to the Bank, which
 
could materially affect the Bank’s businesses,
 
financial condition and operations,
and/or cause serious reputational harm to
 
the Bank, which could also affect the Bank’s future
 
business prospects. Moreover, some claims asserted against
 
the
Bank may be highly complex and include novel
 
or untested legal theories. The outcome of
 
such proceedings may be difficult to predict or
 
estimate, in some
instances, until late in the proceedings, which
 
may last several years. Although the Bank
 
establishes reserves for these matters according
 
to accounting
requirements, the amount of loss ultimately
 
incurred in relation to those matters may be
 
material and may be substantially different
 
from the amounts accrued.
Furthermore, the Bank may not establish reserves
 
for matters where the outcome is uncertain.
 
Regulators and other government agencies
 
examine the operations
of the Bank and its subsidiaries on both a
 
routine- and targeted-exam basis, and
 
they may pursue regulatory settlements, criminal
 
proceedings or other
enforcement actions against the Bank in the
 
future.
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 69
For additional information relating to the Bank’s
 
material legal proceedings, refer to Note 26
 
of the 2024 Consolidated Financial Statements.
Ability to Attract, Develop, and Retain
 
Key Talent
The Bank’s future performance is dependent on the
 
availability of qualified talent, the Bank’s ability
 
to attract, develop, and retain key talent
 
and effectively manage
changes in leadership. The Bank’s management understands
 
that, while the labour market is softening
 
on both sides of the border, the competition for talent
continues across geographies, industries, and
 
emerging capabilities in a number of sectors
 
including financial services. This
 
competition is expected to continue as
a result of shifts in employee preferences, inflationary
 
pressures,
 
rapid speed of AI adoption, regulatory expectations,
 
economic conditions, and remote roles
providing opportunities across geographic boundaries.
 
This could result in increased attrition particularly
 
in areas where core professional and
 
specialized skills are
required.
 
As described in the “Global Resolution of the
 
Investigations into the Bank’s U.S. BSA/AML
 
Program”
 
section above, on October 10, 2024, the Bank
 
and certain of
its U.S. subsidiaries consented to orders
 
with the OCC, the Federal Reserve Board
 
and FinCEN, and entered into plea agreements
 
with the U.S. DOJ. The
negative impact of such orders and plea
 
agreements on the Bank’s reputation, along with
 
the number of limitations on the Bank’s U.S. business
 
imposed by such
orders, could adversely affect our ability to attract
 
and retain our talent in the U.S. or elsewhere
.
Although it is the goal of the Bank’s enterprise programs,
 
management resource policies and practices
 
to attract, develop, and retain key talent
 
employed by the
Bank or an entity acquired by the Bank, the Bank
 
may not be able to do so, and these actions
 
may not be sufficient to mitigate attrition.
 
Foreign Exchange Rates, Interest Rates,
 
Credit Spreads, and Equity Prices
Foreign exchange rate, interest rate, credit
 
spread, and equity price movements in
 
Canada, the U.S., and other jurisdictions in
 
which the Bank does business
impact the Bank’s financial position and its future
 
earnings. Changes in the value of the Canadian
 
dollar relative to the global foreign exchange
 
rates may also
affect the earnings of the Bank’s small business, commercial,
 
and corporate customers. A change in
 
the level of interest rates affects the interest spread
 
between
the Bank’s deposits and other liabilities, including loans
 
and, as a result, impacts the Bank’s net interest income.
 
In particular, elevated interest rates would
increase the Bank’s interest income but could also
 
have adverse impacts on the Bank’s cost of
 
funding for loans and may also result in
 
the risks outlined under the
heading “Inflation, Interest Rates and
 
Recession Uncertainty”. A change in
 
the level of credit spreads affects the relative
 
valuation of assets and liabilities and, as
 
a
result, impacts the Bank’s earnings and could
 
also result in significant losses if, to generate
 
liquidity, the Bank has to sell assets that have suffered a decline in
value. A change in equity prices impacts the Bank’s
 
financial position and its future earnings,
 
due to unhedged positions the Bank holds
 
in tradeable equity
securities. The trading and non-trading market
 
risk frameworks and policies manage
 
the Bank’s risk appetite for known market risk, but
 
such activities may not be
sufficient to mitigate against such market risk, and
 
the Bank remains exposed to unforeseen
 
market risk.
Downgrade, Suspension or Withdrawal
 
of Ratings Assigned by Any Rating
 
Agency
Credit ratings and outlooks of the Bank provided
 
by rating agencies reflect their views and are
 
subject to change from time to time, based
 
on a number of factors,
including the Bank’s financial strength, capital
 
adequacy, competitive position, asset quality, business mix, corporate governance and risk
 
management, the level
and quality of our earnings and liquidity, as well as factors not entirely
 
within the Bank’s control, including the methodologies
 
used by rating agencies and
conditions affecting the overall financial services industry. Our borrowing
 
costs and ability to obtain funding are influenced
 
by our credit ratings. Reductions in one
or more of our credit ratings
 
could adversely affect our ability to borrow funds
 
and raise the costs of our borrowings
 
substantially and could cause creditors and
business counterparties to raise collateral requirements
 
or take other actions that could adversely
 
affect our ability to raise funding. In addition to
 
credit ratings, our
borrowing costs are affected by various other
 
external factors, including market volatility
 
and concerns or perceptions about the financial
 
services industry
generally. There can be no assurance that we will maintain our credit
 
ratings and outlooks and that credit ratings
 
downgrades in the future would not have
 
a
material adverse effect on our ability to borrow
 
funds and borrowing costs. Some of the Bank’s
 
credit ratings were downgraded following the
 
global resolution of
the investigations into the Bank’s U.S. BSA/AML
 
Program, and the Bank’s credit ratings and outlooks
 
could be further downgraded if the rating
 
agencies consider
that the impact of the Global Resolution on
 
the Bank is more negative or sustained
 
than they expected, including if the Bank fails
 
to meet the requirements
imposed by its regulators or if the non-monetary
 
penalties weaken the Bank’s U.S. franchise.
 
Downgrades in our credit ratings also
 
may trigger additional collateral
or funding obligations which, depending on
 
the severity of the downgrade, could have
 
a material adverse effect on our liquidity, including as a result of
 
credit-
related contingent features in certain of our
 
derivative contracts.
Value and Market Price of our Common Shares
 
and other Securities
 
The market price of the Bank’s common shares
 
and other securities may be impacted
 
by market conditions and other factors, and
 
securityholders may not be able
to sell their securities at or above the price at
 
which they purchased such securities.
 
The volume, value and trading price of
 
the Bank’s securities could fluctuate
significantly in response to factors both related
 
and unrelated to our operating or financial
 
performance and/or future prospects, including:
 
(i) variations in the
Bank’s financial and operating results and financial
 
condition; (ii) the Bank’s ability to satisfy the terms
 
of the Global Resolution; (iii) the impact
 
of the Global
Resolution on the Bank’s businesses, operations and
 
financial condition; (iv) the Bank being
 
subject to further prosecution or financial penalties,
 
which may occur if
the Bank fails to comply with the terms
 
of the plea agreements with the DOJ during
 
the five-year term of probation; (v) the Bank’s or
 
U.S. Bank’s former or current
directors, officers or employees becoming
 
subject to civil or criminal investigations or
 
enforcement proceedings in relation
 
to the Bank’s U.S. BSA/AML program;
(vi) differences between the Bank’s actual financial and
 
operating results and financial condition and
 
those expected by investors and analysts;
 
(vii) changes in
perception by investors and analysts in the
 
Bank’s businesses, operations or financial condition;
 
(viii) conduct by the Bank’s employees, third
 
party contractors or
agents that adversely affects the Bank’s reputation; (ix)
 
the Bank’s inability to execute on long-term
 
strategies and shorter-term key strategic priorities;
 
(x) the
occurrence of significant technology or
 
cybersecurity events; (xi) changes in the general
 
business, market or economic conditions
 
in the regions in which the Bank
operates including as a result of geopolitical
 
instability or in conditions affecting financial institutions
 
or the financial services industry generally; (xii)
 
fluctuations in
inflation and interest rates; (xiii) volatility
 
on exchanges on which the Bank’s securities are
 
traded; (xiv) actual or prospective changes in
 
applicable laws,
regulations or rules; and (xv) the materialization
 
of other risks described in this “Risks that
 
May Affect Future Results” section.
Interconnectivity of Financial Institutions
The financial services industry is highly interconnected
 
such that a significant volume of transactions
 
occur among the members of the industry. The
interconnectivity of multiple financial institutions
 
with central or common agents, exchanges
 
and clearinghouses
 
increases the risk that a financial or operational
failure at one institution or entity may cause
 
more widespread failures that could
 
materially impact our ability to conduct business.
 
Any such failure, termination or
constraint could adversely affect our ability to
 
effect transactions, service our clients, manage our
 
exposure to risk or result in financial loss or liability
 
to our clients.
Additionally, the Bank routinely transacts
 
among an array of different financial products and
 
services with counterparties in the financial
 
services industry, including
banks, investment banks, governments,
 
central banks, insurance companies and other
 
financial institutions. A rapid deterioration
 
of a counterparty, or of a
systemically significant market participant
 
that is not a counterparty of the Bank, could
 
lead to creditworthiness concerns of other
 
borrowers or counterparties in
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 70
related or dependent industries, and can lead
 
to substantial disruption within the financial
 
markets.
 
These conditions could cause the Bank
 
to incur significant
losses or other adverse impacts to the Bank’s
 
financial condition. Furthermore, there is no
 
assurance that industry regulators or government
 
authorities will provide
support in the event of the failure or financial
 
distress of other banks or financial institutions,
 
or that they would do so in a timely fashion.
For example, the closures
of Silicon Valley Bank and Signature Bank in March 2023 in the
 
U.S. and their placement into receivership led
 
to liquidity,
 
credit and market risk concerns at many
financial institutions,
 
regardless of whether they had relationships
 
with the closing institutions.
Accounting Policies and Methods Used
 
by the Bank
The Bank’s accounting policies and estimates are
 
essential to understanding its results of
 
operations and financial condition. Some
 
of the Bank’s policies require
subjective, complex judgments and estimates
 
as they relate to matters that are inherently
 
uncertain. Changes in these judgments
 
or estimates and changes to
accounting standards and policies could
 
have a materially adverse impact on the Bank’s
 
Consolidated Financial Statements, and its
 
reputation. Material
accounting policies as well as current
 
and future changes in accounting policies are
 
described in Note 2 and Note 4, respectively, and significant
 
accounting
judgments, estimates, and assumptions are
 
described in Note 3 of the 2024
 
Consolidated Financial Statements.
RISK FACTORS AND MANAGEMENT
Managing Risk
EXECUTIVE SUMMARY
Growing profitability based on balanced revenue,
 
expenses and capital growth involves
 
selectively taking and managing risks
 
within the Bank’s risk appetite. The
Bank’s goal is to earn a stable and sustainable
 
rate of return for every dollar of risk it
 
takes, while putting significant emphasis
 
on investing in its businesses to
meet its strategic objectives.
The Bank’s Enterprise Risk Framework (ERF) reinforces
 
the Bank’s risk culture, which emphasizes transparency
 
and accountability, and supports a common
understanding among stakeholders of how
 
the Bank manages risk. The ERF addresses:
 
(1) how the Bank defines the types of
 
risk it is exposed to; (2) how the
Bank determines the risks arising from the
 
Bank’s strategy and operations; (3) risk management
 
governance and organization; and (4) how
 
the Bank manages risk
through processes that identify and assess,
 
measure, control, monitor, and report risk. The Bank’s risk management
 
resources and processes are designed
 
to
both challenge and enable all its businesses
 
to understand the risks they face and to
 
manage them within the Bank’s risk appetite.
RISKS INVOLVED IN
 
TD’S BUSINESSES
The Bank’s Risk Inventory sets out the Bank’s major
 
risk categories and related subcategories
 
to which the Bank’s businesses and operations could
 
be exposed.
The Risk Inventory facilitates consistent risk identification,
 
assessment, control, measurement, monitoring,
 
reporting, and disclosure of TD’s risks. The
 
Risk
Inventory is the starting point in developing
 
risk management strategies and processes.
 
The Bank’s major risk categories are: Strategic
 
Risk; Credit Risk; Market
Risk; Operational Risk; Model Risk; Insurance
 
Risk; Liquidity Risk; Capital Adequacy
 
Risk; Legal and Regulatory Compliance
 
(including Financial Crime) Risk; and
Reputational Risk.
 
RISK APPETITE
The Bank’s Risk Appetite Statement (RAS) is
 
the primary means used to communicate how
 
the Bank views risk and determines the type and
 
amount of risk it is
willing to take to deliver on its strategy
 
and to enhance shareholder value. In
 
setting the risk appetite, the Bank takes into
 
account its vision, purpose, strategy,
shared commitments, and capacity to bear
 
risk under both normal and recessionary/stress
 
conditions. The core risk principles for the
 
Bank’s RAS are as follows:
The Bank takes risks required to build its business,
 
but only if those risks:
1. Fit the business strategy, and can be understood and managed.
2. Do not expose the enterprise to any significant single loss events; TD does not ‘bet
 
the Bank’ on any single acquisition, business,
 
product or decision.
3. Do not risk harming the TD brand.
The Bank’s Risk Appetite Governance Framework
 
(RAGF) describes the assumptions, responsibilities,
 
and processes established to define, maintain,
 
govern and
monitor TD’s risk appetite, and associated risk
 
measures. The Bank considers current operating
 
conditions and the impact of emerging risks in
 
developing and
applying its risk appetite. Adherence to the
 
Bank’s risk appetite is managed and monitored
 
across the Bank and is informed by the
 
RAGF and a broad collection of
principles, frameworks, policies, processes,
 
and tools.
 
The Bank’s RAS describes, by major risk category, the Bank’s risk principles
 
and establishes both qualitative and quantitative
 
measures, thresholds, and limits, as
appropriate. RAS measures consider both
 
normal and stress scenarios and include
 
those that can be monitored at the enterprise
 
level and cascaded to the
segments.
Risk Management is responsible for establishing
 
practices and processes to formulate,
 
monitor, and report on the Bank’s RAS measures. The Risk
 
Management
function also monitors and evaluates the effectiveness
 
of these practices and processes, as
 
well as the RAS measures. Compliance
 
with RAS principles and
measures is assessed and reported regularly
 
to senior management, the Board, and the Risk
 
Committee of the Board (Risk Committee);
 
other measures are
tracked on an ongoing basis by management,
 
and escalated to senior management and
 
the Board, as required.
 
Major Risk Categories
Market
Risk
Model
Risk
Market
Risk
Major Risk Categories
Reputational
Risk
Liquidity
Risk
Legal &
Regulatory
Compliance
(including
Financial
Crime) Risk
Strategic
Risk
Credit
Risk
Capital
Adequacy
Risk
Legal,
Regulatory
Compliance
 
(including Financial
Crime)
 
and Conduct
Risk
Liquidity
Risk
Model
Risk
Insurance
Risk
Operational
Risk
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
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RISK CULTURE
Risk culture is the attitudes and behaviours
 
around taking and managing risk in
 
the Bank and is guided by our shared commitments
 
and the TD Culture
Framework. The TD Culture Framework defines
 
culture at TD including expected behaviours
 
and desired outcomes, describes our fundamental
 
mechanisms to
drive; embed; and reinforce our desired
 
culture and provides a comprehensive approach
 
to culture oversight. The shared commitments
 
are the behaviours that
differentiate the Bank and help guide the way the
 
Bank runs its business, grows its leaders,
 
supports its colleagues, and serves its communities.
 
Risk culture is
one of the attributes that is integral to the Bank’s overall
 
organizational culture. The Risk Committee
 
engages with the Chief Risk Officer (CRO)
 
who leads a
diverse team of risk professionals to drive a
 
proactive risk culture. The central oversight
 
for organisational culture at TD is led by Human
 
Resources (HR) in
partnership with Risk Management.
 
The Bank’s risk culture starts with the “tone at
 
the top” set by the Chief Executive Officer (CEO)
 
and the Senior Executive Team (SET), and is supported by the
Bank’s vision, purpose, shared commitments,
 
Code of Conduct and Ethics and risk appetite.
 
These governing objectives describe and
 
drive the behaviours,
decision making, and business practices
 
that the Bank seeks to foster among its
 
employees, in building a culture where the only
 
risks taken are those within our
established risk appetite. The Bank’s risk culture reinforces
 
that it is everyone’s accountability to self-reflect,
 
learn from past experiences, encourage
 
open
communication,
 
escalate matters on a timely basis, and
 
strive for transparency on all aspects of risk
 
taking. The Bank’s employees are expected to
 
challenge,
communicate, self-identify and escalate
 
in a timely, accurate and forthright manner when they believe the
 
Bank is operating outside of its desired
 
risk culture or
risk appetite.
Ethics, integrity and conduct is a pillar of
 
TD’s culture and is a key component of the Bank’s
 
risk culture. The Bank’s Code of Conduct and
 
Ethics guides
employees and directors to make decisions
 
that meet the highest standards of integrity, professionalism, and
 
ethical behaviour. Every Bank employee and director
is expected and required to assess business
 
decisions and actions on behalf of the organization
 
in light of whether it is right, legal, and
 
fair.
 
The Bank’s desired risk culture is reinforced by linking
 
compensation to management’s performance
 
against the Bank’s risk appetite. An annual consolidated
assessment of management’s performance against
 
the RAS is prepared by Risk Management,
 
reviewed by the Risk Committee, and
 
is used by the HR
Committee as a key input into compensation
 
decisions. All executives are individually assessed
 
against objectives that include consideration
 
of risk and control
behaviours. This comprehensive approach
 
allows the Bank to consider whether the actions
 
of executive management resulted in risk and
 
control events within
their area of responsibility.
In addition, Oversight Functions operate
 
independently from segments, supported
 
by an organizational structure that is designed
 
to provide objective oversight and
independent challenge. Oversight Function heads,
 
including the CRO, have unfettered access
 
to respective Board committees to raise risk,
 
compliance, and other
issues. Lastly, awareness and communication of the Bank’s RAS and
 
the ERF take place across the organization
 
through enterprise risk communication
programs, employee orientation and training,
 
and participation in internal risk management
 
conferences. These activities further strengthen
 
the Bank’s risk culture
by increasing the knowledge and understanding
 
of the Bank’s expectations for risk taking.
WHO MANAGES RISK
The Bank’s risk governance structure emphasizes
 
and balances strong independent oversight
 
with clear ownership for risk across the Bank.
 
Under the Bank’s
approach to risk governance, a “three lines
 
of defence” model is employed, in which
 
the first line of defence is the risk owner, the second line
 
provides risk
oversight, and the third line is internal audit.
The Bank’s risk governance model includes a
 
senior management committee structure that is
 
designed to support transparent risk reporting
 
and discussions. The
Bank’s overall risk and control oversight is provided
 
by the Board and its committees.
 
The CEO and SET determine the Bank’s long-term
 
direction which is then
carried out by segments within the Bank’s risk appetite.
 
Risk Management, headed by the CRO,
 
sets enterprise risk strategy and policy
 
and provides independent
oversight to support a comprehensive and proactive
 
risk management approach. The
 
CRO, who is also a member of the SET, has unfettered access
 
to the Risk
Committee.
 
In addition, the Chief Anti-Money Laundering
 
Officer and the Chief Compliance Officer have unfettered
 
access to the Audit Committee.
The Bank has a subsidiary governance framework
 
to support its overall risk governance structure,
 
including Boards of Directors, and committees
 
for various
subsidiary entities where appropriate. Within
 
the U.S. Retail business segment, risk and
 
control oversight is provided by separate
 
and distinct Boards of Directors
which includes fully independent Board
 
Risk and Audit Committees. The U.S.
 
Chief Risk Officer (U.S. CRO) has unfettered access
 
to the U.S. Board Risk
Committee,
 
the U.S. BSA Officer has unfettered access to
 
the U.S. Board Audit and Compliance
 
Committees,
 
and the U.S. Chief Compliance Officer has
unfettered access to the U.S. Audit Committee.
 
In addition, as further described in “Significant
 
Events – Global Resolution of the Investigations
 
into the Bank’s U.S.
BSA/AML Program”, the Bank is undertaking
 
a remediation of its U.S. BSA/AML Program,
 
which is a cross-functional undertaking,
 
spanning business lines and
control functions. The Bank has established
 
a dedicated program management infrastructure
 
to monitor execution against the remediation
 
program. This work is
being overseen by the Compliance Committee
 
of the U.S. subsidiary boards.
 
ex992p72i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 72
RISK GOVERNANCE STRUCTURE
 
The Board of Directors
 
The Board oversees the Bank’s strategic direction,
 
the implementation of an effective risk culture and
 
the internal control framework across the
 
enterprise. It
accomplishes its risk management mandate
 
both directly and indirectly through its five
 
committees: Audit, Risk, HR, Corporate
 
Governance and Remediation.
 
The
Board reviews and approves the Bank’s RAS
 
and related RAS measures at least annually, and reviews the
 
Bank’s risk profile and performance relative to its
 
risk
appetite measures and principles. In addition,
 
the Board has oversight of the Bank’s management
 
of capital, liquidity and internal controls
 
policies and practices.
The Audit Committee
The Audit Committee oversees financial reporting,
 
the adequacy and effectiveness of internal controls,
 
including internal controls over financial reporting,
 
and the
activities of the Internal Audit Division,
 
Finance, Compliance, and Financial Crime
 
Risk Management, including Anti-Money
 
Laundering/Terrorist
Financing/Economic Sanctions/Anti-Bribery
 
and Anti-Corruption.
 
In addition, the committee has oversight of
 
the establishment and maintenance of policies
 
and
programs reasonably designed to achieve and
 
maintain the Bank’s compliance with applicable
 
laws and regulations.
 
In support of this oversight, the committee
reviews any significant litigation and regulatory
 
matters.
The Risk Committee
 
The Risk Committee is responsible for reviewing
 
and recommending TD’s RAS for approval by
 
the Board annually. The Risk Committee oversees the
management of TD’s risk profile and performance
 
relative to its risk appetite. In support of
 
this oversight, the committee reviews and
 
approves significant
enterprise-wide risk management frameworks
 
and policies that are designed to help manage
 
the Bank’s major risk exposures, and monitors the
 
management of
risks, issues and trends.
The Human Resources Committee
The HR Committee, in addition to its other
 
responsibilities, oversees the management
 
of the Bank’s culture and approves the Bank’s
 
Culture Framework.
 
It also
satisfies itself that HR risks are appropriately identified,
 
assessed, and managed in a manner consistent
 
with the risk programs within the Bank, and
 
with the
sustainable achievement of the Bank’s business objectives.
 
In addition, the committee monitors the Bank’s
 
compensation strategy, plans, policies and practices,
including the appropriate consideration of
 
risk.
The Corporate Governance Committee
The Corporate Governance Committee, in
 
addition to its other responsibilities, develops,
 
and where appropriate, recommends
 
to the Board for approval corporate
governance principles, including the Bank’s
 
Code of Conduct and Ethics, aimed at
 
fostering a healthy governance culture at
 
the Bank, and also acts as the
conduct review committee for the Bank, including
 
providing oversight of conduct risk.
 
In addition, the committee has oversight of
 
the Bank’s strategy on corporate
responsibility for E&S matters, the establishment
 
and maintenance of policies in respect of
 
the Bank’s compliance with the consumer protection
 
provisions of the
Financial Consumer Protection Framework,
 
and regularly assesses Board succession
 
planning considerations.
The Remediation Committee
 
The Board approved the establishment of a
 
Remediation Committee effective December 5, 2024,
 
with a mandate to provide oversight to the
 
Bank’s and its
subsidiaries’
 
compliance with regulatory enforcement
 
related orders and agreements.
 
The committee will receive reports from the
 
various remediation teams and
oversight functions if necessary, including information and insights related
 
to the Bank’s compliance with all enforcement
 
commitments and progress on the
required remediation.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 73
Chief Executive Officer and Senior Executive
 
Team
The CEO and the SET develop and recommend
 
to the Board the Bank’s long-term strategic direction
 
and also develop and recommend for Board
 
approval TD’s
RAS. The SET members set the “tone at the
 
top” and manage risk in accordance with
 
the Bank’s RAS while considering the impact of
 
current and emerging risks
on the Bank’s strategy and risk profile. This accountability
 
includes identifying, understanding and
 
communicating significant risks to the Risk
 
Committee.
Executive Committees
The CEO, in consultation with the CRO establishes
 
the Bank’s executive committee structure.
 
These committees are chaired by SET members
 
and meet regularly
to oversee governance, risk, and control activities
 
and to review and monitor risk strategies
 
and associated risk activities and
 
practices.
The ERMC, chaired by the CEO, oversees
 
the management of major enterprise governance,
 
risk, and control activities and promotes
 
an integrated and effective
risk management culture. The following executive
 
committees have been established to
 
manage specific major risks based on the nature
 
of the risk and related
business activity:
●
 
ALCO – chaired by the Chief Financial Officer
 
(CFO), the ALCO oversees directly and
 
through its standing subcommittees (the
 
Enterprise Capital Committee
and Global Liquidity and Funding (GLF)
 
Committee) the management of the Bank’s
 
consolidated non-trading market risk and each
 
of its consolidated liquidity,
funding, investments, and capital positions.
●
 
OROC – chaired by the CRO, the OROC oversees
 
the identification, monitoring, and control
 
of key risks within the Bank’s operational risk
 
profile.
●
 
DC – chaired by the CFO, the DC oversees
 
that appropriate controls and procedures are
 
in place and operating to permit timely, accurate, balanced,
 
and
compliant disclosure to regulators with respect
 
to public disclosure, shareholders, and
 
the market.
 
●
 
ERRC – chaired by the CRO, the ERRC
 
oversees the management of reputational
 
risk within the Bank’s risk appetite, provides a
 
forum for discussion, review,
and escalation for non-traditional risks, and
 
acts as a decisioning body in cases where
 
urgent risk assessment and decisions are
 
required for select high-risk
cross-segment/enterprise changes and
 
where decision rights run across more than one
 
group.
Risk Management
 
The Risk Management function, headed
 
by the CRO, provides independent oversight
 
of enterprise-wide risk management, risk governance,
 
and control, including
the setting of risk strategy and policy to
 
manage risk in alignment with the Bank’s risk appetite
 
and business strategy. Risk Management’s primary objective is to
support a comprehensive and proactive approach
 
to risk management that promotes a strong
 
risk culture. Risk Management works with
 
the segments and other
oversight functions to establish policies, standards,
 
and limits that align with the Bank’s risk appetite
 
and monitors and reports on current and
 
emerging risks and
compliance with the Bank’s risk appetite. The
 
CRO leads and directs a diverse team of risk
 
management, including regulatory compliance
 
and financial crime risk
management (including anti-money laundering),
 
professionals organized to oversee risks
 
arising from each of the Bank’s major risk
 
categories. There is an
established process in place for the identification
 
and assessment of top and emerging
 
risks, including tail risk i.e., low probability
 
events that can result in large or
unquantifiable losses,
 
material intervention or action from regulators,
 
and/or significant harm to the TD
 
brand.
 
In addition, the Bank has clear procedures
 
governing
when and how risk events and issues are
 
communicated to senior management and
 
the Risk Committee.
Business and Corporate Segments
Each business and corporate segment has
 
a dedicated risk management function that
 
reports directly to a senior risk executive
 
who, in turn, reports to the CRO.
This structure supports an appropriate level
 
of independent oversight while emphasizing
 
accountability for risk within the segment.
 
Business and corporate
management is responsible for setting
 
the segment-level risk appetite and measures,
 
which are reviewed and challenged by
 
Risk Management, endorsed by the
ERMC, and approved by the CEO, to align
 
with the Bank’s RAS and manage risk within approved
 
risk limits.
The corporate segment includes service
 
and control groups (e.g., Platforms and
 
Technology; Transformation, Enablement and Customer Experience; HR and
Finance) that, like business segments, are
 
responsible for assessing risk, designing
 
and implementing controls and monitoring
 
and reporting their ongoing
effectiveness.
 
Internal Audit
The Bank’s Internal Audit function provides independent
 
and objective assurance to the Board
 
regarding the reliability and effectiveness of
 
key elements of the
Bank’s risk management, internal control, and governance
 
processes.
Global Compliance Department (Compliance)
Compliance is an independent regulatory
 
compliance risk and oversight function
 
for business conduct and market conduct laws,
 
rules and regulations (LRRs).
Compliance is also responsible for the design
 
and oversight of the Bank’s Regulatory Compliance
 
Management (RCM) program in accordance
 
with the Enterprise
RCM Framework and related standards and
 
supports the provision of the Chief Compliance
 
Officer’s opinion to the Audit Committee as
 
to whether the RCM
controls are sufficiently robust in achieving compliance
 
with applicable laws, rules and regulatory requirements
 
enterprise-wide.
Enterprise Conduct Risk Management (ECRM)
ECRM is responsible for the oversight of
 
TD’s management of conduct risk. ECRM owns
 
the Enterprise Conduct Risk Management Policy
 
and assesses
adherence to the policy through testing, analysis
 
of conduct-related issues, and effective challenge
 
of segment reporting and change risk
 
assessments. ECRM
provides enterprise-wide aggregated conduct risk reporting
 
to the Corporate Governance Committee
 
which oversees conduct risk management in
 
the Bank.
Financial Crime Risk Management (FCRM)
FCRM, previously Global Anti-Money Laundering,
 
is responsible for the oversight of TD’s regulatory
 
compliance regarding AML, Anti-Terrorist Financing,
Economic Sanctions, and Anti-Bribery/Anti-Corruption
 
(collectively, “Financial Crime Risk” or “FCR”) and assesses the
 
adequacy of, adherence to and
effectiveness of the Bank’s day-to-day controls of
 
the FCR Programs, using a risk-based
 
approach. FCRM is also responsible
 
for regulatory compliance and
broader prudential risk management
 
across the Bank in alignment with enterprise
 
AML, Sanctions and Anti-Bribery/Anti-Corruption
 
policies so that money
laundering, terrorist financing, economic
 
sanctions, and bribery and corruption risks
 
are appropriately identified and mitigated.
 
FCRM reports to the Audit
Committee and ERMC on the overall adequacy
 
and effectiveness of the FCR Programs including
 
AML, program design and operations.
 
As described in the “Significant Events – Global
 
Resolution of the Investigations into the Bank’s
 
U.S. BSA/AML Program”
 
section, a remediation plan is in place to
address U.S. BSA/AML regulatory requirements
 
and deliver on enhancements to strengthen
 
the AML program across the Global Bank, with
 
the goal of enabling
the Bank’s compliance with regulatory expectations
 
including how we identify, measure, monitor and mitigate
 
AML related risks.
 
Both the U.S. and the Global programs have
 
established risk mitigation and enhancement
 
programs to help ensure that any interim
 
risks are appropriately
identified and managed according to established
 
Risk Management standards during the period
 
that the full multi-year remediation and
 
enhancement activities are
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 74
delivered. The scope of the risk mitigation program
 
extends beyond FCRM specific risks
 
and is focused on helping to ensure that additional
 
risks arising from the
Bank undertaking this type and scale of change
 
are appropriately managed, including Model
 
Risk, Technology and Data Risk, Third Party Risk and Operational
Risk.
Three Lines of Defence
In order to further the understanding of responsibilities
 
for risk management, the Bank employs
 
the following “three lines of defence” model
 
that describes the
respective accountabilities of each line of
 
defence in managing risk across the Bank.
THREE LINES OF DEFENCE
FIRST LINE
RISK OWNER
IDENTIFY AND
CONTROL
●
 
Own, identify, manage, measure, and monitor current and emerging
 
risks in day-to-day activities, operations,
 
products, and
services.
●
 
Understand the risks, including tail risks, across
 
relevant risk categories (what could go
 
wrong and the potential impact to the
Bank’s customers, colleagues, and the Bank itself).
●
 
Identify and understand the applicable LRRs,
 
including LRRs specific to the business.
●
 
Promote ongoing initiatives to raise the profile
 
of risk considerations and understand
 
key risks impacting the business.
●
 
Implement governance and control processes
 
to promote risk awareness, clear risk ownership
 
within the business, and
personal accountability.
●
 
Design, implement, and maintain appropriate
 
mitigating controls, and assess the design
 
and operating effectiveness of those
controls.
●
 
Understand and monitor control gaps and
 
proactively self-identify and remediate issues.
●
 
Monitor and report on risk profile so that activities
 
are within TD’s risk appetite and policies.
●
 
Implement risk-based approval processes
 
for all new products, activities, processes,
 
and systems.
●
 
Escalate risk issues and develop and implement
 
action plans in a timely manner.
●
 
Develop and deliver training, tools, and advice
 
to support its accountabilities.
●
 
Promote a strong risk management culture.
SECOND LINE
RISK OVERSIGHT
 
SET STANDARDS
AND CHALLENGE
●
 
Establish and communicate enterprise governance,
 
risk, and control strategies, frameworks,
 
and policies.
●
 
Provide oversight and independent challenge
 
to the first line through an effective objective assessment,
 
that is evidenced and,
where significant, documented, including:
-
 
Challenge the quality and sufficiency of the first line’s risk
 
activities;
-
 
Identify and assess current and emerging risks
 
and controls, using a risk-based approach,
 
as appropriate;
-
 
Monitor the adequacy and effectiveness of internal
 
control activities;
-
 
Review and discuss assumptions, material
 
risk decisions and outcomes;
 
-
 
Aggregate and share results across business
 
lines and control areas to identify similar
 
events, patterns, or broad trends;
and
-
 
Monitor the execution of the Bank’s remediation activities.
●
 
Identify and assess, and communicate relevant
 
regulatory changes for the applicable LRRs.
●
 
Develop and implement risk measurement
 
tools so that activities are within TD’s RAS.
●
 
Monitor and report on compliance with the
 
Bank’s RAS and policies.
●
 
Escalate risk issues in a timely manner,
 
with a focus on maintaining transparency to
 
key stakeholders.
●
 
Report on the risks of the Bank on an enterprise-wide
 
and disaggregated level to the Board
 
and/or senior management,
independently of the business lines or operational
 
management.
●
 
Provide training, tools, and advice to support
 
the first line in carrying out its accountabilities.
●
 
Promote a strong risk management culture.
THIRD LINE
INTERNAL AUDIT
 
INDEPENDENT
ASSURANCE
●
 
Verify independently that TD’s ERF is designed and operating
 
effectively.
●
 
Validate the effectiveness of the first and second lines of defence in
 
fulfilling their mandates and managing risk.
In support of a strong risk culture, the Bank
 
applies the following principles in governing
 
how it manages risk:
●
Enterprise-Wide in Scope
 
– Risk Management will span all areas of the
 
Bank, including third-party alliances and joint
 
venture undertakings to the extent they
may impact the Bank, and all boundaries, both
 
geographic and regulatory.
●
Transparent and Effective Communication
 
– Matters relating to risk will be communicated
 
and escalated in a timely, accurate, and
 
forthright manner.
 
●
Enhanced Accountability
 
– Risks will be explicitly owned, understood,
 
and actively managed by business management
 
and all employees, individually and
collectively.
 
●
Independent Oversight
 
– Risk policies, monitoring, and reporting
 
will be established and conducted independently
 
and objectively.
●
Integrated Risk and Control Culture
 
– Risk Management disciplines will be integrated
 
into the Bank’s daily routines, decision-making,
 
and strategy
formulation.
●
Strategic Balance
 
– Risk will be managed to an acceptable
 
level of exposure, recognizing the need
 
to protect and grow shareholder value to foster
 
a sound
strategic balance between risk mitigation and
 
risk enablement within TD’s risk appetite.
●
Leadership Accountability
 
– Leaders are accountable to demonstrate,
 
influence and drive the right risk behaviours
 
and risk mindset with colleagues and
stakeholders.
APPROACH TO RISK MANAGEMENT PROCESSES
The Bank’s comprehensive and proactive approach
 
to risk management is comprised of four processes:
 
risk identification and assessment, measurement,
 
control,
and monitoring and reporting.
Risk Identification and Assessment
Risk identification and assessment is focused
 
on recognizing and understanding existing
 
risks, risks that may arise from new or
 
evolving business initiatives,
aggregate risks, tail risks, and emerging risks
 
from the changing environment. The Bank’s
 
objective is to establish and maintain integrated
 
risk identification and
assessment processes that enhance the understanding
 
of risk interdependencies, consider how risk
 
types intersect, and support the identification
 
of emerging
risks.
To
that end, the Bank’s Enterprise-Wide Stress
Te
sting (EWST) program enables senior management,
 
the Board, and its committees to identify and
articulate enterprise-wide risks and understand
 
potential vulnerabilities for the Bank.
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Page 75
Risk Measurement
The ability to quantify risks is a key component
 
of the Bank’s risk management process. The Bank’s risk
 
measurement process aligns with regulatory
 
requirements
such as capital adequacy, leverage ratios, liquidity measures, stress
 
testing, and maximum credit exposure guidelines
 
established by its regulators. Additionally,
the Bank has a process in place to quantify
 
risks to provide accurate and timely measurements
 
of the risks it assumes.
In quantifying risk, the Bank uses various
 
risk measurement methodologies, including
 
Value-at-Risk (VaR) analysis, scenario analysis, stress testing, and limits.
Other examples of risk measurements include
 
credit exposures, PCL, peer comparisons,
 
trending analysis, liquidity coverage, leverage
 
ratios, capital adequacy
metrics, and operational risk event notification
 
metrics. The Bank also requires segments and
 
oversight functions to assess key risks and internal
 
controls through
a structured Risk and Control Self-Assessment
 
program. Internal and external risk events
 
are monitored to assess whether the Bank’s internal
 
controls are
effective. This allows the Bank to identify, escalate, and monitor significant
 
risk issues as needed.
Risk Control
The Bank’s risk control processes are established
 
and communicated through the Risk Committee
 
and management approved policies, and
 
associated
management approved procedures, control limits,
 
and delegated authorities which reflect
 
its risk appetite and risk tolerances.
The Bank’s approach to risk control also includes risk
 
and capital assessments to appropriately
 
capture key risks in its measurement and
 
management of capital
adequacy. This involves the review, challenge, and endorsement by senior management
 
committees of the Bank’s ICAAP and related
 
economic capital practices.
The Bank’s performance is measured based on
 
the allocation of risk-based capital to businesses
 
and the cost charged against that capital.
Risk Monitoring and Reporting
The Bank monitors and reports on risk levels
 
on a regular basis against its risk appetite
 
and Risk Management reports on its
 
risk monitoring activities to senior
management, the Board and its Committees,
 
and appropriate executive and management
 
committees. Complementing regular risk
 
monitoring and reporting,
ad hoc risk reporting is provided to senior
 
management, the Risk Committee, and the
 
Board, as appropriate, for new and emerging
 
risks or any significant changes
to the Bank’s risk profile. The Bank is developing
 
methodologies and approaches for climate
 
scenario analysis through participation in
 
industry-wide working
groups and the OSFI led Standardized
 
Climate Scenario Exercise, and is working
 
to embed the assessment of climate-related risks
 
and opportunities into relevant
Bank processes.
Stress Testing
Stress testing is an integral component of
 
the Bank’s risk management framework and serves
 
as a key component of the Bank’s capital,
 
strategic and financial
planning processes. Stress testing at the
 
Bank comprises an annual enterprise-wide
 
stress test featuring a range of scenarios,
 
prescribed regulatory stress tests in
multiple jurisdictions, and various ongoing
 
and ad hoc stress tests and analysis. The
 
results of these stress tests and analysis enable
 
management to assess the
impact of geopolitical events and changes
 
to economic and other market factors on the
 
Bank’s financial condition and assist in the determination
 
of capital and
liquidity adequacy and targets, risk appetite
 
and other limits. These exercises enable
 
the identification and quantification of vulnerabilities,
 
the monitoring of
changes in risk profile relative to risk appetite
 
limits, and evaluation of business plans.
The Bank utilizes a combination of quantitative
 
modelling and qualitative approaches to assess
 
the impact of changes in the macroeconomic
 
environment on the
Bank’s income statement, balance sheet, and
 
capital and liquidity position under hypothetical
 
stress situations. Stress testing engages
 
senior management across
the lines of business, Finance, TBSM, Economics,
 
and Risk Management. Stress test
 
results are reviewed, challenged and approved
 
by senior management and
executive oversight committees. The Bank’s
 
Risk Committee also
 
reviews, challenges, and discusses
 
the results. The results are submitted, disclosed,
 
or shared
with regulators as required or requested.
Enterprise-Wide Stress Testing
The Bank conducts an annual EWST as part
 
of a comprehensive capital and liquidity planning,
 
strategic, and financial exercise that is a
 
key component of the
Bank’s ICAAP framework. The EWST results are
 
considered in establishing the Bank’s capital targets
 
and stress related risk appetite limits, evaluating
 
the Bank’s
strategies and business plan, and identifying
 
actions that senior management could
 
take to manage the impact of stress events.
 
In addition, the Bank conducts ad
hoc stress tests and analysis for assessing
 
the impact of events deemed to be potentially
 
material or of concern in support of senior
 
management’s assessment of
vulnerabilities and operational readiness
 
to an uncertain or rapidly changing operating
 
environment.
 
The program is subject to a well-defined
 
governance framework that facilitates executive
 
oversight and engagement throughout the
 
organization. EWST
methodologies and results are reviewed and
 
challenged by executives and subject
 
matter experts from the line of business, finance
 
and risk teams. Stress testing
results are further reviewed by ERMC and are
 
also shared with the Board and regulators.
 
The Bank’s EWST program involves the development,
 
execution and
assessment of stress scenarios with varying
 
features and degrees of severity on the balance
 
sheet, income statement, capital, liquidity, and leverage. It enables
management to identify and assess enterprise-wide
 
risks and understand potential vulnerabilities,
 
and changes to the risk profile of the Bank.
 
The stress scenarios
are developed with consideration of the Bank’s
 
key business activities, exposures, concentrations
 
and vulnerabilities. The scenarios are designed
 
to be consistent
with regulatory stress testing frameworks
 
and cover a wide variety of risk factors
 
meaningful to the Bank’s risk profiles in North America
 
and globally including
changes to unemployment, gross domestic product,
 
home prices, and interest rates.
 
For the 2024 EWST program, the Bank developed
 
and assessed scenarios that explored emerging
 
risks such as inflation, various interest rate
 
environments,
increased competition/market pressure on
 
fees, Net Interest Margin compression reflecting
 
deposit attrition and higher funding costs,
 
and elevated regulatory,
fraud and cybersecurity risks. The stress testing
 
scenarios included, a plausible typical recession
 
calibrated to historical recessions in Canada
 
and the U.S., a low
probability and highly severe stagflation
 
scenario targeting TD-specific risks and vulnerabilities,
 
and an alternative scenario that explores
 
another plausible interest
rate environment. Supplemental analysis performed
 
during 2024 explored strategic risk events
 
to support senior management in assessing
 
key risks.
Other Stress Tests and Analysis
Ongoing stress testing and scenario analyses
 
within specific risk types, such as market risk,
 
liquidity risk, retail and wholesale
 
credit risk, operational risk, and
insurance risk, supplement and support our
 
enterprise-wide analyses. Results
 
from these risk-specific programs are used
 
in a variety of decision-making
processes including risk limit setting, portfolio
 
composition evaluation, risk appetite articulation
 
and business strategy implementation.
 
In addition, the Bank
conducts ad hoc stress tests and analysis
 
for the enterprise as well as for targeted portfolios,
 
to evaluate potential vulnerabilities and operational
 
readiness to
specific changes in economic and market
 
conditions including those related to evolving
 
geopolitical risk events.
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 76
Stress tests are also conducted on certain legal
 
entities and jurisdictions, in line with
 
prescribed regulatory requirements.
 
The Bank’s U.S.- holding company and
operating bank subsidiaries’ capital planning
 
process including execution of stress tests are
 
conducted in accordance with the U.S. Dodd-Frank
 
Act stress testing
(DFAST) requirements. In addition, certain Bank subsidiaries
 
in Singapore, Ireland, and the United
 
Kingdom conduct stress testing exercises as
 
part of their
respective ICAAP. The Bank undertakes other internal and regulatory based stress
 
tests including liquidity and market risk, which are
 
detailed in the respective
sections.
 
The Bank also conducts scenario and sensitivity
 
analysis as part of the Recovery and
 
Resolution Planning program to assess potential
 
mitigating actions and
contingency planning strategies, as required.
Strategic Risk
Strategic risk is the risk of sub-optimal outcomes
 
(including financial losses or reputational
 
damage) arising from the Bank’s strategic
 
choices, execution of our
strategies, responses to disruption (e.g.,
 
technological advancements or unforeseen
 
competitive shifts) and regulatory shifts, or
 
tail risk exposures (i.e., low
probability events that can result in large or
 
unquantifiable losses, material intervention
 
or action from regulators, and/or significant
 
harm to the TD brand).
Strategic choices may span ongoing business
 
operations and inorganic (Mergers & Acquisitions
 
and strategic partnerships) activities.
WHO MANAGES STRATEGIC RISK
The CEO manages Strategic Risk, supported
 
by members of the SET and the ERMC.
 
The CEO, together with the SET, defines the overall strategy, in consultation
with, and subject to approval by the Board.
 
The Enterprise Strategy group, under the leadership
 
of the CFO, is charged with developing
 
the Bank’s long-term
strategy and shorter-term strategic objectives
 
and priorities with input and support from
 
senior executives across the Bank.
Each member of the SET is responsible
 
for establishing and managing long-
 
and short-term strategic priorities for
 
their areas of responsibility (business segment
or corporate function), and ensuring such strategies
 
are aligned with the Bank’s long-
 
and short-term strategic objectives and
 
priorities, and are within the Bank’s
risk appetite. Each member of the SET is also
 
accountable to the CEO for identifying,
 
assessing, measuring, controlling, monitoring,
 
and reporting on the
effectiveness and risks of their business segment
 
or corporate function’s strategies.
The CEO, members of the SET, and other senior executives report to the Board
 
on the implementation of the Bank’s strategies, identifying
 
related risks and
explaining how they are managed.
The ERMC oversees the identification and
 
monitoring of significant and emerging risks
 
related to the Bank’s strategies so that
 
mitigating actions are taken where
appropriate.
 
HOW TD MANAGES STRATEGIC RISK
The Bank’s enterprise-wide strategies and operating
 
performance, and those of significant business
 
segments and corporate functions, are assessed
 
regularly by
the CEO and members of the SET through
 
an integrated financial and strategic planning
 
process, as well as operating results reviews.
The Bank’s RAS establishes strategic risk limits at
 
the enterprise and business segment
 
levels. Limits include qualitative and quantitative
 
assessments and are
established to monitor and control business
 
concentrations, strategic disruption, and
 
E&S risks.
The Bank’s annual integrated planning process establishes
 
plans at the enterprise and segment levels.
 
The plans incorporate market trends, TD’s relative
performance, long-
 
and short-term strategies, target
 
metrics, key risks / mitigants, and alignment
 
with the Bank’s enterprise strategy and risk appetite.
Operating results are reviewed periodically during
 
the year to monitor segment / function
 
performance against the integrated financial
 
and strategic plan. These
reviews include an evaluation of long-term
 
strategy and short-term strategic priorities, including
 
the operating environment, relative performance
 
and competitive
positioning assessments, initiative execution
 
status, and key risks / mitigants. The frequency
 
of operating results reviews depends
 
on the risk profile and size of the
business segment or corporate function.
The Bank’s strategic risk and adherence to its
 
risk appetite is reviewed by the ERMC in
 
the normal course, as well as by the Board.
 
Additionally, material
acquisitions are assessed for their fit with
 
the Bank’s strategy and risk appetite in accordance
 
with the Bank’s Due Diligence Policy. This assessment is reviewed
by the SET and Board as part of the decision
 
process.
The shaded areas of this MD&A represent
 
a discussion on risk management policies
 
and procedures relating to credit, market,
 
and liquidity risks as required under
IFRS 7,
Financial Instruments: Disclosures
, which permits these specific disclosures
 
to be included in the MD&A. Therefore,
 
the shaded areas which include Credit
Risk, Market Risk, and Liquidity Risk, form an
 
integral part of the audited Consolidated
 
Financial Statements for the years ended October
 
31, 2024 and
October 31, 2023.
The Basel Framework
The objective of the Basel Framework is to improve the
 
consistency of capital requirements internationally
 
and establish minimum regulatory capital
 
standards
which adequately capture risks. The
 
Basel Framework sets different risk-sensitive
 
approaches for calculating credit, market,
 
and operational RWA.
Credit Risk
Credit risk is the risk of loss if a borrower or
 
counterparty in a transaction fails to meet
 
its agreed payment obligations.
Credit risk is one of the most significant and
 
pervasive risks in banking. Every loan,
 
extension of credit, or transaction that involves
 
the transfer of payments
between the Bank and other parties or financial
 
institutions exposes the Bank to some
 
degree of credit risk.
 
The Bank’s primary objective is to be methodical
 
in its credit risk assessment so that the
 
Bank can understand, select, and manage
 
its exposures to reduce
significant fluctuations in earnings.
 
The Bank’s strategy is to include central oversight of
 
credit risk in each business, and reinforce
 
a culture of transparency, accountability, independence, and
balance.
WHO MANAGES CREDIT RISK
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 77
The responsibility for credit risk management
 
is enterprise-wide.
To
reinforce ownership of credit risk, credit risk
 
control functions are integrated into each
business, but also report to Risk Management.
Each business segment’s credit risk control unit is
 
responsible for its credit decisions and
 
must comply with established policies, exposure
 
guidelines, credit
approval limits, and policy/limit exception procedures.
 
It must also adhere to established enterprise-wide
 
standards of credit assessment and obtain
 
Risk
Management’s approval for credit decisions beyond its
 
discretionary authority.
Risk Management is accountable for oversight
 
of credit risk by developing policies that
 
govern and control portfolio risks, and approval
 
of product-specific
policies, as required.
The Risk Committee oversees the management
 
of credit risk and annually approves
 
certain significant credit risk policies.
HOW TD MANAGES CREDIT RISK
The Bank’s Credit Risk Management Framework
 
outlines the internal risk and control
 
structure to manage credit risk and includes
 
risk appetite, policies,
processes, limits and governance. The Credit
 
Risk Management Framework is maintained by
 
Risk Management and supports alignment
 
with the Bank’s risk
appetite for credit risk.
Credit risk policies and credit decision-making
 
strategies, as well as the discretionary limits
 
of officers throughout the Bank for extending lines
 
of credit are
centrally approved by Risk Management,
 
and the Board where applicable.
 
Limits are established to monitor and control
 
country, industry, product, geographic, and group exposure risks in the portfolios in
 
accordance with enterprise-
wide policies.
In the Bank’s Retail businesses, the Bank uses established
 
underwriting guidelines (which include
 
collateral and loan-to-value requirements)
 
along with
approved scoring techniques and standards
 
in extending, monitoring, and reporting
 
personal credit. Credit scores and decision
 
strategies are used in the
origination and ongoing management of new
 
and existing retail credit exposures. Scoring
 
models and decision strategies utilize a
 
combination of borrower
attributes, including, but not limited to, income,
 
employment status, existing loan exposure
 
and performance, and size of total bank
 
relationship, as well as external
data such as credit bureau information, to determine
 
the amount of credit the Bank is prepared to extend
 
to retail customers and to estimate future
 
credit
performance. Established policies and procedures
 
are in place to govern the use, and
 
monitor and assess the performance of scoring
 
models and decision
strategies to align with expected performance
 
results. Retail credit exposures approved
 
within the credit centres are subject to ongoing
 
Retail Risk Management
review to assess the effectiveness of credit decisions
 
and risk controls, as well as to identify
 
emerging or systemic issues and trends.
 
Material policy exceptions
are tracked and reported and larger dollar exposures
 
and material exceptions to policy are
 
escalated to Retail Risk Management.
The Bank’s Commercial Banking and Wholesale Banking
 
businesses use credit risk models and policies
 
to establish borrower and facility risk
 
ratings (BRR and
FRR), quantify and monitor the level of risk,
 
and to aid in the Bank’s effective management of risk.
 
Risk ratings are also used to determine
 
the amount of credit
exposure the Bank is willing to extend
 
to a particular borrower. Management processes are used
 
to monitor country, industry, and borrower or counterparty risk
ratings, which include daily, monthly, quarterly, and annual review requirements for credit exposures. The key
 
parameters used in the Bank’s credit risk models
 
are
monitored on an ongoing basis.
Unanticipated economic or political changes
 
in a foreign country could affect cross-border payments
 
for goods and services, loans, dividends,
 
and trade-related
finance, as well as repatriation of the Bank’s capital
 
in that country. The Bank currently has credit exposure in
 
a number of countries, with the majority of the
exposure in North America. The Bank measures
 
country risk using approved risk rating models
 
and qualitative factors that are also used
 
to establish country
exposure limits covering all aspects of credit
 
exposure across all businesses. Country risk
 
ratings are managed on an ongoing
 
basis and are subject to a detailed
review at least annually.
As part of the Bank’s credit risk strategy, the Bank sets limits on the
 
amount of credit it is prepared to extend
 
to specific industry sectors. The Bank
 
monitors its
concentration to any given industry to provide
 
for a diversified loan portfolio and to reduce
 
the risk of undue concentration. The Bank
 
manages this risk using limits
based on an internal risk rating methodology
 
that considers relevant factors.
 
The Bank assigns a maximum exposure
 
limit or a concentration limit to each
 
major
industry segment which is a percentage of its
 
total wholesale and commercial private sector
 
exposure.
The Bank may also set limits on the amount
 
of credit it is prepared to extend to a particular
 
entity or group of entities, also referred
 
to as “entity risk”. All entity
risk is approved by the appropriate decision-making
 
authority using limits based on the entity’s BRR.
 
This exposure is monitored on a regular basis.
To
determine the potential loss that could be incurred
 
under a range of adverse scenarios, the
 
Bank subjects its credit portfolios to stress
 
tests. Stress tests
assess vulnerability of the portfolios to
 
the effects of severe but plausible situations, such as
 
an economic downturn or a material market
 
disruption.
Credit Risk and the Basel Framework
The Bank uses the Basel IRB to calculate
 
credit risk RWA for all material portfolios. Based on exposure
 
class, in accordance with the OSFI CAR
 
guidelines, either
a foundation approach (Foundation Internal
 
Ratings-Based (FIRB))
 
or advanced approach (Advanced
 
Internal Ratings-Based (AIRB))
 
is applied.
The following risk parameters are used in
 
credit risk RWA calculations and may be subject to prescribed
 
floors in some cases:
●
 
Probability of default (PD) – the likelihood
 
that the borrower will not be able to meet
 
its scheduled repayments within a one-year
 
time horizon.
●
 
Loss given default (LGD) – the amount
 
of loss the Bank would likely incur when a
 
borrower defaults on a loan, which is
 
expressed as a percentage of exposure
at default (EAD).
●
 
EAD – the total amount of the Bank’s exposure at
 
the time of default, including certain off-balance
 
sheet items.
 
The FIRB approach primarily uses internally
 
derived PD, while other components such
 
as LGD and EAD are prescribed. The
 
AIRB approach uses internally
derived PD, LGD, and EAD.
To
continue to qualify to use the IRB approaches
 
for credit risk, the Bank must meet the ongoing
 
conditions and requirements established by OSFI
 
and the Basel
Framework. The Bank regularly assesses its
 
compliance with these requirements.
Credit Risk Exposures Subject to the
 
IRB Approaches
Banks that adopt the IRB approaches to
 
credit risk must report credit risk exposures by
 
counterparty type, each having different underlying
 
risk characteristics.
These counterparty types may differ from the
 
presentation in the Bank’s 2024
 
Consolidated Financial Statements.
 
The Bank’s credit risk exposures are divided into
two main portfolios, retail and non-retail.
Retail Exposures
In the retail portfolio, including individuals and
 
small businesses, the Bank manages exposures
 
on a pooled basis, using predictive credit
 
scoring techniques. There
are three sub-types of retail exposures: residential
 
secured (for example, mortgages and
 
HELOCs), qualifying revolving retail (for
 
example, credit cards, unsecured
lines of credit, and overdraft protection products),
 
and other retail (for example, personal loans,
 
including secured automobile loans, student
 
lines of credit, and
small business banking credit products).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 78
The Bank calculates RWA for its retail exposures using the
 
AIRB approach. All retail PD, LGD, and
 
EAD parameter models are based on the
 
internal default
and loss performance history for each of
 
the three retail exposure sub-types. These parameters
 
are also used in the calculation of regulatory
 
capital, economic
capital, and allowance for credit losses.
Account-level PD, LGD, and EAD models are
 
built for each product portfolio and calibrated
 
based on the observed account-level default
 
and loss performance
for the portfolio.
 
Consistent with the AIRB approach, the Bank
 
defines default for exposures as delinquency
 
of 90 days or more for the majority
 
of retail credit portfolios. LGD
estimates used in the RWA calculations reflect economic losses,
 
such as direct and indirect costs as well as
 
any appropriate discount to account
 
for time between
default and ultimate recovery. EAD estimates reflect the historically
 
observed utilization of credit limits at default.
 
PD, LGD, and EAD models are calibrated
 
using
established statistical methods, such as logistic
 
and linear regression techniques. Predictive
 
attributes in the models may include account
 
attributes, such as loan
size, interest rate, and collateral, where
 
applicable; an account’s previous history and
 
current status; an account’s age on book; a customer’s
 
credit bureau
attributes; a customer’s other holdings
 
with the Bank; and macroeconomic inputs,
 
such as unemployment rate. For secured
 
products such as residential
mortgages, property characteristics, loan-to-value
 
ratios, and a customer’s equity in
 
the property, play a significant role in PD as well as in LGD models.
 
All risk parameter estimates are updated
 
on a quarterly basis based on the refreshed
 
model inputs. Parameter estimation is fully automated
 
based on approved
formulas and is not subject to manual overrides.
 
Exposures are then assigned to pre-defined
 
PD segments based on their estimated long-run
 
average one-year PD.
 
The predictive power of the Bank’s retail credit
 
models is assessed against the most recently
 
available one-year default and loss performance
 
on a quarterly basis.
All models are also subject
 
to a comprehensive independent validation as
 
outlined in the “Model Risk Management”
 
section of this disclosure.
Long-run PD estimates are generated by
 
including key economic indicators, such as
 
interest rates and unemployment rates, and
 
using their long-run average
over the credit cycle to estimate PD.
 
LGD estimates are required to reflect a downturn
 
scenario. Downturn LGD estimates are generated
 
by using macroeconomic inputs, such
 
as changes in
housing prices and unemployment rates
 
expected in an appropriately severe downturn
 
scenario.
 
For unsecured products, downturn LGD estimates
 
reflect the observed lower recoveries
 
for exposures defaulted during the 2008
 
to 2009 recession. For
products secured by residential real estate,
 
such as mortgages and HELOCs,
 
downturn LGD reflects the potential impact
 
of a severe housing downturn. EAD
estimates similarly reflect a downturn scenario.
The following table maps PD ranges
 
to risk levels:
Risk assessment
PD Segment
PD Range
Low Risk
1
0.00
to
0.15
%
Normal Risk
2
0.16
to
0.41
3
0.42
to
1.10
Medium Risk
4
1.11
to
2.93
5
2.94
to
4.74
High Risk
6
4.75
to
7.59
7
7.60
to
18.24
8
18.25
to
99.99
Default
9
100.00
Non-Retail Exposures
In the non-retail portfolio, the Bank manages
 
exposures on an individual borrower basis, using
 
industry and sector-specific credit risk
 
models, and expert judgment.
The Bank has categorized non-retail credit risk
 
exposures according to the following
 
Basel counterparty types: corporate, including
 
wholesale and commercial
customers, sovereign, and bank. Under the
 
IRB approaches, CMHC-insured mortgages
 
are considered sovereign risk and are
 
therefore classified as non-retail.
 
The Bank evaluates credit risk for non-retail
 
exposures by using both a BRR and
 
FRR. The Bank uses this system for all corporate,
 
sovereign, and bank
exposures. The Bank determines the risk
 
ratings using industry and sector-specific
 
credit risk models that are based on
 
internal historical data. In Canada, for both
the wholesale and commercial lending portfolios,
 
credit risk models are calibrated based on internal
 
data beginning in 1994. In the U.S.,
 
credit risk models are
calibrated based on internal data beginning in
 
2007. All borrowers and
 
facilities are assigned an internal risk rating
 
that must be reviewed at least once each
 
year.
External data such as rating agency default rates
 
or loss databases are used to benchmark
 
the parameters.
 
Internal risk ratings (BRR and FRR) are key
 
to portfolio monitoring and management,
 
and are used to set exposure limits and loan
 
pricing. Internal risk ratings
are also used in the calculation of regulatory
 
capital, economic capital, and allowance
 
for credit losses.
 
Borrower Risk Rating and PD
Each borrower is assigned a BRR that
 
reflects the PD of the borrower using proprietary
 
models and expert judgment. In assessing
 
borrower risk, the Bank reviews
the borrower’s competitive position,
 
financial performance, economic, and industry
 
trends, management quality, and access to funds. Under the IRB
 
approaches,
borrowers are grouped into BRR grades
 
where a PD is calibrated for each BRR grade.
 
Use of projections for model implied risk ratings
 
is not permitted and BRRs
may not incorporate a projected reversal,
 
stabilization of negative trends, or the acceleration
 
of existing positive trends. Historic financial results
 
can however be
sensitized to account for events that have occurred,
 
or are about to occur, such as additional debt incurred
 
by a borrower since the date of the last
 
set of financial
statements. In conducting an assessment
 
of the BRR, all relevant and material information
 
must be taken into account and the information
 
being used must be
current. Quantitative rating models are used
 
to rank the expected through-the-cycle PD, and
 
these models are segmented into categories
 
based on industry and
borrower size. The quantitative model output
 
can be modified in some cases by expert judgment,
 
as prescribed within the Bank’s credit policies.
To
calibrate PDs for each BRR band, the Bank
 
computes yearly transition matrices based
 
on annual cohorts and then estimates the average
 
annual PD for each
BRR. The PD is set at the average estimation
 
level plus an appropriate adjustment to
 
cover statistical and model uncertainty. The calibration process
 
for PD is a
through-the-cycle approach. TD’s 21-point BRR
 
scale broadly aligns to external ratings as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 79
Description
Rating category
Standard & Poor’s
Moody’s Investor Services
Investment grade
0 to 1C
AAA to AA-
Aaa to Aa3
2A to 2C
A+ to A-
A1 to A3
3A to 3C
BBB+ to BBB-
Baa1 to Baa3
Non-investment grade
4A to 4C
BB+ to BB-
Ba1 to Ba3
5A to 5C
B+ to B-
B1 to B3
Watch and classified
6 to 8
CCC+ to CC and below
Caa1 to Ca and below
Impaired/default
9A to 9B
Default
Default
Facility Risk Rating and LGD
The FRR maps to LGD, with different models used
 
based on industry and obligor size, and
 
takes into account facility-specific characteristics
 
such as collateral,
seniority ranking of debt, loan structure,
 
and borrower enterprise value.
Average LGD and the statistical uncertainty of LGD
 
are estimated for each FRR grade. In some
 
FRR models, the scarcity of historical default
 
events requires
the model to output a rank-ordering which
 
is then mapped through expert judgment
 
to the quantitative LGD scale.
 
Under the FIRB approach, LGDs are prescribed
 
whereas the AIRB approach stipulates the use
 
of downturn LGD, where the downturn period,
 
as determined by
internal and/or external experience, suggests
 
higher than average loss rates or lower
 
than average recovery.
To
reflect this, calibrated LGDs take into account
both the statistical estimation uncertainty and
 
the higher than average LGDs experienced
 
during downturn periods.
Exposure at Default
 
The Bank calculates non-retail EAD by first
 
measuring the drawn amount of a facility and
 
then adding a potential increased utilization
 
at default from the undrawn
portion, if any. Usage Given Default (UGD) is measured as the percentage
 
of undrawn exposure that would be expected
 
to be drawn by a borrower defaulting in
the next year, in addition to the amount that already has been drawn
 
by the borrower. In the absence of credit mitigation effects or
 
other details, the EAD is set at
the drawn amount plus (estimated UGD
 
x undrawn) for AIRB exposure, or (prescribed
 
UGD x undrawn) for FIRB exposures.
BRR and drawn ratio up to one-year prior
 
to default are predictors for UGD under the AIRB
 
approach.
 
Consequently, the UGD estimates are calibrated by BRR
and drawn ratio, the latter representing
 
the ratio of the drawn to authorized amounts.
 
Historical UGD experience is studied for any downturn
 
impacts, similar to the LGD downturn analysis.
 
The Bank has not found downturn UGD
 
to be significantly
different from average UGD, therefore the UGDs under
 
AIRB are set at the average calibrated
 
level, by drawn ratio and/or BRR, plus
 
an appropriate adjustment for
statistical and model uncertainty.
UGDs under the FIRB approach are prescribed
 
for relevant exposure classes.
Credit Risk Exposures Subject to the Standardized
 
Approach (SA)
Currently the SA to credit risk is used
 
for new portfolios, which are in the process of
 
transitioning to IRB approaches, or exempted portfolios
 
which are either
immaterial or expected to wind down. The
 
Bank primarily applies SA to certain segments
 
within both the Retail and Non-retail portfolios.
 
Under the SA, the
exposure amounts are multiplied by risk
 
weights prescribed by OSFI, based on the
 
OSFI Capital Adequacy Requirements
 
(CAR) guidelines, to determine RWA.
These risk weights are assigned according
 
to certain factors including counterparty type,
 
product type, and the nature/extent of
 
credit risk mitigation. The Bank
uses external credit ratings, including Moody’s and S&P
 
to determine the appropriate risk weight
 
for its exposures to sovereigns and central
 
banks, public sector
entities (PSEs), banks (regulated DTIs and
 
securities firms), and corporates. The Bank
 
applies SA to certain retail portfolios, including
 
Real Estate Secured
Lending (RESL), where the assigned risk
 
weight is primarily based on the exposure’s Loan-to-Value ratio and
 
whether the exposure is categorized as income
producing or general.
Lower risk weights apply where approved
 
credit risk mitigants exist. For off-balance sheet
 
exposures, specified credit conversion
 
factors are used to convert the
notional amount of the exposure into a credit
 
equivalent amount.
Derivative Exposures
Credit risk on derivative financial instruments,
 
also known as counterparty credit risk,
 
is the risk of a financial loss occurring as a result
 
of the failure of a
counterparty to meet its obligation to the Bank.
 
Derivative-related credit risks are subject to
 
the same credit approval standards that
 
the Bank uses for assessing
loans. These standards include evaluating
 
the creditworthiness of counterparties,
 
measuring and monitoring exposures, including
 
wrong-way risk exposures, and
managing the size, diversification, and
 
maturity structure of the portfolios.
The Bank uses various qualitative and quantitative
 
methods to measure and manage counterparty
 
credit risk. These include statistical methods
 
to measure the
current and future potential risk, as well as
 
ongoing stress testing to identify and quantify
 
exposure under a range of adverse scenarios.
 
The Bank establishes
various limits to manage business volumes
 
and concentrations. Risk Management
 
independently measures and monitors
 
counterparty credit risk relative to
established credit policies and limits. As
 
part of the credit risk monitoring process,
 
management periodically reviews all exposures,
 
including exposures resulting
from derivative financial instruments to higher
 
risk counterparties, and to assess the
 
valuation of underlying financial instruments and
 
the impact evolving market
conditions may have on the Bank.
There are two types of wrong-way risk exposures,
 
namely general and specific. General
 
wrong-way risk arises when the PD of the
 
counterparties moves in the
same direction as a given market risk factor. Specific wrong-way
 
risk arises when the exposure to a particular
 
counterparty moves in the same direction as
 
the PD
of the counterparty due to the nature of
 
the transactions entered into with that counterparty. These exposures
 
require specific approval within the credit approval
process. The Bank measures and manages
 
specific wrong-way risk exposures in the
 
same manner as direct loan obligations
 
and controls them by way of
approved credit facility limits.
The Bank uses the standardized approach
 
for counterparty credit risk to calculate
 
the EAD amount, which is defined by OSFI as
 
a multiple of the summation of
replacement cost and potential future exposure,
 
to estimate the risk and determine regulatory
 
capital requirements
 
for derivative exposures.
Credit Valuation Adjustment Risk
The Bank maintains policies and procedures
 
that govern the valuation and hedging of
 
Credit Valuation Adjustment (CVA) risk. These policies, procedures and
associated results are regularly reviewed and
 
approved by senior management. While
 
CVA risk, capital and hedging is managed and owned by a
 
dedicated
business function, the independent Risk
 
Management function oversees the process,
 
including the effectiveness of hedges, reporting
 
and monitoring for
compliance to policies and frameworks and
 
adherence to risk appetite. Quantitative
 
models used for CVA risk and CVA capital comply with TD’s Model Risk
Management Framework.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 80
Validation of the Credit Risk Rating System
Credit risk rating systems and methodologies
 
are independently validated on a regular
 
basis to verify that they remain accurate predictors
 
of risk. The validation
process includes the following considerations:
–
●
 
Risk parameter estimates – PDs, LGDs, and
 
EADs are reviewed and updated against actual
 
loss experience to verify that estimates
 
continue to be reasonable
predictors of potential loss.
●
 
Model performance – Estimates continue
 
to be discriminatory, stable, and predictive.
●
 
Data quality – Data used in the risk rating
 
system is accurate, appropriate, and sufficient.
●
 
Assumptions – Key assumptions underlying
 
the development of the model remain
 
valid for the current portfolio and environment.
Risk Management verifies that the credit
 
risk rating system complies with the Bank’s
 
Model Risk Policy. At least annually, the Risk Committee is informed of the
performance of the credit risk rating system.
 
The Risk Committee must approve any material
 
changes to the Bank’s credit risk rating system.
Credit Risk Mitigation
 
The techniques the Bank uses to reduce or
 
mitigate credit risk include written policies
 
and procedures to value and manage financial
 
and non-financial security
(collateral) and to review and negotiate netting
 
agreements. The amount and type of
 
collateral, and other credit risk mitigation
 
techniques required, are based on
the Bank’s own assessment of the borrower’s
 
or counterparty’s credit quality and capacity
 
to pay.
In the Retail and Commercial banking businesses,
 
security for loans is primarily non-financial
 
and includes residential real estate, real
 
estate under
development, commercial real estate, automobiles,
 
and other business assets, such as accounts
 
receivable, inventory, and fixed assets. In the Wholesale Banking
business, a large portion of loans are
 
to investment grade borrowers where no security
 
is pledged. Non-investment grade borrowers
 
typically pledge business
assets in the same manner as commercial
 
borrowers. Common standards across the Bank
 
are used to value collateral, determine
 
frequency of recalculation, and
to document, register, perfect, and monitor collateral.
The Bank mitigates derivative counterparty
 
exposure using mitigation strategies
 
that include master netting agreements,
 
collateral pledging, and central clearing
houses. Master netting agreements allow
 
the Bank to offset and arrive at a net obligation
 
amount, whereas collateral agreements allow
 
the Bank to secure the
Bank’s exposure. Security for derivative exposures
 
is primarily financial and includes
 
cash and negotiable securities issued by highly
 
rated governments and
investment grade issuers. Central clearing houses
 
further reduce bilateral credit risk by taking
 
the opposite position to each trade.
 
In all but exceptional situations, the Bank
 
secures collateral by taking possession and
 
controlling it in a jurisdiction where it can legally
 
enforce its collateral
rights. In exceptional situations and when demanded
 
by the Bank’s counterparty, the Bank holds or pledges collateral
 
with an acceptable third-party custodian.
 
The
Bank documents all such third party arrangements
 
with industry standard agreements.
Occasionally, the Bank may take guarantees to reduce the risk in credit
 
exposures. For credit risk exposures subject
 
to the IRB approaches, the Bank only
recognizes irrevocable guarantees for
 
Commercial Banking and Wholesale Banking
 
credit exposures that are provided by entities
 
with a better risk rating than that
of the borrower or counterparty to the
 
transaction.
The Bank makes use of credit derivatives
 
to mitigate credit risk. The credit, legal, and
 
other risks associated with these transactions
 
are controlled through well-
established procedures. The Bank’s policy is
 
to enter into these transactions with investment
 
grade financial institutions and transact
 
on a collateralized basis.
Credit risk to these counterparties is managed
 
through the same approval, limit, and monitoring
 
processes the Bank uses for all counterparties
 
for which it has
credit exposure.
The Bank uses appraisals as well as valuations
 
via automated valuation models (AVMs) to support property values
 
when adjudicating loans collateralized by
residential property. AVMs are computer-based tools used to estimate or validate the
 
market value of residential property and uses
 
market comparables and price
trends for local market areas. The primary
 
risk associated with the use of these tools
 
is that the value of an individual property
 
may vary significantly from the
average for the market area. The Bank has
 
specific risk management guidelines addressing
 
the circumstances when they may be used,
 
and processes to
periodically validate AVMs including obtaining third-party appraisals.
Gross Credit Risk Exposure
Gross credit risk exposure, also referred
 
to as EAD, is the total amount the Bank is
 
exposed to at the time of default of a loan
 
and is measured before
counterparty-specific provisions or
 
write-offs. Gross credit risk exposure does not
 
reflect the effects of credit risk mitigation and
 
includes both on-balance sheet and
off-balance sheet exposures. On-balance sheet exposures
 
consist primarily of outstanding loans, non-trading
 
securities, derivatives, and certain other repo-style
transactions. Off-balance sheet exposures
 
consist primarily of undrawn commitments,
 
guarantees, and certain other repo-style
 
transactions.
Gross credit risk exposures for the two approaches
 
the Bank uses to measure credit risk are
 
included in the following table.
 
TABLE 42: GROSS CREDIT RISK EXPOSURES
 
Standardized and Internal Ratings-Based
 
(IRB) Approaches
1
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Standardized
IRB
Total
Standardized
IRB
Total
Retail
Residential secured
$
4,163
$
537,075
$
541,238
$
4,815
$
515,152
$
519,967
Qualifying revolving retail
866
172,203
173,069
810
169,183
169,993
Other retail
3,391
104,253
107,644
3,368
99,253
102,621
Total retail
8,420
813,531
821,951
8,993
783,588
792,581
Non-retail
Corporate
2,346
721,156
723,502
3,496
654,369
657,865
Sovereign
205
588,498
588,703
116
527,423
527,539
Bank
4,541
171,250
175,791
5,272
171,180
176,452
Total non-retail
7,092
1,480,904
1,487,996
8,884
1,352,972
1,361,856
Gross credit risk exposures
$
15,512
$
2,294,435
$
2,309,947
$
17,877
$
2,136,560
$
2,154,437
1
 
Gross credit risk exposures represent EAD and are before the effects of credit risk mitigation. This table
 
excludes securitization, equity, and other credit
 
RWA.
Other Credit Risk Exposures
Non-trading Equity Exposures
The Bank applies the standardized approach
 
to calculate RWA on non-trading equity exposures. Under
 
the standardized approach, a 250% risk
 
weight is applied
to equity holdings with the exception of speculative
 
unlisted equities that receive a 400% risk
 
weight. Equity exposures to sovereigns and
 
holdings made under
legislated programs
 
continue to follow the OSFI prescribed risk
 
weights of 0%, 20% or 100%.
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 81
Securitization Exposures
 
The Bank applies risk weights to all securitization
 
exposures under the revised securitization
 
framework published by OSFI. The revised
 
securitization framework
includes a hierarchy of approaches to determine
 
capital treatment, and transactions that
 
meet the simple, transparent, and comparable
 
requirements that are
eligible for preferential capital treatment.
The Bank uses Internal Ratings-Based Approach
 
(SEC-IRBA) for qualified exposures.
 
Under SEC-IRBA, risk weights are determined
 
using a loss coverage
model that quantifies and monitors the level
 
of risk. The SEC-IRBA also considers
 
credit enhancements available for loss protection.
For externally rated exposures that do not
 
qualify for SEC-IRBA, the Bank uses an
 
External Ratings-Based Approach (SEC-ERBA).
 
Risk weights are assigned
to exposures using external ratings by external
 
rating agencies, including Moody’s and S&P. The SEC-ERBA also takes into account
 
additional factors, including
the type of the rating (long-term or short-term),
 
maturity, and the seniority of the position.
 
For exposures that do not qualify for SEC-IRBA
 
or SEC-ERBA, and are held by an ABCP
 
issuing conduit, the Bank uses the
 
Internal Assessment Approach
(IAA).
Under the IAA, the Bank considers all relevant
 
risk factors in assessing the credit quality
 
of these exposures, including those published
 
by the Moody’s and S&P
rating agencies. The Bank also uses loss
 
coverage models and policies to quantify
 
and monitor the level of risk, and facilitate
 
its management. The Bank’s IAA
process includes an assessment of the extent
 
by which the enhancement available for loss
 
protection provides coverage of expected
 
losses. The levels of
stressed coverage the Bank requires for each
 
internal risk rating are consistent with the
 
rating agencies’ published stressed factor
 
requirements for their equivalent
external ratings by asset class. Under the
 
IAA, exposures are multiplied by OSFI prescribed
 
risk weights to calculate RWA for capital purposes.
 
For exposures that do not qualify for SEC-IRBA,
 
SEC-ERBA or the IAA, the Bank
 
uses the SA (SEC-SA). Under SEC-SA,
 
the primary factors that determine the
risk weights include the asset class of the underlying
 
loans, the seniority of the position, the level
 
of credit enhancements, and historical
 
delinquency rates.
Irrespective of the approach being used to
 
determine the risk weights, all exposures are
 
assigned an internal risk rating based on
 
the Bank’s assessment, which
must be reviewed at least annually. The ratings scale TD uses corresponds
 
to the long-term ratings scales used by
 
the rating agencies.
 
The Bank’s internal rating process is subject
 
to all of the key elements and principles of
 
the Bank’s risk governance structure, and is managed
 
in the same way
as outlined in this “Credit Risk” section.
 
The Bank uses the results of the internal rating
 
in all aspects of its credit risk management,
 
including performance tracking, control mechanisms,
 
and
management reporting.
Market Risk
Trading Market Risk is the risk of loss from financial instruments
 
held in trading portfolios due to adverse
 
movements in market factors. These market
 
factors
include interest rates, foreign exchange rates,
 
equity prices, commodity prices, credit
 
spreads, and their respective volatilities.
Non-Trading Market Risk is the risk of loss on the balance
 
sheet or volatility in earnings from non-trading
 
activities such as asset-liability management
 
or
investments, due to adverse movements
 
in market factors. These market factors
 
are predominantly interest rates, credit
 
spreads, foreign exchange rates and
equity prices.
 
The Bank is exposed to market risk in its
 
trading and investment portfolios, as well
 
as through its non-trading activities. The Bank
 
is an active participant in the
market through its trading and investment
 
portfolios, seeking to realize returns
 
for the Bank through careful management of its
 
positions and inventories. In the
Bank’s non-trading activities, it is exposed to
 
market risk through the everyday banking transactions
 
that the Bank executes with its customers.
The Bank complied with the Basel III
 
market risk requirements as at October 31, 2024,
 
using the Standardized Approach.
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 82
MARKET RISK LINKAGE TO THE BALANCE SHEET
The following table provides a breakdown of
 
the Bank’s balance sheet into assets and liabilities
 
exposed to trading and non-trading market
 
risks. Market risk of
assets and liabilities included in the calculation
 
of VaR and other metrics used for regulatory market risk capital purposes
 
is classified as trading market risk.
 
TABLE 43: MARKET RISK LINKAGE TO THE
 
BALANCE SHEET
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Non-trading market
Balance
Trading
Non-trading
Balance
Trading
Non-trading
risk – primary risk
sheet
market risk
market risk
Other
sheet
market risk
market risk
Other
sensitivity
Assets subject to market risk
Interest-bearing deposits with banks
$
169,930
$
1,601
$
168,329
$
–
$
98,348
$
327
$
98,021
$
–
Interest rate
Trading loans, securities, and other
175,770
174,232
1,538
–
152,090
151,011
1,079
–
Interest rate
Non-trading financial assets at
fair value through profit or loss
5,869
–
5,869
–
7,340
–
7,340
–
Equity,
 
foreign exchange,
 
interest rate
Derivatives
78,061
70,636
7,425
–
87,382
81,526
5,856
–
Equity,
 
foreign exchange,
 
interest rate
Financial assets designated at
fair value through profit or loss
6,417
–
6,417
–
5,818
–
5,818
–
Interest rate
Financial assets at fair value through
other comprehensive income
93,897
–
93,897
–
69,865
–
69,865
–
Equity,
 
foreign exchange,
 
interest rate
Debt securities at amortized cost,
net of allowance for credit losses
271,615
–
271,615
–
308,016
–
308,016
–
Foreign exchange,
interest rate
Securities purchased under
reverse repurchase agreements
208,217
10,488
197,729
–
204,333
9,649
194,684
–
Interest rate
Loans, net of allowance for
 
loan losses
949,549
–
949,549
–
895,947
–
895,947
–
Interest rate
Customers’ liability under
acceptances
–
–
–
–
17,569
–
17,569
–
Interest rate
Investment in Schwab
9,024
–
9,024
–
8,907
–
8,907
–
Equity
Other assets
1,2
2,230
–
2,230
–
1,956
–
1,956
–
Interest rate
Assets not exposed to
 
market risk
91,172
–
–
91,172
97,568
–
–
97,568
Total Assets
2
$
2,061,751
$
256,957
$
1,713,622
$
91,172
$
1,955,139
$
242,513
$
1,615,058
$
97,568
Liabilities subject to market risk
Trading deposits
$
30,412
$
26,827
$
3,585
$
–
$
30,980
$
27,059
$
3,921
$
–
Equity, interest rate
Derivatives
68,368
66,976
1,392
–
71,640
70,382
1,258
–
Equity,
foreign exchange,
interest rate
Securitization liabilities at fair value
20,319
20,319
–
–
14,422
14,422
–
–
Interest rate
Financial liabilities designated at
 
fair value through profit or loss
207,914
2
207,912
–
192,130
2
192,128
–
Interest rate
Deposits
1,268,680
–
1,268,680
–
1,198,190
–
1,198,190
–
Interest rate,
foreign exchange
Acceptances
–
–
–
–
17,569
–
17,569
–
Interest rate
Obligations related to securities
sold short
39,515
37,812
1,703
–
44,661
43,993
668
–
Interest rate
Obligations related to securities sold
under repurchase agreements
201,900
13,540
188,360
–
166,854
12,641
154,213
–
Interest rate
Securitization liabilities at amortized
cost
12,365
–
12,365
–
12,710
–
12,710
–
Interest rate
Subordinated notes and debentures
11,473
–
11,473
–
9,620
–
9,620
–
Interest rate
Other liabilities
1,2
34,066
–
34,066
–
27,062
–
27,062
–
Equity, interest rate
Liabilities and Equity not
 
exposed to market risk
2
166,739
–
–
166,739
169,301
–
–
169,301
Total Liabilities and Equity
2
$
2,061,751
$
165,476
$
1,729,536
$
166,739
$
1,955,139
$
168,499
$
1,617,339
$
169,301
1
 
Relates to retirement benefits, insurance, and structured entity liabilities.
2
 
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 of the Bank’s
 
2024 Consolidated Financial Statements for further details.
MARKET RISK IN TRADING ACTIVITIES
The overall objective of the Bank’s trading businesses
 
is to provide wholesale banking services,
 
including facilitation and liquidity, to clients of the Bank. The Bank
must take on risk in order to provide effective
 
service in markets where its clients trade.
 
In particular, the Bank needs to hold inventory, act as principal to facilitate
client transactions, and underwrite new issues.
 
The Bank also trades in order to have in-depth
 
knowledge of market conditions to provide
 
the most efficient and
effective pricing and service to clients,
 
while balancing the risks inherent in its dealing
 
activities.
WHO MANAGES MARKET RISK IN TRADING
 
ACTIVITIES
Primary responsibility for managing market
 
risk in trading activities lies with Wholesale
 
Banking,
 
with oversight from Market Risk Control
 
within Risk Management.
The Market Risk Control Committee meets
 
regularly to review the market risk profile
 
and trading results of the Bank’s trading businesses.
 
The committee is
chaired by the Vice President, Head of Market Risk,
 
and includes Wholesale Banking senior
 
management.
There were no significant reclassifications
 
between trading and non-trading books during
 
the year ended October 31, 2024.
 
 
 
 
ex992p83i0
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 83
HOW TD MANAGES MARKET RISK IN TRADING
 
ACTIVITIES
Market risk plays a key part in the assessment
 
of trading business strategies. The process
 
for the Bank to launch new trading initiatives,
 
or expand existing ones,
involves an assessment of risk with respect
 
to the Bank’s risk appetite and business expertise
 
and an assessment of the appropriate infrastructure
 
required to
monitor, control, and manage the risk. The Trading Market Risk Framework
 
outlines the management of trading market
 
risk and incorporates risk appetite, risk
governance structures, risk identification, risk
 
measurement, and risk control. The Trading Market
 
Risk Framework is maintained by Risk
 
Management and
supports alignment with the Bank’s risk appetite
 
for trading market risk.
Processes are in place to classify positions
 
as either trading book or banking book for
 
the purpose of calculating regulatory capital, per
 
OSFI CAR Guidelines.
Policies define the governance and monitoring
 
requirements of internal risk transfers.
Trading Limits
The Bank sets trading limits that are
 
consistent with the approved business strategy
 
for each business and its tolerance for the
 
associated market risk, aligned to
its market risk appetite. In setting limits, the
 
Bank takes
 
into account market volatility, market liquidity, organizational experience,
 
and business strategy. Limits are
prescribed at the Wholesale Banking level in
 
aggregate, as well as at more granular
 
levels.
The core market risk limits are based on
 
the key risk drivers in the business and includes
 
notional, credit spread, yield curve
 
shift, price, and volatility limits.
 
Another primary measure of trading limits is
 
VaR,
 
which the Bank uses to monitor and
 
control overall risk levels. VaR measures the adverse impact
 
that
potential changes in market rates and prices
 
could have on the value of a portfolio over a
 
specified period of time.
At the end of each day, risk positions are compared with risk limits,
 
and any excesses are reported in accordance
 
with established market risk policies and
procedures.
Calculating VaR
The Bank computes total VaR on a daily basis by combining the General
 
Market Risk (GMR) and Idiosyncratic Debt
 
Specific Risk (IDSR) associated with the
Bank’s trading positions.
GMR is determined by creating a distribution
 
of potential changes to the market value of
 
the current portfolio using historical simulation.
 
The Bank values the
current portfolio using the market price and rate
 
changes of the most recent 259 trading days
 
for equity, interest rate, foreign exchange, credit, and commodity
products. GMR is computed as the threshold
 
level that portfolio losses are not expected
 
to exceed more than one out of every 100 trading
 
days. A one-day holding
period is used for GMR calculation.
IDSR measures idiosyncratic (single-name) credit
 
spread risk
 
for credit exposures in the trading portfolio
 
using Monte Carlo simulation. The IDSR
 
model is
based on the historical behaviour of five-year idiosyncratic
 
credit spreads. Similar to GMR, IDSR is
 
computed as the threshold level that portfolio
 
losses are not
expected to exceed more than one out of every
 
100 trading days. IDSR is measured
 
for a ten-day holding period.
The following graph discloses daily one-day
 
VaR usage and trading net revenue, reported on a TEB,
 
within Wholesale Banking. Trading net revenue includes
trading income and net interest income related
 
to positions within the Bank’s market risk capital
 
trading books. For the year ending October 31,
 
2024, there
were 12 days of trading losses and trading
 
net revenue was positive for 95% of the trading
 
days, reflecting normal trading activity. Losses in the year did
 
not
exceed VaR on any trading day.
VaR is a valuable risk measure but it should be used in the
 
context of its limitations, for example:
●
 
VaR uses historical data to estimate future events, which limits
 
its forecasting abilities;
●
 
it does not provide information on losses beyond
 
the selected confidence level; and
●
 
it assumes that all positions can be liquidated
 
during the holding period used for VaR calculation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 84
The Bank continuously improves its VaR methodologies and incorporates
 
new risk measures in line with market
 
conventions, industry practices, and regulatory
requirements.
 
To mitigate some of the shortcomings of VaR, the Bank uses additional metrics designed for risk
 
management.
 
This include Stress Testing as well as
sensitivities to various market risk factors.
The following table presents the end of year, average, high,
 
and low usage of TD’s portfolio metrics.
 
TABLE 44: PORTFOLIO MARKET RISK
 
MEASURES
(millions of Canadian dollars)
2024
2023
As at
Average
High
Low
As at
Average
High
Low
Interest rate risk
$
8.4
$
16.8
$
27.7
$
5.1
$
21.1
$
24.9
$
44.2
$
12.2
Credit spread risk
25.1
30.0
40.5
18.9
31.5
31.6
41.9
22.5
Equity risk
7.7
7.8
12.0
5.2
6.0
9.4
15.8
5.7
Foreign exchange risk
5.2
2.9
7.8
1.2
2.1
3.5
9.7
1.0
Commodity risk
6.0
4.5
11.5
2.2
2.9
4.8
11.7
2.3
Idiosyncratic debt specific risk
18.2
20.3
29.7
13.8
28.4
33.2
57.2
20.3
Diversification effect
1
(45.0)
(50.8)
n/m
2
n/m
(57.4)
(62.6)
n/m
n/m
Total Value-at-Risk (one-day)
25.6
31.5
44.9
21.8
34.6
44.8
69.6
30.1
1
 
The aggregate VaR is less than the sum of the VaR
 
of the different risk types due to risk offsets resulting from portfolio diversification.
2
 
Not meaningful. It is not meaningful to compute a diversification effect because the high and low may
 
occur on different days for different risk types.
Market volatility subsided across most asset
 
classes in 2024, with slowing inflation and interest
 
rates cuts, however concerns still
 
persist related to ongoing
geopolitical tensions.
The Bank has managed market risk by
 
maintaining stable risk exposures, with daily VaR remaining within approved
 
limits during the year.
Average VaR decreased year-over-year due to changes in interest rate
 
and fixed income positions, coupled
 
with narrowing credit spreads.
Validation of VaR Model
 
The Bank uses a back-testing process
 
to compare the actual profits
 
and losses to VaR to review their consistency with the
 
statistical results of the VaR model.
Stress Testing
The Bank’s trading business is subject to an overall global
 
stress test limit. In addition, global businesses
 
have stress test limits, and each broad risk
 
class has an
overall stress test threshold. Stress scenarios
 
are designed to model extreme economic events,
 
replicate worst-case historical experiences,
 
or introduce severe,
but plausible,
 
hypothetical changes in key market risk
 
factors. The stress testing program includes
 
scenarios developed using actual historical
 
market data during
periods of market disruption, in addition
 
to hypothetical scenarios developed by
 
Risk Management. Stress tests
 
are produced and reviewed regularly.
 
The events
the Bank has modelled include the 1987 equity
 
market crash, the 1998 Russian debt default
 
crisis, the aftermath of September 11, 2001, the 2007 ABCP crisis,
the credit crisis of Fall 2008,
 
the Brexit referendum of June 2016, and
 
the COVID-19 pandemic of 2020.
 
MARKET RISK IN OTHER WHOLESALE
 
BANKING ACTIVITIES
The Bank is also exposed to market risk arising
 
from its investment portfolio and other non-trading
 
portfolios.
 
Risk Management reviews and approves
 
policies and
procedures, which are established to
 
monitor, measure, and mitigate these risks.
Structural (Non-Trading) Market Risk
Structural (Non-Trading) Market Risk generally arises from traditional
 
banking activities, such as personal and
 
commercial banking products (loans and deposits),
as well as related funding, investments and
 
HQLA. It does not include market risk
 
from TD’s Wholesale Banking or Insurance businesses.
 
Structural market risks
primarily include interest rate risk and
 
foreign exchange risk.
WHO MANAGES STRUCTURAL (NON-TRADING)
 
MARKET RISK
The TBSM group measures and manages the
 
market risks of non-trading banking activities
 
outside of TD’s Wholesale Banking and Insurance
 
businesses, with
oversight from the ALCO. The Market
 
Risk Control function provides independent
 
oversight, governance, and control of these
 
market risks. The Risk Committee
reviews and approves key non-trading
 
market risk policies and monitors the Bank’s positions
 
and compliance with these policies
 
through regular reporting and
updates from senior management.
HOW TD MANAGES STRUCTURAL (NON-TRADING)
 
MARKET RISK
Non-trading interest rate risk, if not managed,
 
has the potential to increase earnings
 
volatility and generate losses without contributing
 
long term expected value.
To
manage this risk, the Bank’s non-trading asset and
 
liability profile is managed in accordance
 
with a target and series of limits to control
 
the impact of interest
rate changes on the Bank’s NII,
while maintaining the Bank’s economic value sensitivity
 
within risk appetite.
 
Managing Structural Interest Rate Risk
Interest rate risk is the impact that changes
 
in interest rates could have on the Bank’s margins,
 
earnings, and economic value. Interest rate
 
risk management is
designed to generate stable and predictable
 
earnings over time. The Bank has adopted
 
a disciplined hedging approach to manage
 
the net interest income from its
asset and liability positions. Key aspects of
 
this approach are:
●
 
Evaluating and managing the impact of rising
 
or falling interest rates on net interest income
 
and economic value, and developing strategies
 
to manage overall
sensitivity to rates across varying interest
 
rate scenarios;
●
 
Modelling the expected impact of customer
 
behaviour on TD’s products (e.g., how actively
 
customers exercise embedded options,
 
such as prepaying a loan or
redeeming a deposit before its maturity date);
 
●
 
Assigning target-modelled maturity profiles
 
for non-maturity assets, liabilities, and equity;
●
 
Measuring the margins of TD’s banking products
 
on a fully-hedged basis, including the impact
 
of financial options that are granted
 
to customers; and
 
●
 
Developing and implementing strategies
 
to stabilize net interest income from all retail and
 
commercial banking products.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 85
The Bank is exposed to the interest rate risk
 
from “mismatched positions”
 
which occur when asset and liability principal
 
and interest cash flows have different
repricing or maturity dates. The Bank measures
 
this risk based on an assessment of:
 
contractual cash flows, product-embedded
 
optionality, customer behaviour
expectations and the modelled maturity
 
profiles for non-maturity products.
To
manage this risk, the Bank primarily uses
 
financial derivatives, wholesale
investments and funding instruments.
 
The Bank also measures its exposure
 
to non-maturity liabilities, such as core deposits,
 
by assessing interest rate elasticity and balance
 
permanence using
historical data and business judgment. Fluctuations
 
of non-maturity deposits can occur due
 
to factors such as interest rate and equity
 
market movements, and
changes to customer liquidity preferences.
 
Banking product optionality, whether from freestanding options
 
such as mortgage rate commitments or options
 
embedded within loans and deposits, expose
 
the
Bank to significant financial risk. To manage these exposures, the Bank
 
purchases options or uses a dynamic hedging
 
process designed to replicate the payoff of
a purchased option.
●
Rate Commitments
: The Bank measures its exposure from
 
freestanding mortgage rate commitment
 
options using an expected funding profile based
 
on
historical experience. Customers’ propensity
 
to fund, and their preference for fixed or
 
floating rate mortgage products, is influenced
 
by factors such as market
mortgage rates, house prices, and seasonality.
●
Asset Prepayment and other Embedded
 
Options
: The Bank models its exposure to options
 
embedded in some of its products based on
 
analyses of
customer behaviour. Examples of modeled options are the right
 
to prepay residential mortgage loans,
 
and the right to early redeem some
 
term deposit products.
For mortgages, econometric models are used
 
to model prepayments and the effects of prepayment
 
behaviour to the Bank. In general, mortgage
 
prepayments
are also affected by factors such as mortgage age,
 
house prices, and GDP growth. The combined
 
impacts from these parameters are also
 
assessed to
determine a core liquidation speed that is independent
 
of market incentives. A similar analysis is
 
undertaken for other products with embedded
 
optionality.
Structural Interest Rate Risk Measures
The primary measures for this risk are Economic
 
Value of Shareholders’ Equity (EVE) Sensitivity and Net Interest
 
Income Sensitivity (NIIS).
EVE Sensitivity measures the impact of a
 
specified interest rate shock to the net present
 
value of the Bank’s banking book assets, liabilities,
 
and certain off-
balance sheet items. It reflects a measurement
 
of the potential present value impact on
 
shareholders’ equity without an assumed term
 
profile for the management
of the Bank’s own equity and excludes product
 
margins.
 
NIIS measures the NII change over a twelve-month
 
horizon for a specified change in interest
 
rates for banking book assets, liabilities,
 
and certain off-balance
sheet items assuming a constant balance
 
sheet over the period.
 
The Bank’s Market Risk policy sets overall limits
 
on structural interest rate risk measures.
 
These limits are periodically reviewed and approved
 
by the Risk
Committee.
 
In addition to the Board policy limits, book-level
 
risk limits for the Bank’s management of non-trading
 
interest rate risk are set by Risk Management.
Exposures against these limits are routinely
 
monitored and reported, and breaches of the
 
Board limits, if any, are escalated to both the ALCO and the
 
Risk
Committee.
 
TABLE 45: STRUCTURAL INTEREST
 
RATE SENSITIVITY MEASURES
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
EVE
NII
1,2
EVE
NII
1
Sensitivity
Sensitivity
1
Sensitivity
Sensitivity
1
Canada
U.S.
 
Total
Canada
U.S.
Total
Total
Total
Before-tax impact of
 
 
100 bps increase in rates
$
(643)
$
(1,846)
$
(2,489)
$
301
$
419
$
720
$
(2,211)
$
920
 
100 bps decrease in rates
496
1,418
1,914
(357)
(626)
(983)
1,599
(1,099)
1
 
Represents the twelve-month NII exposure to an immediate and sustained shock in rates.
As at October 31, 2024, an immediate and
 
sustained 100 bps increase in interest rates
 
would have a negative impact to the Bank’s EVE
 
of $2,489 million, an
increase of $278 million from last year, and a positive impact
 
to the Bank’s NII of $720 million, a decrease of
 
$200 million from last year. An immediate and
sustained 100 bps decrease in interest rates
 
would have a positive impact to the Bank’s EVE
 
of $1,914 million, an increase of $315
 
million from last year, and a
negative impact to the Bank’s NII of $983 million, a
 
decrease of $116 million from last year. The year-over-year increases in both up and
 
down shock EVE
Sensitivity is primarily due to an increase in
 
the sensitivity of net assets funded by equity.
 
The year-over-year decreases in both up and
 
down shock NIIS is
primarily due to Treasury hedging activity. As at October 31, 2024, reported EVE
 
and NII Sensitivities remain within the Bank’s
 
risk appetite and established Board
limits.
 
Managing Non-trading Foreign Exchange
 
Risk
Foreign exchange risk refers to losses that
 
could result from changes in foreign-currency
 
exchange rates. Assets and liabilities
 
that are denominated in foreign
currencies create foreign exchange risk.
 
The Bank is exposed to non-trading foreign exchange
 
risk primarily from its investments in foreign
 
operations. When the Bank’s foreign currency
 
assets are
greater or less than its liabilities in that
 
currency, they create a foreign currency open position. An adverse
 
change in foreign exchange rates can impact
 
the Bank’s
reported net income and shareholders’
 
equity, and its capital ratios.
 
To minimize the impact of an adverse foreign exchange rate change on certain
 
capital ratios, the Bank’s net investments in
 
foreign operations are hedged so
certain capital ratios change by no more
 
than an acceptable amount for a given change
 
in foreign exchange rates. The Bank does not
 
generally hedge the
earnings of foreign subsidiaries which results
 
in changes to the Bank’s consolidated earnings
 
when relevant foreign exchange rates
 
change.
Other Non-trading Market Risks
Other structural market risks monitored on a regular
 
basis include:
●
Basis Risk
– The Bank is exposed to risks related
 
to the difference in various market indices.
●
Equity Risk
 
–
The Bank is exposed to non-trading equity
 
risk from investment securities designated
 
at FVOCI, equity-linked guaranteed investment
 
certificate
product offerings
 
and share-based compensation plans
 
where certain employees are awarded
 
share units equivalent to the Bank’s common
 
shares as
compensation for services provided to
 
the Bank. These share units are recorded
 
as a liability over the vesting period and revalued
 
at each reporting period until
settled in cash, and changes in the Bank’s share
 
price can impact non-interest expenses.
 
The Bank uses equity derivative instruments
 
to manage its non-
trading equity price risk.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 86
Managing Investment Portfolios
The Bank manages a securities portfolio
 
that is integrated into the overall asset and
 
liability management process. The securities
 
portfolio is comprised of high-
quality, low-risk securities and managed in a manner appropriate
 
to the attainment of the following goals: (1)
 
to generate a targeted credit of funds to deposit
balances that are in excess of loan balances;
 
(2) to provide a sufficient pool of liquid assets
 
to meet deposit and loan fluctuations and overall
 
liquidity management
objectives; (3) to provide eligible securities
 
to meet collateral and cash management requirements;
 
and (4) to manage the target interest rate risk
 
profile of the
balance sheet. The Risk Committee reviews
 
and approves the Enterprise Investment
 
Policy that sets out limits for the Bank’s investment
 
portfolio. In addition, the
Wholesale Banking and Insurance businesses
 
also hold investments that are managed
 
separately.
WHY NET INTEREST MARGIN FLUCTUATES
 
OVER TIME
As previously noted, the Bank’s approach to structural
 
(non-trading) market risk is designed
 
to generate stable and predictable earnings
 
over time, regardless of
cash flow mismatches and the exercise
 
of options granted to customers.
 
This approach also creates margin certainty
 
on loan and deposit profitability as they are
booked. Despite this approach however, the Bank’s NIM is
 
subject to change over time for the following
 
reasons (among others):
●
 
Differences in margins earned on new and renewing
 
products relative to the margin previously
 
earned on matured products;
●
 
Weighted-average margin impact from
 
changes in business and product mix;
●
 
Changes in the basis between certain market
 
indices;
●
 
The lag in changing product prices in response
 
to changes in market interest rates,
 
including rate-sensitive deposit pricing;
●
 
Changes from the repricing of hedging strategies
 
to manage the investment profile of the
 
Bank’s non-rate sensitive deposits; and
●
 
Margin changes from the portion of the Bank’s deposits
 
that are non-rate sensitive but not expected
 
to be longer term in nature, resulting in a
 
shorter term
investment profile and higher sensitivity
 
to short-term rates.
The general level of interest rates will affect the return
 
the Bank generates on its modelled
 
maturity profile for core non-rate sensitive deposits
 
and the investment
profile for its net equity position as it evolves
 
over time. The general level of interest rates
 
is also a key driver of some modelled option
 
exposures, and will affect
the cost of hedging such exposures. The Bank’s approach
 
to managing these factors tends to moderate their
 
impact over time, resulting in a more
 
stable and
predictable earnings stream.
Operational
Risk
Operational risk is the risk of loss resulting
 
from inadequate or failed internal processes,
 
people and systems or from external events
 
and also includes losses
related to legal risk events and regulatory
 
fines.
 
Operational risk is inherent in all of the Bank’s business
 
activities, including the practices and controls
 
used to manage other risks such as credit,
 
market, and
liquidity risk. Failure to manage operational
 
risk can result in financial loss (direct or
 
indirect), reputational harm, or regulatory
 
censure and penalties.
 
The Bank seeks to actively mitigate and
 
manage operational risk in order to create
 
and sustain shareholder value, successfully
 
execute the Bank’s business
strategies, operate efficiently, and provide reliable, secure, and convenient
 
access to financial services. The Bank maintains
 
a formal enterprise-wide operational
risk management framework that emphasizes
 
a strong risk management and internal
 
control culture throughout TD to help support
 
operational resilience and the
Bank’s ability to withstand disruptions.
WHO MANAGES OPERATIONAL RISK
Operational Risk Management is an independent
 
function that owns and maintains the Bank’s
 
Operational Risk Management Framework.
 
This framework sets out
the enterprise-wide governance processes, policies,
 
and practices to identify, assess, measure, control, monitor, escalate, report, and
 
communicate on operational
risk. Operational Risk Management is
 
designed to provide appropriate monitoring
 
and reporting of the Bank’s operational risk profile
 
and exposures to senior
management through the OROC, the ERMC,
 
and the Risk Committee.
In addition to the framework, Operational
 
Risk Management owns and maintains, or has
 
oversight of, the Bank’s operational risk policies including
 
those that
govern business continuity and crisis
 
management, third-party risk management,
 
data risk management, fraud risk management,
 
change governance, operational
resilience, technology and cyber security risk
 
management, and insider risk management.
Senior management of individual business
 
segments and corporate functions are responsible
 
for the day-to-day management of operational
 
risk following the
Bank’s established operational risk management framework,
 
policies and the three lines of defence
 
model. An independent risk management oversight
 
function
supports each business segment and corporate
 
function and monitors and challenges the
 
implementation and use of the operational
 
risk management programs
according to the nature and scope of the operational
 
risks inherent in the area. Senior executives
 
in each business segment and corporate
 
area participate in a
Risk Management Committee that oversees
 
operational risk management issues and
 
initiatives.
Ultimately, every employee has a role to play in managing operational
 
risk. In addition to policies and procedures
 
guiding employee activities, training is
 
available
to all employees regarding specific types of operational
 
risks and their role in helping to protect
 
the interests and assets of the Bank.
HOW TD MANAGES OPERATIONAL RISK
The Operational Risk Management Framework
 
outlines the internal risk and control structure
 
to manage operational risk and includes
 
the operational risk appetite,
governance processes, and policies. The Operational
 
Risk Management Framework supports alignment
 
with the Bank’s ERF and risk appetite. The
 
framework
incorporates sound industry practices and
 
is designed to meet regulatory requirements.
 
Key components of the framework
 
include:
Governance and Organization
Management reporting and organizational
 
structures emphasize accountability, ownership, and effective oversight
 
of each business segment’s and each corporate
function’s operational risk exposures. In addition,
 
the expectations of the Risk Committee
 
and senior management for managing operational
 
risk are set out by
enterprise-wide policies and practices.
Risk and Control Self-Assessment
Internal controls are one of the primary
 
methods of safeguarding the Bank’s employees, customers,
 
assets, and information, and in preventing
 
and detecting errors
and fraud. Management undertakes comprehensive
 
assessments of key risk exposures and
 
the internal controls in place to reduce or offset these
 
risks. Senior
management reviews the results of these evaluations
 
to assess whether risk management and
 
internal controls are effective, appropriate, and
 
compliant with the
Bank’s policies.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 87
Operational Risk Event Monitoring
To
reduce the Bank’s exposure to future loss, the Bank
 
must remain aware of and respond to its
 
own and industry operational risks. The Bank’s
 
policies and
processes require that operational risk events
 
be identified, tracked,
 
and reported to the appropriate level of
 
management to facilitate the Bank’s analysis and
management of its risks and inform the assessment
 
of suitable corrective and preventative
 
action. The Bank also reviews, analyzes,
 
and benchmarks itself against
operational risk losses that have occurred at other
 
institutions using information acquired
 
through recognized industry data providers.
Scenario Analysis
Scenario Analysis is a systematic and repeatable
 
process of obtaining expert business and
 
risk opinion to derive assessments of
 
the likelihood and potential loss
estimates of high impact operational events
 
that are unexpected and outside the normal
 
course of business. The Bank applies this practice
 
to meet risk
measurement and risk management objectives.
 
The process includes the use of relevant
 
external operational loss event data along
 
with the Bank’s internal loss
data and risk outlook that is assessed considering
 
the Bank’s operational risk profile and control
 
structure. The program is designed to raise awareness
 
and
educate business and corporate segments
 
regarding existing and emerging risks, which
 
may result in the identification and assessment
 
of new hypothetical
scenarios and risk mitigation action plans
 
to minimize tail risks.
Risk Reporting
Risk Management regularly monitors risk-related
 
measures and the risk profile throughout
 
the Bank to report to senior management and
 
the Risk Committee.
Operational risk measures are
 
systematically tracked, assessed, and
 
reported to promote management accountability
 
and direct the appropriate level of attention
to current and emerging issues.
Insurance
TD’s Corporate Insurance team, with oversight from
 
Risk Management, utilizes insurance and
 
other risk transfer arrangements to mitigate
 
and reduce potential
future losses related to operational risk.
 
Risk Management includes oversight of the effective
 
use of insurance aligned with the Bank’s risk
 
management strategy
and risk appetite. Insurance terms and provisions,
 
including types and amounts of coverage,
 
are regularly assessed so that the Bank’s tolerance
 
for risk and,
where applicable, statutory requirements are
 
satisfied. The management process includes
 
conducting regular in-depth risk and financial
 
analysis and identifying
opportunities to transfer elements of the Bank’s risk
 
to third parties where appropriate.
 
The Bank transacts with external insurers that
 
satisfy its minimum financial
strength rating requirements.
Technology and Cyber Security
The Bank leverages technology to support
 
its operations including new markets, competitive
 
products, delivery channels, as well as other
 
opportunities.
The Bank manages technology and cyber
 
security risks to support day-to-day operations;
 
and protect against unauthorized access
 
to the Bank’s technology,
infrastructure, systems, information, and
 
data.
To
enable this, the Bank monitors, manages,
 
and continues to enhance its ability to
 
mitigate these risks through
enterprise-wide programs and the implementation
 
of industry-accepted technology risk and cyber
 
threat management practices to help support
 
rapid detection and
response.
 
The Bank’s Platforms and Technology Risk and Compliance Committee provides
 
senior executive oversight, direction and
 
guidance regarding management of
risks relating to technology and cyber security, including cyber terrorism/activism,
 
cyber fraud, cyber espionage, cyber extortion,
 
identity theft and data theft. This
Committee endorses actions and makes
 
recommendations to the CEO and the ERMC
 
as appropriate, including in some instances,
 
supporting onward
recommendations to the Risk Committee and
 
the Board of Directors. Together with the Bank’s Operational Risk Management
 
Framework, technology and cyber
security programs also include resiliency planning
 
and testing, as well as disciplined technology
 
operations practices.
Data Management
The Bank’s data assets are governed and managed
 
with a view to preserve value and support
 
business objectives. Inconsistent or inadequate
 
data governance
and management practices may compromise
 
the Bank’s data and information assets which
 
could result in financial and reputational impacts.
 
The Bank’s
Enterprise Data Management Office develops
 
and implements enterprise-wide standards and
 
practices that describe how data and
 
information assets are created,
used, or maintained on behalf of the Bank.
The Bank manages data risk through
 
the Data Risk Management Framework
 
which describes the governance, policies, and
 
processes that TD’s business
segments, corporate segments,
 
and oversight functions employ to help
 
manage and govern data risk within the Bank’s
 
risk appetite.
 
Business Continuity and Crisis Management
The Bank maintains an enterprise-wide business
 
continuity and crisis management program
 
that supports management’s ability to operate
 
the Bank’s businesses
and operations (including providing customers
 
access to products and services) in the event
 
of a crisis or business disruption incident.
 
All areas of the Bank are
required to maintain and regularly test business
 
continuity plans to maintain resilience and
 
facilitate the continuity and recovery of business
 
operations. This
program is supported by formal crisis management
 
measures so that the appropriate level of leadership,
 
oversight and management is applied
 
to incidents
affecting the Bank.
Third-Party Management
A third-party is an entity that supplies products,
 
services or other business activities, functions
 
or processes to or on behalf of the Bank.
 
While these relationships
bring benefits to the Bank’s businesses and
 
customers, the Bank also needs to manage and
 
minimize any risks related to the activity. The Bank does this through
an enterprise third-party risk management
 
program that is designed to manage third-party
 
risks throughout the life cycle of a
 
relationship with a third-party. This
process also provides
 
risk management and senior management
 
oversight of these arrangements that
 
management considers appropriate based on
 
the size, risk,
and criticality of the arrangement.
 
Operational Resilience
Operational resilience is the ability of the
 
Bank to continue to deliver, and rapidly recover, critical services through
 
business disruption events, whether internal
 
or
external.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 88
The Bank’s Operational Resilience program assesses
 
the end-to-end availability of the Bank’s most
 
essential business and shared services, across
 
critical, single
points of failure, such as technology, third-parties, people, premises,
 
and data, to assess whether the
 
service can be delivered through disruptive
 
events, and
without causing material hardship to customers
 
and financial markets.
Change and Delivery
The Bank has established an enterprise-wide
 
standard for identifying and assessing the
 
risks of proposed changes that affect Products/
 
Services,
Process/Operations and Technology, and formal methodologies for delivering the changes (i.e., Project
 
Delivery Lifecycle, TD Agile and TD Scaled
 
Agile). This
approach involves senior management governance
 
and oversight of the Bank’s change portfolio and
 
leverages the use of a standardized
 
change risk assessment,
change delivery methodologies, defined
 
accountabilities and capabilities, and portfolio
 
reporting and management tools
 
to help support successful delivery.
Fraud Management
The Bank develops and implements enterprise-wide
 
fraud management strategies, policies, and
 
practices that are designed to
 
minimize the number, size
and scope of fraudulent activities
 
perpetrated against it. The Bank
 
employs prevention, detection and monitoring
 
capabilities across the enterprise that
are designed to help protect
 
customers, shareholders, and employees from
 
increasingly sophisticated fraud risk. Fraud risk is managed by
 
communicating
appropriate policies, procedures, employee
 
education in fraud risks, and monitoring activity
 
to help maintain adherence to the Fraud
 
Risk Management
Framework. The Fraud Risk Management Framework
 
describes the governance, policies, and
 
processes that the Bank’s businesses employ to
 
proactively
manage and govern fraud risk within the Bank’s risk
 
appetite which is embedded in the Bank’s
 
day to day operations and culture.
 
Operational Risk Capital Measurement
The Bank’s
 
operational
 
risk capital
 
is determined
 
using
 
the Basel
 
III Standardized
 
Approach
 
(SA), which is based on a Business Indicator Component (BIC),
a financial-statement-based proxy for operational
 
risk, and an Internal Loss Multiplier (ILM),
 
which is based on average historical losses
 
and the BIC. ILM is
derived using operational risk losses, net of
 
recoveries, over the previous ten years, and
 
BIC is derived using financial information
 
over the previous three years.
The operational risk capital is the product
 
of the BIC and the ILM.
People Risk Management
People risk is the risk associated with inadequacies
 
in the Bank’s organizational capacity, capability, and resources to support its business
 
goals, objectives and
strategies, human resource policies, processes,
 
and practices to hire, develop and retain resources
 
with appropriate capabilities and requisite
 
domain expertise to
operate and grow the business in a manner
 
consistent with employment laws, regulatory
 
expectations, and TD’s culture and expected behaviours.
 
HR sets policies
for key people and talent programs that business
 
lines implement within their daily operations.
 
HR is an oversight function and has central oversight
 
for TD’s
culture and people risk for the Bank including
 
compensation, conduct (in partnership
 
with Risk Management), and talent. The Bank
 
undertakes a Talent Review
and Succession Management program, which
 
focuses on the assessment, development
 
and succession planning for senior
 
and key roles within the organization.
In addition, a Critical Roles program exists
 
to strengthen our practices to assess leadership
 
and domain capabilities and aims to enhance
 
the management of
talent in roles most critical to the Bank’s success.
 
Risk Management provides oversight and independent
 
challenge to HR through an effective objective
assessment of their activities and programs.
 
Insider Risk Management
 
Insider Risk exposure is inherent in the normal
 
course of operating TD’s businesses and insider
 
risk continues to evolve, leading to new or
 
emerging threats. The
Bank has developed and implemented enterprise-wide
 
insider risk management strategies, policies
 
and practices that are designed to
 
mitigate unauthorized
insider activities. The Enterprise Insider
 
Risk Framework describes governance, roles
 
and responsibilities, and processes that
 
the Bank’s businesses and
corporate functions employ to proactively
 
manage and govern insider risk within the
 
Bank’s risk appetite.
 
Conduct Risk
 
Conduct risk may lead to legal, reputational,
 
and financial impact that can adversely
 
affect customers, the market, employees, and
 
the organization. Conduct risk
may arise from, but not limited to, business
 
practices, customer interactions, product
 
design, market manipulation, and individual
 
behaviour. The Bank has
developed and implemented enterprise-wide processes
 
and procedures that are designed
 
to identify, assess and manage conduct risk. TD business lines and
corporate functions are responsible for establishing,
 
implementing, and maintaining conduct
 
risk management procedures and controls,
 
as appropriate, in
alignment with TD’s policies and in compliance
 
with the laws and regulations that apply in the
 
jurisdictions in which they operate, and
 
to align with TD’s Shared
Commitments, TD’s Code of Conduct and Ethics,
 
and TD’s desired culture.
 
Model Risk
Model risk is the potential for adverse consequences
 
arising from decisions based on incorrect
 
or misused models and their outputs. It
 
can lead to financial loss,
reputational risk, or incorrect business and
 
strategic decisions.
 
WHO MANAGES MODEL RISK
Primary accountability for the management
 
of model risk resides with the senior
 
management of individual businesses
 
with respect to the models they use. The
Model Risk Governance Committee provides
 
oversight of governance, risk, and control
 
matters, by providing a platform to guide,
 
challenge, and advise decision
makers and model owners in model risk related
 
matters. Model Risk Management monitors
 
and reports on existing and emerging
 
model risks, and provides
periodic assessments to senior management,
 
Risk Management, the Risk Committee, and
 
regulators on the state of model risk at
 
TD and alignment with the
Bank’s Model risk appetite. The Risk Committee approves
 
the Bank’s Model Risk Management Framework
 
and Model Risk Policy.
HOW TD MANAGES MODEL RISK
The Bank manages model risk in accordance
 
with management approved model risk policies
 
and supervisory guidance which encompass
 
the life cycle of a model,
including proof of concept, development,
 
validation and approval, implementation, usage,
 
and ongoing model monitoring. The Bank’s
 
Model Risk Management
Framework also captures models that may be
 
partially or wholly qualitative or based on
 
expert judgment.
Segments identify the need for a new model
 
and are responsible for model development
 
and documentation according to the Bank’s
 
policies and standards.
During model development, controls with
 
respect to code generation, acceptance
 
testing, and usage are established and documented
 
to a level of detail and
comprehensiveness commensurate with
 
their model risk rating. Once models are implemented,
 
model owners are responsible for ongoing
 
monitoring and usage in
accordance with the Bank’s Model Risk Policy. In cases where a model is
 
deemed obsolete or unsuitable for its
 
originally intended purposes, it is decommissioned
in accordance with the Bank’s policies.
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 89
Model Risk Management provides oversight,
 
including maintaining a centralized inventory of
 
all models as defined in the Bank’s Model Risk
 
Policy, independent
validation before each initial use, annual model
 
review, and ongoing validation on a pre-determined schedule
 
depending on the model risk rating.
 
Model Risk
Management sets model monitoring and
 
model implementation standards, and provides
 
training to all stakeholders. The validation
 
process varies in rigour,
depending on the model risk rating, but at a
 
minimum contains a detailed determination
 
of:
 
●
 
the conceptual soundness of model methodologies
 
and underlying quantitative and qualitative
 
assumptions;
 
●
 
the risk associated with a model based on intrinsic
 
risk, materiality and criticality;
 
●
 
the sensitivity of a model to assumptions
 
within the model and changes in data inputs
 
including stress testing; and
 
●
 
the limitations of a model and the compensating
 
risk mitigation mechanisms in place to address
 
the limitations.
 
As with traditional model approaches,
 
AI or machine learning models (including
 
Generative AI models) are also subject
 
to the same standards and risk
management practices.
 
At the conclusion of the validation process,
 
a model will either be approved for use
 
or will be rejected and require redevelopment
 
or other courses of action.
Models identified as obsolete or no longer
 
appropriate for use, due to changes in industry
 
practice, the business environment or Bank
 
strategies, are
decommissioned.
 
The Bank has policies and procedures in
 
place designed to discern models from
 
non-models, and the level of independent
 
challenge and oversight is
commensurate with the risk rating of the model.
 
Non-models are subject to governance requirements
 
such as End User Computing Standards.
Insurance
Risk
Insurance risk is the risk of financial loss due
 
to actual experience emerging differently
 
from expectations in insurance product pricing
 
and/or design, underwriting,
reinsurance protection,
 
and claims or reserving either at the inception
 
of an insurance or reinsurance contract,
 
during the lifecycle of the claim or at the
 
valuation
date. Unfavourable experience could emerge
 
due to adverse fluctuations in timing, actual
 
size, frequency of claims (for example, driven
 
by non-life premium risk,
non-life reserving risk, catastrophic risk, mortality
 
risk, morbidity risk, and longevity risk),
 
policyholder behaviour,
 
or associated expenses.
Insurance contracts provide financial protection
 
by transferring insured risks to the issuer
 
in exchange for premiums. The Bank is
 
engaged in insurance businesses
relating to property and casualty insurance, life
 
and health insurance, and reinsurance, through
 
various subsidiaries; it is through these businesses
 
that the Bank is
exposed to insurance risk.
WHO MANAGES INSURANCE RISK
Senior management within the insurance business
 
units has primary responsibility for
 
managing insurance risk with oversight by
 
the CRO for Insurance, who
reports into the Bank’s Risk Management Group.
 
The Bank’s Audit Committee and the Bank’s Corporate
 
Governance Committee respectively act
 
as the Audit and Conduct review committees
 
for the Canadian
insurance company subsidiaries. The insurance
 
company subsidiaries also have their own
 
boards of directors who provide additional
 
risk management oversight.
HOW TD MANAGES INSURANCE RISK
The Bank’s risk governance practices are designed
 
to support independent oversight and
 
control of risk within the insurance business.
 
The TD Insurance Risk
Committee and its subcommittees provide
 
critical oversight of the risk management
 
activities within the insurance business
 
and monitor compliance with insurance
risk policies. The Bank’s Insurance Risk Management
 
Framework and Insurance Risk Policy collectively
 
outline the internal risk and control structure
 
to manage
insurance risk and include risk appetite, policies,
 
processes, as well as limits and governance.
 
These documents are maintained by Risk Management
 
and support
alignment with the Bank’s risk appetite for insurance
 
risk.
The assessment of insurance contract liabilities
 
(remaining coverage and incurred claims)
 
is central to the insurance operation.
 
TD Insurance establishes reserves
to cover estimated future payments (including
 
loss adjustment expenses) on all claims
 
or terminations/surrenders of premium
 
arising from insurance contracts
underwritten. The reserves cannot be established
 
with complete certainty and represent
 
management’s best estimate for future payments.
 
As such, TD Insurance
regularly monitors estimates against actual
 
and emerging experience and adjusts reserves
 
as appropriate if experience emerges
 
differently than anticipated.
Liabilities for incurred claims and liabilities
 
for remaining coverage are governed
 
by the Bank’s general insurance and life and health
 
reserving risk policies.
Sound product design is an essential element
 
of managing risk. The Bank’s exposure to insurance
 
risk is mostly short-term in nature as
 
the principal underwriting
risk relates to personal automobile and home
 
insurance and small commercial insurance.
Insurance market cycles, as well as changes
 
in insurance legislation, the regulatory
 
environment, judicial environment, trends
 
in court awards, climate patterns,
pandemics or other applicable public health emergencies,
 
and the economic environment may impact
 
the performance of the insurance business.
 
We maintain
premium, pricing and underwriting policies or
 
standards to help manage these inherent risks.
There is also exposure to concentration risk
 
associated with general insurance and
 
life and health insurance coverage. Exposure
 
to insurance risk concentration is
managed through established underwriting guidelines,
 
limits, and authorization levels that govern
 
the acceptance of risk. Concentration of
 
insurance risk is also
mitigated through the purchase of reinsurance.
 
The insurance business’ reinsurance programs
 
are governed by catastrophe and reinsurance
 
risk management
policies.
Strategies are in place to help manage the risk
 
to the Bank’s reinsurance business. Underwriting
 
risk on business assumed is managed
 
through a policy that limits
exposure
 
to certain types of business and countries.
 
The vast majority of reinsurance treaties
 
are annually renewable, which minimizes long-term
 
risk. Pandemic
exposure is reviewed and estimated annually
 
within the reinsurance business to manage
 
concentration risk.
Liquidity Risk
The risk of having insufficient cash or collateral
 
to meet financial obligations and an inability
 
to, in a timely manner, raise funding or monetize assets at
 
a non-
distressed price. Financial obligations can arise
 
from deposit withdrawals, debt maturities,
 
commitments to provide credit or liquidity
 
support or the need to pledge
additional collateral.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 90
TD’S LIQUIDITY RISK APPETITE
TD follows a disciplined liquidity management
 
program, which is subject to risk governance
 
and oversight, and is designed to maintain
 
sufficient liquidity to permit
the Bank to operate through a significant
 
liquidity event without relying on extraordinary
 
central bank assistance. The Bank seeks
 
to maintain a stable and
diversified funding profile that emphasizes
 
funding assets and contingencies to the appropriate
 
term.
TD manages liquidity risk using a combination
 
of quantitative and qualitative measures.
 
This includes ensuring the Bank has sufficient liquidity
 
to satisfy its
operational needs and client commitments
 
in both normal and stress conditions. The
 
Bank maintains buffers over regulatory minimums
 
prescribed by OSFI’s
Liquidity Adequacy Requirements (LAR) Guideline.
 
The Bank targets a 90-day survival horizon
 
under a combined bank-specific and
 
market-wide stress scenario,
and a minimum surplus over prescribed
 
regulatory requirements. Under the LAR
 
guidelines, Canadian banks are required
 
to maintain a Liquidity Coverage Ratio
(LCR) of 100% or above (other than during
 
periods of financial stress), and a
 
Net Stable Funding Ratio (NSFR) of at least
 
100%. The Bank’s funding program
emphasizes maximizing deposits as
 
a core source of funding and having ready
 
access to wholesale funding markets across
 
diversified terms, funding types, and
currencies. This approach helps lower exposure
 
to a sudden contraction of wholesale funding
 
capacity and minimizes structural liquidity gaps.
 
The Bank also
maintains a Contingency Funding Plan to enhance
 
preparedness to address potential liquidity
 
stress events. The Bank’s strategies, plans and
 
governance
practices underpin an integrated liquidity risk
 
management program that is designed to reduce
 
exposure to liquidity risk and maintain
 
compliance with regulatory
requirements.
LIQUIDITY RISK MANAGEMENT RESPONSIBILITY
The Bank’s ALCO is responsible for establishing
 
effective management structures and practices
 
to ensure appropriate measurement, management,
 
and
governance of liquidity risk. The GLF Committee,
 
a subcommittee of the ALCO comprised of
 
senior management from Treasury, Wholesale Banking and Risk
Management, identifies and monitors the Bank’s liquidity
 
risks. The management of liquidity risk is
 
the responsibility of the SET member responsible
 
for Treasury,
while oversight and challenge are provided
 
by the ALCO and independently by
 
Risk Management. The Risk Committee
 
regularly reviews the Bank’s liquidity
position and approves the Bank’s Liquidity Risk
 
Management Framework bi-annually and
 
the related policies annually.
The following areas are responsible for
 
measuring, monitoring, and managing liquidity
 
risks for major business segments:
●
 
Enterprise Liquidity Risk in Risk Management
 
is responsible for liquidity risk management
 
and asset pledging policies, along with
 
associated limits, standards,
and processes which are established
 
to ensure that consistent and efficient liquidity
 
management approaches are applied across
 
all of the Bank’s operations.
Risk Management jointly owns the Liquidity
 
Risk Management Framework along with
 
the SET member responsible for Treasury. Enterprise Liquidity Risk
provides oversight of liquidity risk across
 
the enterprise and provides independent risk
 
assessment and effective challenge of liquidity
 
risk management. Capital
Markets Risk Management is responsible
 
for independent liquidity risk metric reporting.
●
 
Treasury Liquidity Management manages the liquidity
 
position of the Canadian Personal and
 
Commercial Banking, Wealth Management, and
 
Insurance,
Corporate, Wholesale Banking, and U.S.
 
Retail segments, as well as the liquidity position
 
of CUSO; and
●
 
Other regional operations, including those
 
within TD’s insurance business, foreign branches,
 
and/or subsidiaries are responsible for
 
managing their liquidity risk
in compliance with their own policies and
 
local regulatory requirements, while maintaining
 
alignment with the enterprise framework.
HOW TD MANAGES LIQUIDITY RISK
The Bank manages the liquidity profile of
 
its businesses in accordance with a defined
 
liquidity risk appetite and maintains
 
minimum liquidity requirements using a
combination of internal and regulatory measures.
The Bank’s internal stress testing informs the
 
management of liquidity risk. Among scenarios
 
considered is a severe combined stress
 
event resulting in elevated
liquidity requirements and a loss of confidence
 
in the Bank’s ability to meet obligations as
 
they come due. In addition to this bank-specific
 
event, this scenario
incorporates a market-wide liquidity
 
stress that materially reduces the availability
 
of funding for all institutions and decreases
 
the marketability of assets. The
Bank’s liquidity risk management policies stipulate
 
that the Bank must maintain a sufficient level of
 
liquid assets to support business growth,
 
and to cover identified
stressed liquidity requirements
 
under the stress scenario, for a period
 
of up to 90 days. Key elements of
 
the scenario include:
●
 
loss of access to wholesale funding including
 
repayment of maturing debt in the next 90
 
days;
●
 
accelerated attrition or “run-off” of deposits;
●
 
increased utilization of available credit and liquidity
 
facilities;
 
and
●
 
increased collateral requirements associated
 
with downgrades in the Bank’s credit ratings.
Internal measures complement regulatory
 
liquidity requirements, such as the Liquidity
 
Coverage Ratio (LCR), the Net Stable
 
Funding Ratio (NSFR), and the Net
Cumulative Cash Flow (NCCF) monitoring
 
tool which are prescribed in OSFI’s LAR guidance.
 
The LCR requires that banks maintain an
 
adequate stock of
unencumbered high-quality liquid assets (HQLA)
 
to meet liquidity needs over a 30-day stress
 
period (a minimum LCR of 100%). The
 
NSFR requires that banks
maintain available stable funding (ASF) in excess
 
of required stable funding (RSF) for periods
 
up to one year (a minimum NSFR of 100%),
 
and the NCCF monitors
the Bank’s detailed cash flow gaps for various
 
time bands. As a result, the Bank’s liquidity is
 
managed to the higher of its internal liquidity
 
requirements and target
buffers over the regulatory minimums.
The Bank also considers regional regulatory
 
metrics as well as potential restrictions
 
on liquidity transferability in the calculation
 
of enterprise liquidity positions.
Accordingly, surplus liquidity domiciled in regulated subsidiaries
 
may be excluded from consolidated liquidity
 
positions as appropriate. During fiscal 2024,
 
the Bank
maintained elevated liquidity levels (as compared
 
to fiscal 2023) as a risk management measure.
 
In the near-term, the Bank is targeting a liquidity
 
coverage ratio
of 150% for the Bank’s Canadian retail businesses,
 
TD Bank USA, N.A., TD Bank N.A. and
 
TD Securities Inc. This near-term elevated
 
liquidity should have a near-
term negative impact on net interest income
 
and net interest margin.
The Bank’s Funds Transfer Pricing process considers liquidity
 
risk as a key determinant of the cost
 
or credit of funds to the Retail and Wholesale
 
Banking
businesses. Liquidity costs are reflective
 
of the funding needs and reserve requirements
 
driven by the liquidity risk profile of the Bank’s
 
assets, liabilities, and
contingent obligations like undrawn lines of
 
credit provided to our clients.
LIQUID ASSETS
The Bank’s unencumbered liquid assets may be
 
used to help address potential liquidity requirements
 
arising from stress events. Liquid asset eligibility
 
considers
estimated in-stress market values and trading
 
market depths, as well as operational, legal,
 
or other impediments to sale, rehypothecation
 
or pledging.
 
Assets held by the Bank to meet liquidity
 
requirements are summarized in the following
 
tables. The tables do not include assets held
 
within the Bank’s insurance
businesses as these are used to support insurance-specific
 
liabilities and capital requirements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 91
TABLE 46: SUMMARY OF LIQUID
 
ASSETS BY TYPE AND CURRENCY
(millions of Canadian dollars, except as noted)
As at
 
Securities
 
received as
 
collateral from
 
securities
 
financing and
 
Bank-owned
 
derivative
 
Total
Encumbered
 
Unencumbered
 
liquid assets
 
transactions
liquid assets
liquid assets
 
liquid assets
1
October 31, 2024
 
Cash and central bank reserves
$
41,200
$
–
$
41,200
$
819
$
40,381
Canadian government obligations
20,938
79,241
100,179
49,952
50,227
National Housing Act Mortgage-Backed
Securities (NHA MBS)
42,320
–
42,320
1,627
40,693
Obligations of provincial governments, public sector entities
and multilateral development banks
41,788
28,332
70,120
39,339
30,781
Corporate issuer obligations
4,581
6,970
11,551
7,199
4,352
Equities
12,442
2,540
14,982
11,128
3,854
Total Canadian dollar-denominated
163,269
117,083
280,352
110,064
170,288
Cash and central bank reserves
125,271
–
125,271
218
125,053
U.S. government obligations
74,749
64,616
139,365
83,592
55,773
U.S. federal agency obligations, including U.S.
 
federal agency mortgage-backed obligations
76,085
15,008
91,093
28,147
62,946
Obligations of other sovereigns, public sector entities
and multilateral development banks
67,118
38,599
105,717
42,194
63,523
Corporate issuer obligations
74,072
16,758
90,830
31,291
59,539
Equities
53,525
37,204
90,729
52,894
37,835
Total non-Canadian dollar-denominated
470,820
172,185
643,005
238,336
404,669
Total
$
634,089
$
289,268
$
923,357
$
348,400
$
574,957
October 31, 2023
 
Total Canadian dollar-denominated
153,281
123,806
277,087
113,486
163,601
Total non-Canadian dollar-denominated
408,299
182,652
590,951
212,888
378,063
Total
$
561,580
$
306,458
$
868,038
$
326,374
$
541,664
1
 
Unencumbered liquid assets include on-balance sheet assets, assets borrowed or purchased under resale agreements,
 
and other off-balance sheet collateral received less encumbered
liquid assets.
Total unencumbered liquid assets increased by $33 billion from October 31, 2023
 
largely as a result of higher deposit
 
balances and wholesale funding proceeds.
Unencumbered liquid assets held in The
 
Toronto-Dominion Bank and multiple domestic and foreign subsidiaries (excluding
 
insurance subsidiaries) and branches
are summarized in the following table.
 
TABLE 47: SUMMARY OF UNENCUMBERED
 
LIQUID ASSETS BY BANK,
 
SUBSIDIARIES, AND BRANCHES
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
The Toronto-Dominion Bank (Parent)
$
227,435
$
205,408
Bank subsidiaries
314,306
291,915
Foreign branches
33,216
44,341
Total
$
574,957
$
541,664
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 92
The Bank’s monthly average liquid assets (excluding
 
those held in insurance subsidiaries) for
 
the years ended October 31, 2024, and October
 
31, 2023, are
summarized in the following table.
 
TABLE 48: SUMMARY OF
 
AVERAGE LIQUID ASSETS BY
 
TYPE AND CURRENCY
(millions of Canadian dollars, except as noted)
Average for the years ended
Securities
received as
collateral from
securities
financing and
Total
Bank-owned
derivative
liquid
Encumbered
Unencumbered
liquid assets
transactions
assets
liquid assets
liquid assets
1
October 31, 2024
Cash and central bank reserves
$
26,361
$
–
$
26,361
$
669
$
25,692
Canadian government obligations
20,458
84,295
104,753
52,252
52,501
NHA MBS
41,411
17
41,428
1,553
39,875
Obligations of provincial governments, public sector
 
 
entities and multilateral development banks
42,940
24,936
67,876
36,602
31,274
Corporate issuer obligations
13,517
5,751
19,268
5,805
13,463
Equities
12,646
2,604
15,250
11,187
4,063
Total Canadian dollar-denominated
157,333
117,603
274,936
108,068
166,868
Cash and central bank reserves
78,694
–
78,694
223
78,471
U.S. government obligations
71,187
63,884
135,071
75,404
59,667
U.S. federal agency obligations, including U.S.
 
 
federal agency mortgage-backed obligations
78,303
13,148
91,451
27,507
63,944
Obligations of other sovereigns, public sector entities and
 
multilateral development banks
65,794
38,992
104,786
41,221
63,565
Corporate issuer obligations
77,837
14,208
92,045
25,676
66,369
Equities
51,707
38,117
89,824
51,551
38,273
Total non-Canadian dollar-denominated
423,522
168,349
591,871
221,582
370,289
Total
$
580,855
$
285,952
$
866,807
$
329,650
$
537,157
October 31, 2023
Total Canadian dollar-denominated
159,066
118,731
277,797
115,390
162,407
Total non-Canadian dollar-denominated
434,538
168,482
603,020
191,601
411,419
Total
$
593,604
$
287,213
$
880,817
$
306,991
$
573,826
1
 
Unencumbered liquid assets include on-balance sheet assets, assets borrowed or purchased under resale agreements,
 
and other off-balance sheet collateral received less encumbered
liquid assets.
Average unencumbered liquid assets held in
 
The Toronto-Dominion Bank and multiple domestic and foreign subsidiaries (excluding
 
insurance subsidiaries) and
branches are summarized in the following
 
table.
 
TABLE 49: SUMMARY OF
 
AVERAGE UNENCUMBERED LIQUID
 
ASSETS BY BANK, SUBSIDIARIES,
 
AND BRANCHES
(millions of Canadian dollars)
Average for the years ended
October 31, 2024
October 31, 2023
The Toronto-Dominion Bank (Parent)
$
219,007
$
217,807
Bank subsidiaries
290,536
308,892
Foreign branches
27,614
47,127
Total
$
537,157
$
573,826
ASSET ENCUMBRANCE
In the course of the Bank’s daily operations, assets
 
are pledged to obtain funding, support
 
trading and brokerage businesses, and participate
 
in clearing and/or
settlement systems. A summary of on-
 
and off-balance sheet encumbered and unencumbered
 
assets is presented as follows.
TABLE 50: ENCUMBERED
 
AND UNENCUMBERED ASSETS
(millions of Canadian dollars)
As at
Total Assets
Encumbered
Unencumbered
Total
 
Pledged as
 
Available as
Assets
Collateral
1
Other
2
Collateral
3
Other
4
October 31, 2024
Cash and due from banks
$
6,437
$
–
$
–
$
26
$
6,411
Interest-bearing deposits with banks
169,930
6,161
–
158,123
5,646
Securities, trading loans, and other
920,003
406,745
20,738
447,011
45,509
Derivatives
78,061
–
–
–
78,061
Loans, net of allowance for loan losses
932,343
96,175
92,790
30,331
713,047
Other assets
5
95,989
238
–
–
95,751
Total assets
$
2,202,763
$
509,319
$
113,528
$
635,491
$
944,425
October 31, 2023
Total assets
6
$
2,093,392
$
437,482
$
84,997
$
623,826
$
947,087
1
 
Pledged collateral refers to the portion of assets that are pledged through encumbering activities, such as repurchase
 
agreements, securities lending, derivative contracts, and
requirements associated with participation in clearing houses and payment systems.
 
2
Includes assets supporting TD’s long-term funding activities such as asset securitization and issuance
 
of covered bonds.
3
 
Represents assets that are readily available for use as collateral to generate funding or support collateral requirements.
 
This category includes unencumbered loans backed by real-estate
that qualify as eligible collateral at FHLB.
4
Other unencumbered assets are not subject to any restrictions on their use to secure funding or as collateral but
 
would not be considered immediately available.
 
5
Other assets include investment in Schwab, goodwill, other intangibles, land, buildings, equipment, other depreciable
 
assets and right-of-use assets, deferred tax assets, amounts
receivable from brokers, dealers, and clients, and other assets on the balance sheet not reported in the above categories
 
.
6
 
Balances as at October 31, 2023 have been restated, with no impact on the measurement of the related financial
 
instruments in the Bank’s 2024 Consolidated Financial Statements, to
reflect the categorization of certain pledged assets in the comparative period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 93
LIQUIDITY STRESS TESTING AND CONTINGENCY
 
FUNDING PLANS
In addition to the Bank’s internal liquidity stress
 
metric, the Bank performs liquidity
 
stress testing on multiple alternate scenarios.
 
These scenarios consist of a mix
of TD-specific and market-wide stress
 
events designed to evaluate the potential
 
impact of risk factors material to the
 
Bank’s risk profile. Liquidity assessments are
also part of the Bank’s EWST program.
The Bank has designed contingency funding
 
plans (CFP) for the enterprise and
 
material subsidiaries operating in foreign jurisdictions.
 
As they provide a
playbook for managing stressed liquidity conditions,
 
these plans are an integral component of
 
the Bank’s overall liquidity risk management framework.
 
The CFPs
outline different contingency levels based on the
 
severity and duration of the liquidity situation
 
and identify recovery actions appropriate
 
for each level. To support
operational readiness, CFPs provide key
 
steps required to implement each recovery
 
action. Regional CFPs identify recovery
 
actions to address region-specific
stress events. The actions and governance
 
structure outlined in the Bank’s CFP are aligned
 
with the Bank’s Crisis Management Recovery
 
Plan.
CREDIT RATINGS
Credit ratings may impact the Bank’s access to,
 
and cost of, raising funding and its ability
 
to engage in certain business activities
 
on a cost-effective basis. Credit
ratings and outlooks provided by rating agencies
 
reflect their views and methodologies and
 
are subject to change based on a number
 
of factors including the
Bank’s financial strength, competitive position, and
 
liquidity, as well as factors not entirely within the Bank’s control, including
 
conditions affecting the overall
financial services industry.
TABLE 51: CREDIT RATINGS
1
As at
October 31, 2024
Moody’s
S&P
Fitch
DBRS
Deposits/Counterparty
2
Aa2
A+
AA
AA (high)
Legacy Senior Debt
3
Aa3
A+
AA
AA (high)
Senior Debt
4
A2
A-
AA-
AA
Covered Bonds
Aaa
–
AAA
AAA
Legacy Subordinated Debt – non-NVCC
A3
A-
A
AA (low)
Tier 2 Subordinated Debt – NVCC
A3 (hyb)
BBB+
A
A
AT1 Perpetual Debt – NVCC
Baa2 (hyb)
BBB-
BBB+
–
Limited Recourse Capital Notes – NVCC
Baa2 (hyb)
BBB-
BBB+
A (low)
Preferred Shares – NVCC
Baa2 (hyb)
BBB-
BBB+
Pfd-2 (high)
Short-Term Debt (Deposits)
P-1
A-1
F1+
R-1 (high)
Outlook
Stable
Stable
Negative
Negative (Long Term);
Stable (Short Term)
1
 
The above ratings are for The Toronto-Dominion
 
Bank legal entity. Subsidiaries’ ratings are available
 
on the Bank’s website at http://www.td.com/investor/credit.jsp. Credit
 
ratings are not
recommendations to purchase, sell, or hold a financial obligation in as much as they do not comment on market
 
price or suitability for a particular investor. Ratings are subject
 
to revision
or withdrawal at any time by the rating organization.
2
 
Represents Moody’s Long-Term
 
Deposits Ratings and Counterparty Risk Rating, S&P’s Issuer Credit Rating, Fitch’s
 
Long-Term Deposits Rating and DBRS
 
’
 
Long-Term Issuer Rating.
3
 
Includes (a) Senior debt issued prior to September 23, 2018; and (b) Senior debt issued on or after September
 
23, 2018 which is excluded from the bank recapitalization “bail-in” regime.
4
 
Subject to conversion under the bank recapitalization “bail-in”
 
regime.
The Bank regularly reviews the level
 
of increased collateral its trading counterparties
 
would require in the event of a downgrade of
 
TD’s credit rating. The following
table presents the additional collateral that
 
could have been contractually
 
required to be posted to over-the-counter
 
(OTC) derivative counterparties as
 
of the
reporting date in the event of one, two, and
 
three-notch downgrades of the Bank’s credit ratings.
 
TABLE 52: ADDITIONAL COLLATERAL
 
REQUIREMENTS FOR RATING DOWNGRADES
1
(millions of Canadian dollars)
Average for the years ended
October 31, 2024
October 31, 2023
One-notch downgrade
$
127
$
124
Two-notch downgrade
287
192
Three-notch downgrade
1,014
913
1
 
The above collateral requirements are based on each OTC trading counterparty’s Credit Support Annex
 
and the Bank’s credit rating across applicable rating agencies.
 
LIQUIDITY COVERAGE RATIO
 
The LCR is a Basel III standard that aims to ensure
 
that an institution has an adequate stock
 
of unencumbered high-quality liquid assets
 
(HQLA), consisting of
cash or assets that can be converted into cash
 
to meet its liquidity needs for a 30-calendar
 
day liquidity stress scenario.
 
Other than during periods of financial stress,
 
the Bank must maintain the LCR above
 
100% in accordance with the published
 
OSFI LAR requirement. The
Bank’s LCR is calculated according to the scenario
 
parameters in the LAR
 
guideline, including prescribed HQLA eligibility
 
criteria and haircuts, deposit run-off
rates, and other outflow and inflow rates.
 
HQLA held by the Bank that are eligible
 
for the LCR calculation under the LAR are primarily
 
central bank reserves,
sovereign-issued or sovereign-guaranteed
 
securities, and high-quality securities issued
 
by non-financial entities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 94
The following table summarizes the Bank’s average
 
daily LCR as of the relevant dates.
 
TABLE 53: AVERAGE LIQUIDITY
 
COVERAGE RATIO
1
(millions of Canadian dollars, except
 
as noted)
Average for the three months ended
October 31, 2024
Total unweighted
Total weighted
value (average)
2
value (average)
3
High-quality liquid assets
Total high-quality liquid assets
$
n/a
$
361,452
Cash outflows
Retail deposits and deposits from small business
 
customers, of which:
$
486,164
$
31,137
Stable deposits
262,831
7,885
Less stable deposits
223,333
23,252
Unsecured wholesale funding, of which:
374,254
183,788
Operational deposits (all counterparties)
 
and deposits in networks of cooperative banks
4
132,853
31,460
Non-operational deposits (all counterparties)
215,462
126,389
Unsecured debt
25,939
25,939
Secured wholesale funding
n/a
44,188
Additional requirements, of which:
338,644
96,198
Outflows related to derivative exposures and
 
other collateral requirements
45,211
36,403
Outflows related to loss of funding on debt products
10,839
10,839
Credit and liquidity facilities
282,594
48,956
Other contractual funding obligations
18,368
8,410
Other contingent funding obligations
821,172
12,660
Total cash outflows
$
n/a
$
376,381
Cash inflows
Secured lending
 
$
237,640
$
35,256
Inflows from fully performing exposures
25,208
12,686
Other cash inflows
66,539
66,539
Total cash inflows
$
n/a
$
114,481
Average for the three months ended
October 31, 2024
Jul 31, 2024
Total weighted
Total weighted
value
value
Total high-quality liquid assets
$
361,452
$
337,631
Total net cash outflows
261,900
262,308
Liquidity coverage ratio
138
%
129
%
1
The LCR is calculated in accordance with OSFI’s LAR guideline, which is reflective of liquidity-related
 
requirements published by the BCBS. The LCR for the quarter ended October 31,
2024, is calculated as an average of the 62 daily data points in the quarter.
2
Unweighted inflow and outflow values are outstanding balances maturing or callable within 30 days.
3
Weighted values are calculated after the application of respective HQLA haircuts, or inflow and outflow
 
rates, and applicable caps as prescribed by the OSFI LAR guideline.
4
Operational deposits from non-SME business customers are deposits kept with the Bank in order to facilitate their
 
access and ability to conduct payment and settlement activities. These
activities include clearing, custody, or cash management
 
services.
The Bank’s average LCR of 138% for the quarter ended
 
October 31, 2024, continues to meet regulatory
 
requirements.
 
The Bank holds a variety of liquid assets
 
commensurate with its liquidity needs.
 
Many of these assets qualify as HQLA in
 
the OSFI LAR guideline. The average
HQLA of the Bank for the quarter ended October
 
31, 2024, was $361 billion (July 31, 2024 –
 
$338 billion), with Level 1 assets representing
 
86% (July 31, 2024 –
84%). The Bank’s reported HQLA excludes excess
 
HQLA from U.S. Retail operations, as required
 
by the OSFI LAR guideline, to reflect liquidity
 
transfer
considerations between U.S. Retail and its
 
affiliates as a result of the U.S. Federal Reserve
 
Board’s regulations. By excluding excess
 
HQLA, the U.S. Retail LCR
is effectively capped at 100% prior to total Bank
 
consolidation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 95
NET STABLE
 
FUNDING RATIO
The NSFR is a Basel III metric calculated as
 
the ratio of total ASF over total RSF in accordance
 
with OSFI’s LAR guideline. The Bank must maintain
 
an NSFR ratio
equal to or above 100% in accordance with
 
the LAR guideline.
 
The Bank’s ASF comprises the Bank’s liability and capital
 
instruments (including deposits and
wholesale funding). The assets that require
 
stable funding are based on the Bank’s on and
 
off-balance sheet activities and a function of
 
their liquidity
characteristics and the requirements of
 
OSFI’s LAR guideline.
 
TABLE 54: NET STABLE FUNDING RATIO
1
(millions of Canadian dollars, except
 
as noted)
As at
October 31, 2024
Unweighted value by residual maturity
6 months to
No
 
Less than
 
less than
 
More than
Weighted
maturity
2
6 months
 
1 year
 
1 year
 
value
3
Available Stable Funding Item
Capital
$
111,829
$
–
$
–
$
11,015
$
122,844
Regulatory capital
111,829
–
–
11,015
122,844
Other capital instruments
–
–
–
–
–
Retail deposits and deposits from small business
 
customers:
446,633
84,074
32,636
31,121
552,573
Stable deposits
252,382
33,209
13,774
16,103
300,499
Less stable deposits
194,251
50,865
18,862
15,018
252,074
Wholesale funding:
254,602
422,642
113,427
240,571
475,575
Operational deposits
105,233
2,043
1
–
53,639
Other wholesale funding
149,369
420,599
113,426
240,571
421,936
Liabilities with matching interdependent assets
4
–
2,486
1,157
26,817
–
Other liabilities:
51,828
92,158
3,068
NSFR derivative liabilities
n/a
347
n/a
All other liabilities and equity not included
 
in the above categories
51,828
87,580
2,327
1,904
3,068
Total Available Stable Funding
$
1,154,060
Required Stable Funding Item
Total NSFR high-quality liquid assets
$
n/a
$
n/a
$
n/a
$
n/a
$
57,070
Deposits held at other financial institutions for
 
operational purposes
–
–
–
–
–
Performing loans and securities:
111,220
241,451
123,685
678,007
784,545
Performing loans to financial institutions
 
secured by Level 1 HQLA
–
67,307
7,243
–
10,748
Performing loans to financial institutions
 
secured by non-Level 1
HQLA and unsecured performing
 
loans to financial institutions
–
58,937
11,532
13,395
25,443
Performing loans to non-financial corporate
 
clients, loans to retail
and small business customers, and loans
 
to sovereigns, central
banks and PSEs, of which:
39,510
59,215
48,510
298,130
345,033
With a risk weight of less than or equal
 
to 35% under the Basel II
standardized approach for credit risk
–
–
–
–
–
Performing residential mortgages, of which:
33,550
48,093
51,034
304,963
311,354
With a risk weight of less than or equal
 
to 35% under the Basel II
standardized approach for credit risk
33,550
48,093
51,034
304,963
311,354
Securities that are not in default and do not
 
qualify as HQLA,
including exchange-traded equities
38,160
7,899
5,366
61,519
91,967
Assets with matching interdependent liabilities
4
–
2,390
2,380
25,721
–
Other assets:
79,809
135,611
122,581
Physical traded commodities, including gold
16,148
n/a
n/a
n/a
14,130
Assets posted as initial margin for derivative
 
contracts and
 
contributions to default funds of CCPs
n/a
17,426
14,812
NSFR derivative assets
 
n/a
10,730
10,383
NSFR derivative liabilities before deduction
 
of variation margin
posted
n/a
19,931
997
All other assets not included in the above
 
categories
63,661
78,453
2,066
7,005
82,259
Off-balance sheet items
n/a
837,941
30,371
Total Required Stable Funding
$
994,567
Net Stable Funding Ratio
 
116
%
As at
October 31, 2023
Total Available Stable Funding
$
1,123,816
Total Required Stable Funding
960,590
Net Stable Funding Ratio
 
117
%
1
 
The NSFR is calculated in accordance with OSFI’s LAR guideline, which is reflective of liquidity-related
 
requirements published by the BCBS.
2
 
Items in the “no maturity” time bucket do not have a stated maturity. These
 
may include, but are not limited to, items such as capital with perpetual maturity,
 
non-maturity deposits, short
positions, open maturity positions, non-HQLA equities, and physical traded commodities.
3
 
Weighted values are calculated after the application of respective NSFR weights, as prescribed by the
 
OSFI LAR guideline.
 
4
 
Interdependent asset and liability items are deemed by OSFI to be interdependent and have RSF and ASF risk factors
 
adjusted to zero. Interdependent liabilities cannot fall due while the
asset is still on balance sheet, cannot be used to fund any other assets and principal payments from the asset cannot
 
be used for anything other than repaying the liability.
 
As such, the
only interdependent assets and liabilities that qualify for this treatment at the Bank are the liabilities arising from the
 
Canada Mortgage Bonds Program and their corresponding
encumbered assets.
The Bank’s NSFR as at October 31, 2024 is 116% (October 31, 2023
 
– 117%), representing a surplus of $159 billion, adhering to regulatory
 
requirements. The
NSFR remained relatively stable to the previous
 
quarter (July 31, 2024 – 115%) as the Bank’s funding continued
 
to adequately support its assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 96
FUNDING
The Bank’s primary approach to managing funding
 
activities is to maximize the use of deposits
 
raised through personal and commercial
 
banking channels. The
Bank’s base of personal and commercial,
 
wealth, and Schwab sweep deposits make up approximately
 
70% (2023
 
– 70%) of the Bank’s total funding.
 
TABLE 55: SUMMARY OF DEPOSIT
 
FUNDING
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
P&C deposits – Canadian
$
566,329
$
529,078
P&C deposits – U.S.
1
433,406
446,355
Total
$
999,735
$
975,433
1
P&C deposits in U.S. are presented on a Canadian equivalent basis and therefore period-over-period movements
 
reflect both underlying growth and changes in the foreign exchange
rate.
WHOLESALE FUNDING
The Bank maintains various registered external
 
wholesale term (greater than 1 year) funding
 
programs to provide access to diversified
 
funding sources, including
asset securitization, covered bonds, and
 
unsecured wholesale debt. The Bank raises
 
term funding through Senior Notes, NHA MBS,
 
and notes backed by credit
card receivables (Evergreen Credit Card
 
Trust) and HELOC (Genesis Trust II). The Bank’s wholesale funding
 
is diversified by geography, by currency, and by
funding types. The Bank raises short-term (1
 
year and less) funding using certificates of deposit,
 
commercial paper, and up until June 28, 2024, BAs.
The following table summarizes the registered
 
term funding and capital programs by geography, with the related program
 
size as at October 31, 2024.
Canada
United States
Europe
Capital Securities Program ($20 billion)
Canadian Senior Medium-Term Linked Notes
Program ($5 billion)
HELOC ABS Program (Genesis Trust II) ($7
 
billion)
U.S. SEC (F-3) Registered Capital and
 
Debt
Program (US$75 billion)
United Kingdom Listing Authority (UKLA)
Registered Legislative Covered Bond Program
($100 billion)
UKLA Registered European Medium-Term Note
Program (US$40 billion)
The following table presents a breakdown of
 
the Bank’s term debt by currency and funding
 
type. Term funding as at October 31, 2024, was $184.5 billion (October
31, 2023 – $173.3 billion).
Note that Table 56: Long-Term Funding and Table
 
57: Wholesale Funding do not include
 
any funding accessed via repurchase transactions
 
or securities financing.
 
TABLE 56: LONG-TERM FUNDING
1
As at
Long-term funding by currency
October 31, 2024
 
October 31, 2023
Canadian dollar
25
%
27
%
U.S. dollar
31
35
Euro
33
27
British pound
5
5
Other
6
6
Total
100
%
100
%
Long-term funding by type
 
 
Senior unsecured medium-term notes
51
%
61
%
Covered bonds
40
31
Mortgage securitization
2
7
7
Term asset backed securities
2
1
Total
100
%
100
%
1
The table includes funding issued to external investors only.
2
Mortgage securitization excludes the residential mortgage trading business.
The Bank maintains depositor concentration
 
limits in respect of short-term wholesale
 
deposits so that it is not overly reliant
 
on individual depositors for funding.
The Bank further limits short-term wholesale
 
funding maturity concentration in an effort
 
to mitigate refinancing risk during a stress
 
event.
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 97
The following table represents the remaining
 
maturity of various sources of funding outstanding
 
as at October 31, 2024, and October 31, 2023.
TABLE 57: WHOLESALE FUNDING
1
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Less than
1 to 3
3 to 6
6 months
Up to 1
Over 1 to
Over
1 month
months
months
to 1 year
year
2 years
2 years
Total
Total
Deposits from banks
2
$
1,156
$
142
$
79
$
479
$
1,856
$
–
$
–
$
1,856
$
2,095
Bearer deposit notes
10
191
309
277
787
–
–
787
1,804
Certificates of deposit
8,621
12,111
27,651
52,457
100,840
328
–
101,168
113,476
Commercial paper
7,637
10,869
19,896
20,791
59,193
1,146
–
60,339
40,515
Covered bonds
450
–
1,792
10,261
12,503
18,117
44,779
75,399
54,006
Mortgage securitization
3
119
1,593
1,147
1,324
4,183
5,155
23,346
32,684
27,131
Legacy senior unsecured medium-term
notes
4
–
–
–
–
–
88
–
88
3,162
Senior unsecured medium-term notes
5
–
7,845
1,720
11,221
20,786
17,311
55,060
93,157
100,492
Subordinated notes and debentures
6
–
–
–
200
200
–
11,273
11,473
9,620
Term asset backed securitization
302
–
2,495
4,169
6,966
1,150
1,488
9,604
2,204
Other
7
34,788
5,853
3,450
24,933
69,024
861
1,066
70,951
44,348
Total
$
53,083
$
38,604
$
58,539
$
126,112
$
276,338
$
44,156
$
137,012
$
457,506
$
398,853
Of which:
Secured
$
7,130
$
5,766
$
7,868
$
39,051
$
59,815
$
24,423
$
69,617
$
153,855
$
92,361
Unsecured
45,953
32,838
50,671
87,061
216,523
19,733
67,395
303,651
306,492
Total
$
53,083
$
38,604
$
58,539
$
126,112
$
276,338
$
44,156
$
137,012
$
457,506
$
398,853
1
 
Excludes BA, which are disclosed in the Remaining Contractual Maturity table within the “Managing Risk” section
 
of this document.
2
 
The presentation has been changed to only include fixed-term commercial bank deposits, to better align with how
 
management views the Bank’s composition of wholesale funding.
3
 
Includes mortgaged backed securities issued to external investors and Wholesale Banking residential mortgage trading
 
business.
4
 
Includes a) senior debt issued prior to September 23, 2018; and b) senior debt issued on or after September 23,
 
2018 which is excluded from the bank recapitalization “bail-in” regime,
including debt with an original term-to-maturity of less than 400 days.
5
 
Comprised of senior debt subject to conversion under the bank recapitalization “bail-in”
 
regime. Excludes $4.4 billion of structured notes subject to conversion under the “bail-in”
regime (October 31, 2023 – $5.7 billion).
6
 
Subordinated notes and debentures are not considered wholesale funding as they may be raised primarily for capital
 
management purposes.
7
Includes fixed-term deposits from non-bank institutions (unsecured) of $17.3 billion (October 31, 2023 – $22.1
 
billion) and the remaining are non-term deposits.
Excluding the Wholesale Banking residential
 
mortgage trading business, the Bank’s total 2024
 
mortgage-backed securities issued to external
 
investors was
$2.3 billion (2023 – $1.3 billion) and other asset-backed
 
securities issued was $2.6 billion (2023 –
 
$0.4 billion). The Bank also issued $13.6
 
billion of unsecured
medium-term notes (2023 – $27.6 billion)
 
and $27.1 billion of covered bonds (2023
 
– $26.1 billion) during the year ended October
 
31, 2024.
MATURITY ANALYSIS OF ASSETS, LIABILITIES, AND OFF-BALANCE SHEET COMMITMENTS
The following table summarizes on-balance
 
sheet and off-balance sheet categories by remaining
 
contractual maturity. Off-balance sheet commitments include
contractual obligations to make future payments
 
on certain lease-related commitments, certain
 
purchase obligations,
 
and other liabilities. The values of credit
instruments reported in the following
 
table represent the maximum amount of additional
 
credit that the Bank could be obligated to extend
 
should such instruments
be fully drawn or utilized. Since a significant
 
portion of guarantees and commitments
 
are expected to expire without being
 
drawn upon, the total of the contractual
amounts is not representative of expected future
 
liquidity requirements. These contractual obligations
 
have an impact on the Bank’s short-term and
 
long-term
liquidity and capital resource needs.
The maturity analysis
 
presented does not depict the degree of
 
the Bank’s maturity transformation or the Bank’s exposure
 
to interest rate and liquidity risk. The
Bank’s objective is to fund its assets appropriately
 
to protect against borrowing cost volatility
 
and potential reductions to funding market
 
availability. The Bank
utilizes stable non-maturity deposits (chequing
 
and savings accounts) and term deposits
 
as the primary source of long-term funding
 
for the Bank’s non-trading
assets including personal and business
 
term loans and the stable balance of revolving
 
lines of credit.
 
Additionally, the Bank issues long-term funding in respect of
such non-trading assets and raises short
 
term funding primarily to finance trading assets.
 
The liquidity of trading assets under stressed
 
market conditions is
considered when determining the appropriate
 
term of the funding.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 98
TABLE 58: REMAINING CONTRACTUAL
 
MATURITY
(millions of Canadian dollars)
As at
October 31, 2024
No
Less than
1 to 3
3 to 6
6 to 9
9 months
Over 1 to
Over 2 to
Over
specific
1 month
months
months
months
to 1 year
2 years
5 years
5 years
maturity
Total
Assets
Cash and due from banks
$
6,437
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
6,437
Interest-bearing deposits with banks
165,665
23
–
–
–
–
–
–
4,242
169,930
Trading loans, securities, and other
1
3,773
4,852
6,777
4,852
4,729
11,756
28,458
27,484
83,089
175,770
Non-trading financial assets at fair value through
profit or loss
–
2
301
1,431
96
702
810
694
1,833
5,869
Derivatives
11,235
12,059
5,501
4,257
2,587
10,485
17,773
14,164
–
78,061
Financial assets designated at fair value through
profit or loss
367
251
486
613
292
1,144
1,865
1,399
–
6,417
Financial assets at fair value through other comprehensive
 
income
357
7,284
6,250
6,459
9,367
5,766
19,729
34,270
4,415
93,897
Debt securities at amortized cost, net of allowance
for credit losses
1,620
4,237
4,763
6,367
4,072
30,513
93,429
126,617
(3)
271,615
Securities purchased under reverse repurchase
 
agreements
2
134,310
35,360
19,897
10,119
5,299
1,722
482
–
1,028
208,217
Loans
Residential mortgages
 
7,502
11,817
13,066
16,074
4,353
86,112
132,381
60,344
–
331,649
Consumer instalment and other personal
974
1,758
2,509
4,077
6,137
28,498
88,052
35,096
61,281
228,382
Credit card
–
–
–
–
–
–
–
–
40,639
40,639
Business and government
 
55,591
15,405
10,866
19,340
18,982
47,488
98,362
61,904
29,035
356,973
Total loans
64,067
28,980
26,441
39,491
29,472
162,098
318,795
157,344
130,955
957,643
Allowance for loan losses
–
–
–
–
–
–
–
–
(8,094)
(8,094)
Loans, net of allowance for loan losses
64,067
28,980
26,441
39,491
29,472
162,098
318,795
157,344
122,861
949,549
Customers’ liability under acceptances
 
–
–
–
–
–
–
–
–
–
–
Investment in Schwab
–
–
–
–
–
–
–
–
9,024
9,024
Goodwill
3
–
–
–
–
–
–
–
–
18,851
18,851
Other intangibles
3
–
–
–
–
–
–
–
–
3,044
3,044
Land, buildings, equipment, other depreciable
assets, and right-of-use assets
3
–
8
1
4
12
81
562
3,130
6,039
9,837
Deferred tax assets
–
–
–
–
–
–
–
–
4,937
4,937
Amounts receivable from brokers, dealers, and clients
22,115
–
–
–
–
–
–
–
–
22,115
Other assets
6,556
2,478
2,989
556
367
373
312
153
14,397
28,181
Total assets
$
416,502
$
95,534
$
73,406
$
74,149
$
56,293
$
224,640
$
482,215
$
365,255
$
273,757
$
2,061,751
Liabilities
Trading deposits
$
4,522
$
2,516
$
2,768
$
2,101
$
3,715
$
5,488
$
7,566
$
1,736
$
–
$
30,412
Derivatives
9,923
11,556
5,740
3,319
2,783
8,800
12,877
13,370
–
68,368
Securitization liabilities at fair value
–
1,004
328
644
97
3,313
9,443
5,490
–
20,319
Financial liabilities designated at
 
fair value through profit or loss
 
50,711
25,295
51,967
40,280
37,964
1,477
–
–
220
207,914
Deposits
4,5
Personal
14,229
31,997
30,780
16,971
19,064
15,120
15,590
7
497,909
641,667
Banks
14,714
4,287
2,434
16,343
6,954
–
3
–
12,963
57,698
Business and government
23,536
24,136
11,295
19,038
9,020
37,681
76,667
24,144
343,798
569,315
Total deposits
52,479
60,420
44,509
52,352
35,038
52,801
92,260
24,151
854,670
1,268,680
Acceptances
–
–
–
–
–
–
–
–
–
–
Obligations related to securities sold short
1
1,431
2,392
750
971
603
8,303
10,989
12,610
1,466
39,515
Obligations related to securities sold under repurchase
 
agreements
2
173,741
21,172
2,096
1,036
30
1,225
23
–
2,577
201,900
Securitization liabilities at amortized cost
119
589
819
438
144
1,843
4,823
3,590
–
12,365
Amounts payable to brokers, dealers, and clients
26,598
–
–
–
–
–
–
–
–
26,598
Insurance-related liabilities
224
448
671
671
705
1,184
1,656
727
883
7,169
Other liabilities
12,396
14,478
7,279
1,114
876
1,886
1,421
5,608
6,820
51,878
Subordinated notes and debentures
 
–
–
–
200
–
–
–
11,273
–
11,473
Equity
–
–
–
–
–
–
–
–
115,160
115,160
Total liabilities and equity
$
332,144
$
139,870
$
116,927
$
103,126
$
81,955
$
86,320
$
141,058
$
78,555
$
981,796
$
2,061,751
Off-balance sheet commitments
Credit and liquidity commitments
6,7
$
31,198
$
28,024
$
26,127
$
24,731
$
21,440
$
52,706
$
174,388
$
4,743
$
1,948
$
365,305
Other commitments
8
113
266
270
400
254
1,019
1,591
403
50
4,366
Unconsolidated structured entity commitments
–
–
–
125
766
490
19
–
–
1,400
Total off-balance sheet commitments
$
31,311
$
28,290
$
26,397
$
25,256
$
22,460
$
54,215
$
175,998
$
5,146
$
1,998
$
371,071
1
 
Amount has been recorded according to the remaining contractual maturity of the underlying security.
 
2
 
Certain contracts considered short-term are presented in ‘less than 1 month’ category.
3
 
Certain non-financial assets have been recorded as having ‘no specific maturity’.
4
 
As the timing of demand deposits and notice deposits is non-specific and callable by the depositor,
 
obligations have been included as having ‘no specific maturity’.
5
 
Includes $75 billion of covered bonds with remaining contractual maturities of $2 billion in ‘over 3 months
 
to 6 months’, $10 billion in ‘over 6 months to 9 months’, $18 billion in ‘over 1 to
2 years’, $37 billion in ‘over 2 to 5 years’, and $8 billion in ‘over 5 years’.
6
 
Includes $609 million in commitments to extend credit to private equity investments.
7
 
Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable
 
at the Bank’s discretion at any time.
8
 
Includes various purchase commitments as well as commitments for leases not yet commenced, and
 
lease-related payments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 99
TABLE 58: REMAINING CONTRACTUAL
 
MATURITY
(continued)
(millions of Canadian dollars)
As at
October 31, 2023
No
Less than
1 to 3
3 to 6
6 to 9
9 months
Over 1 to
Over 2 to
Over
specific
1 month
months
months
months
to 1 year
2 years
5 years
5 years
maturity
Total
Assets
Cash and due from banks
$
6,721
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
–
$
6,721
Interest-bearing deposits with banks
91,966
559
–
–
–
–
–
–
5,823
98,348
Trading loans, securities, and other
1
4,328
6,329
5,170
3,008
4,569
13,226
27,298
25,677
62,485
152,090
Non-trading financial assets at fair value through
profit or loss
–
–
354
1,538
199
1,664
828
1,351
1,406
7,340
Derivatives
10,145
10,437
5,246
4,244
3,255
11,724
25,910
16,421
–
87,382
Financial assets designated at fair value through
profit or loss
374
496
375
695
324
838
1,470
1,246
–
5,818
Financial assets at fair value through other comprehensive
 
income
745
2,190
1,200
5,085
2,223
9,117
15,946
29,845
3,514
69,865
Debt securities at amortized cost, net of allowance
for credit losses
1,221
4,020
4,073
16,218
3,480
22,339
116,165
140,502
(2)
308,016
Securities purchased under reverse repurchase
 
agreements
2
124,253
33,110
29,068
7,381
7,298
955
506
–
1,762
204,333
Loans
Residential mortgages
 
1,603
2,616
5,860
10,575
14,181
57,254
168,475
59,733
44
320,341
Consumer instalment and other personal
894
1,580
2,334
3,830
5,974
27,166
85,487
34,183
56,106
217,554
Credit card
–
–
–
–
–
–
–
–
38,660
38,660
Business and government
 
37,656
10,058
13,850
14,886
16,964
42,460
96,952
67,190
26,512
326,528
Total loans
40,153
14,254
22,044
29,291
37,119
126,880
350,914
161,106
121,322
903,083
Allowance for loan losses
–
–
–
–
–
–
–
–
(7,136)
(7,136)
Loans, net of allowance for loan losses
40,153
14,254
22,044
29,291
37,119
126,880
350,914
161,106
114,186
895,947
Customers’ liability under acceptances
 
14,804
2,760
5
–
–
–
–
–
–
17,569
Investment in Schwab
–
–
–
–
–
–
–
–
8,907
8,907
Goodwill
3
–
–
–
–
–
–
–
–
18,602
18,602
Other intangibles
3
–
–
–
–
–
–
–
–
2,771
2,771
Land, buildings, equipment, other depreciable
assets, and right-of-use assets
3
–
8
6
8
14
79
573
3,153
5,593
9,434
Deferred tax assets
4
–
–
–
–
–
–
–
–
3,951
3,951
Amounts receivable from brokers, dealers, and clients
30,416
–
–
–
–
–
–
–
–
30,416
Other assets
4
5,267
1,869
5,619
208
194
137
129
82
14,124
27,629
Total assets
4
$
330,393
$
76,032
$
73,160
$
67,676
$
58,675
$
186,959
$
539,739
$
379,383
$
243,122
$
1,955,139
Liabilities
Trading deposits
$
1,272
$
1,684
$
5,278
$
4,029
$
4,153
$
6,510
$
6,712
$
1,342
$
–
$
30,980
Derivatives
9,068
9,236
4,560
3,875
2,559
8,345
16,589
17,408
–
71,640
Securitization liabilities at fair value
2
498
345
1,215
391
1,651
6,945
3,375
–
14,422
Financial liabilities designated at
 
fair value through profit or loss
 
48,197
30,477
37,961
42,792
32,473
112
–
–
118
192,130
Deposits
5,6
Personal
6,044
19,095
22,387
14,164
19,525
17,268
20,328
51
507,734
626,596
Banks
19,608
68
29
–
–
–
4
1
11,515
31,225
Business and government
25,663
16,407
24,487
11,819
9,658
33,723
74,300
19,652
324,660
540,369
Total deposits
51,315
35,570
46,903
25,983
29,183
50,991
94,632
19,704
843,909
1,198,190
Acceptances
14,804
2,760
5
–
–
–
–
–
–
17,569
Obligations related to securities sold short
1
135
1,566
1,336
1,603
1,309
5,471
19,991
11,971
1,279
44,661
Obligations related to securities sold under repurchase
 
agreements
2
146,559
10,059
6,607
457
1,142
150
46
–
1,834
166,854
Securitization liabilities at amortized cost
–
526
355
1,073
703
2,180
4,956
2,917
–
12,710
Amounts payable to brokers, dealers, and clients
30,872
–
–
–
–
–
–
–
–
30,872
Insurance contract liabilities
4
243
305
327
258
253
694
1,131
501
2,134
5,846
Other liabilities
4
11,923
9,808
7,986
1,276
1,198
918
1,979
4,226
8,260
47,574
Subordinated notes and debentures
 
–
–
–
–
–
196
–
9,424
–
9,620
Equity
4
–
–
–
–
–
–
–
–
112,071
112,071
Total liabilities and equity
4
$
314,390
$
102,489
$
111,663
$
82,561
$
73,364
$
77,218
$
152,981
$
70,868
$
969,605
$
1,955,139
Off-balance sheet commitments
Credit and liquidity commitments
7,8
$
22,242
$
24,178
$
26,399
$
21,450
$
22,088
$
47,826
$
166,891
$
5,265
$
1,487
$
337,826
Other commitments
9
109
279
214
197
204
889
1,364
424
73
3,753
Unconsolidated structured entity commitments
–
836
3
239
95
729
–
–
–
1,902
Total off-balance sheet commitments
$
22,351
$
25,293
$
26,616
$
21,886
$
22,387
$
49,444
$
168,255
$
5,689
$
1,560
$
343,481
1
 
Amount has been recorded according to the remaining contractual maturity of the underlying security.
 
2
 
Certain contracts considered short-term are presented in ‘less than 1 month’ category.
3
 
Certain non-financial assets have been recorded as having ‘no specific maturity’.
4
 
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 of the Bank’s
 
2024 Consolidated Financial Statements for further details.
5
 
As the timing of demand deposits
 
and notice deposits is non-specific and callable by the depositor, obligations
 
have been included as having ‘no specific maturity’.
6
 
Includes $54 billion of covered bonds with remaining contractual maturities of $6 billion in ‘over 3 months
 
to 6 months’, $1 billion in ‘over 6 months to 9 months’, $12 billion in ‘over 1 to
2 years’, $31 billion in ‘over 2 to 5 years’, and $4 billion in ‘over 5 years’.
7
 
Includes $573 million in commitments to extend credit to private equity investments.
8
 
Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable
 
at the Bank’s discretion at any time.
9
 
Includes various purchase commitments as well as commitments for leases not yet commenced, and lease-related
 
payments.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 100
Capital Adequacy Risk
Capital adequacy risk is the risk of insufficient
 
level and composition of capital being
 
available in relation to the amount of
 
capital required to carry out the Bank’s
strategy and/or satisfy regulatory and internal
 
capital adequacy requirements under normal
 
and stress conditions.
Capital is held to protect the viability
 
of the Bank in the event of unexpected
 
financial losses. Capital represents the loss-absorbing
 
funding required to provide a
cushion to protect depositors and other
 
creditors from unexpected losses.
Managing capital levels requires that the Bank
 
holds sufficient capital, in normal and stress environments,
 
to avoid the risk of breaching minimum capital
 
levels
prescribed by regulators and internal Board
 
limits.
WHO MANAGES CAPITAL ADEQUACY RISK
The Board oversees the Bank’s capital adequacy
 
and capital management by reviewing adherence
 
to capital targets and approving the annual
 
capital plan and the
Capital Adequacy Risk Management Policy. The Risk Committee
 
reviews and approves the Capital Adequacy
 
Risk Management Framework. The CRO
 
and the
CFO oversee that the Bank’s ICAAP is effective in
 
meeting capital adequacy requirements.
The ALCO recommends and maintains the
 
Capital Adequacy Risk Management Framework
 
and the Capital Adequacy Risk Management
 
Policy, and sets
additional capital targets and minimum requirements,
 
including the allocation of capital limits
 
to business segments, to support ongoing
 
compliance with the Capital
Adequacy Risk Management Policy. The ALCO also reviews the ongoing
 
adherence to established capital targets in
 
support of the effective and prudent
management of the Bank’s capital position and
 
maintenance of adequate capital.
TBSM is responsible for forecasting and
 
monitoring compliance with capital targets, on
 
a consolidated basis, with oversight provided
 
by ALCO. TBSM updates
the capital forecast, including appropriate
 
changes to capital issuance, repurchase
 
and redemption. The capital forecast is reviewed
 
by ALCO. TBSM also leads
the ICAAP and EWST processes. The Bank’s business
 
segments are responsible for managing to assigned
 
RWA and leverage exposure limits.
Additionally, regulated subsidiaries of the Bank, including certain insurance
 
subsidiaries and subsidiaries in the U.S. and other
 
jurisdictions, manage their capital
adequacy risk in accordance with applicable
 
regulatory requirements. Capital management
 
policies and procedures of subsidiaries
 
are also required to conform
with those of the Bank. U.S. regulated subsidiaries
 
of the Bank are required to follow several
 
regulatory guidelines, rules and expectations
 
related to capital
planning and stress testing including the U.S.
 
Federal Reserve Board’s Regulation YY establishing
 
Enhanced Prudential Standards for Foreign
 
Banking
Organizations, applicable to U.S. Bank Holding
 
Companies. Refer to the sections on “Future
 
Regulatory Capital Developments”, “Enterprise-Wide
 
Stress Testing”,
and “Risk Factors That May Affect Future Results”
 
for further details.
HOW TD MANAGES CAPITAL ADEQUACY RISK
Capital resources are managed in a manner
 
designed so that the Bank’s capital position can
 
support business strategies under both current
 
and future business
operating environments. The Bank manages
 
its operations within the capital constraints
 
defined by both internal and regulatory
 
capital requirements, so that it
meets the higher of these requirements.
Regulatory capital requirements represent
 
minimum capital levels. Capital targets are
 
established to provide a sufficient buffer so that the Bank
 
is able to
continuously meet these minimum capital requirements.
 
The purpose of these capital targets is
 
to reduce the risk of a breach of minimum
 
capital requirements,
due to unexpected events, allowing management
 
the opportunity to react to declining capital
 
levels before minimum capital requirements
 
are breached.
A periodic monitoring process is undertaken
 
to plan and forecast capital requirements.
 
As part of the annual planning process, business
 
segments are allocated
individual RWA and Leverage exposure limits. Capital generation
 
and usage are monitored and reported
 
to the ALCO.
The Bank assesses the sensitivity of its
 
forecast capital requirements and new
 
capital formations to various economic
 
conditions through its EWST process.
The results of the EWST are considered in
 
the determination of capital targets and
 
capital risk appetite limits.
The Bank also determines its internal capital
 
requirements through the ICAAP process
 
using models to measure the risk-based
 
capital required based on its
own tolerance for the risk of unexpected
 
losses. This risk tolerance is calibrated
 
to the required confidence level so that
 
the Bank will be able to meet its
obligations, even after absorbing severe
 
unexpected losses over a one-year period.
In addition, the Bank has a Capital Contingency
 
Plan that is designed to prepare management
 
to maintain capital adequacy through periods
 
of bank-specific or
systemic market stress. The Capital Contingency
 
Plan outlines the governance and procedures
 
to be followed if the Bank’s consolidated capital
 
levels are forecast
to fall below capital targets or when there
 
are capital concerns from disruptive events
 
or trends. It also outlines potential
 
management actions that may be taken to
prevent such a breach from occurring.
Legal and Regulatory Compliance (including Financial Crime) Risk
Legal and Regulatory Compliance (including
 
Financial Crime) (LRC) risk is the risk associated
 
with the Bank’s failure to comply with applicable
 
laws, rules,
regulations, prescribed practices, contractual
 
obligations, the Bank’s
 
Code of Conduct and Ethics, or standards of
 
fair business conduct or market conduct, which
can lead to adverse judgements, fines, sanctions,
 
liabilities, or reputational harm
 
that could be material to the Bank. LRC risk
 
includes the regulatory risks
associated with financial crimes (which include,
 
but are not limited to, money laundering,
 
terrorist financing, bribery, corruption, and violations of economic
sanctions), privacy, market conduct, consumer protection and business
 
conduct, as well as prudential and other generally
 
applicable non-financial requirements.
 
The Bank is exposed to
 
LRC risk in virtually all
 
of its activities. Failure to
 
mitigate LRC risk and meet regulatory
 
and legal requirements can
 
impact the
Bank’s ability to meet strategic objectives,
 
poses a risk of censure
 
or penalty, may lead to
 
litigation, and puts the Bank’s
 
reputation at risk. Financial
penalties, reputational damage, and other
 
costs associated with legal proceedings and
 
unfavourable judicial or regulatory determinations may
 
also
adversely affect the Bank’s business,
 
results of operations and financial
 
condition. LRC risk generally cannot be
 
effectively mitigated by trying to limit
 
its
impact to any one business
 
or jurisdiction as realized LRC
 
risk may adversely impact
 
unrelated businesses or jurisdictions. LRC risk
 
exposure is inherent
in the normal course of
 
operating the Bank’s businesses. Known
 
LRC risks continue to rapidly change as
 
a result of evolving laws
 
and regulatory
expectations, as well as new
 
or emerging threats, including geopolitical
 
and those associated with use
 
of new, emerging and interrelated
 
technologies
and use of,
 
AI,
 
machine learning, models and decision-making
 
tools.
WHO MANAGES LEGAL AND REGULATORY COMPLIANCE (INCLUDING FINANCIAL
 
CRIME) RISK
The proactive and effective management
 
of LRC risk is complex given the
 
breadth and pervasiveness of exposure.
 
The LRC Risk Management
Framework applies enterprise-wide to the
 
Bank and to all its
 
corporate functions, business segments, its
 
governance, risk, and oversight functions,
 
and
its subsidiaries, and is aligned
 
with the Bank’s ERF. All the
 
Bank’s businesses are accountable for
 
operating their business in compliance with
 
LRC
(including financial crime) requirements applicable to their jurisdiction
 
and specific businesses. All the Bank’s
 
businesses, including corporate functions,
are also accountable for the
 
LRC risk that they generate in their
 
operations, including LRC risks that may
 
arise in their dealings with third-party
 
vendors.
These accountabilities involve assessing
 
the risk, designing and implementing
 
controls, and monitoring and reporting
 
on their ongoing effectiveness to
safeguard the businesses from operating outside
 
of the Bank’s risk appetite.
 
Global Compliance and Financial Crime Risk
 
Management (FCRM) are
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 101
independent oversight functions (the “Oversight
 
Functions”) and are accountable for
 
RCM oversight and provide
 
objective guidance, and oversight with
respect
 
to managing
 
LRC risk. Legal,
 
U.S. Regulatory Relations & Government
 
Affairs (RRGA)/and Regulatory Risk provide advice
 
with
 
respect
 
to managing
LRC risk. Representatives of these
 
groups interact regularly with senior executives of
 
the Bank’s businesses. Also, the
 
senior management of Legal,
Compliance, and FCRM have established regular meetings
 
with and reporting to the Audit
 
Committee, which oversees the establishment
 
and
maintenance of policies and programs
 
designed to help achieve and maintain
 
the Bank’s compliance with the
 
applicable LRRs. Senior management of
the Compliance Department also report
 
regularly to the Corporate Governance Committee,
 
which oversees conduct risk management
 
in the Bank, the
establishment and maintenance of policies
 
in respect of the Bank’s compliance
 
with the consumer protection provisions of
 
the Canadian Financial
Consumer Protection Framework, and in
 
its capacity as the Bank’s conduct
 
review committee, related party transactions for
 
the Bank and certain of
 
its
Canadian subsidiaries that are federally-regulated financial
 
institutions. In addition, senior management
 
of Regulatory Risk has established periodic
reporting to the Board and
 
regular reporting to the Risk Committee.
HOW TD MANAGES LEGAL AND REGULATORY COMPLIANCE (INCLUDING
 
FINANCIAL CRIME) RISK
Effective management of LRC risk is a result of enterprise-wide
 
collaboration and requires (a) independent and
 
objective identification and oversight
 
of LRC risk,
(b) objective guidance and advisory services
 
and/or independent challenge and oversight
 
to identify, assess, control, and monitor LRC risk, and (c) an approved
set of frameworks, policies, procedures, guidelines,
 
and practices. While each business line
 
and corporate function is accountable for
 
owning LRC risk, each of the
Oversight Functions plays a critical role in
 
the management of LRC risk at the Bank.
 
Depending on the circumstances, they play
 
different roles at different times:
‘trusted advisor’, provider of objective
 
guidance, independent challenge,
 
and oversight and control (including ‘gatekeeper’
 
or approver).
 
Compliance performs the following functions:
 
it acts as an independent Regulatory Compliance
 
oversight function to establish enterprise
 
standards for business
and Oversight Functions in managing regulatory
 
compliance risk; it fosters a culture of integrity, ethics and compliance,
 
with accountability understood and
accepted throughout TD to manage and mitigate
 
Regulatory Compliance Risks; it assesses the
 
adequacy of, adherence to, and effectiveness of
 
the Bank’s day-to-
day RCM controls; it proactively manages regulatory
 
change and maintains a RCM Regulatory
 
Change Standard for Oversight Functions to
 
do the same; and it
supports the Chief Compliance Officer in providing an
 
opinion to the Audit Committee as to
 
whether the RCM controls are sufficiently robust to
 
achieve compliance
with applicable regulatory requirements.
 
FCRM acts as an independent regulatory compliance
 
and risk management oversight function
 
and is responsible for regulatory compliance
 
(laws, rules,
regulations) and the broader prudential risk
 
management components of the AML,
 
Anti-Terrorist Financing, Sanctions, and Anti-Bribery/Anti-Corruption programs
(collectively, the “FCR Programs”), including their design, content, and
 
enterprise-wide implementation; develops
 
policies and standards, monitors, evaluates,
 
and
reports on FCR Program controls, design, and
 
execution; and reports on the overall
 
adequacy and effectiveness of the FCR Programs,
 
including program design
and operation.
 
For their respective programs, Compliance
 
and FCRM have developed methodologies and
 
processes to measure and aggregate regulatory
 
compliance risks and
FCR program risks (including the risks that
 
our products, and services and delivery
 
channels are misused for financial crime)
 
on an ongoing basis as a baseline to
assess whether the Bank’s internal controls are
 
effective in adequately identifying and mitigating
 
such risks and determine whether individual
 
or aggregate
business activities are conducted within
 
the Bank’s risk appetite.
 
As further described in the “Significant Events –
 
Global Resolution of the Investigations
 
into the Bank’s U.S. BSA/AML Program” section above,
 
the Bank is
undertaking a remediation of its U.S. BSA/AML
 
Program and undertaking several improvements
 
to the Bank’s enterprise-wide AML/Anti-Terrorist Financing and
Sanctions Programs (the “Enterprise AML Program”).
 
Similar to the U.S. BSA/AML remediation
 
program, the FINTRAC remediation and
 
other planned strategic
enhancements of the Enterprise AML Program
 
outside the U.S. are organized under
 
five core pillars; (i) People & Talent, (ii) Governance & Structure, (iii) Policy
 
&
Risk Assessment, (iv) Process & Control,
 
(v) Data & Technology. The Bank has established a dedicated program management infrastructure
 
to monitor execution
against these programs. For the U.S.,
 
the work is being overseen by the Compliance
 
Committee of the U.S. subsidiary boards
 
and is expected to be a multi-year
endeavour, involving additional investments. In Canada, the
 
work is subject to oversight by senior executive
 
governance forums
 
along with regular reporting to the
Audit Committee of the Board.
Legal acts as an independent provider of
 
legal services and advice and protects
 
the Bank from unacceptable legal risk. Legal has
 
also developed methodologies
for measuring litigation risk for adherence
 
to the Bank’s risk appetite.
 
Processes employed by Legal, Compliance, and
 
FCRM (including policies and frameworks,
 
training and education, and the Bank’s Code of Conduct
 
and Ethics)
support the responsibility of each business
 
to adhere to LRC requirements.
Finally, the Corporate and Public Affairs (CAPA), Regulatory Risk Management and RRGA departments
 
also create and facilitate communication
 
with elected
officials and regulators, monitor legislation and
 
regulations, support business relationships
 
with governments, coordinate regulatory
 
examinations, track and
monitor issues from those examinations,
 
support regulatory discussions on new
 
or proposed products or business initiatives,
 
and advance the public policy
objectives of the Bank.
Reputational Risk
Reputational risk is the potential that stakeholder
 
perceptions, whether true or not, regarding
 
the Bank’s business practices, actions or inactions,
 
will or may cause
a significant decline in the Bank’s value, brand, liquidity
 
or customer base, or require costly measures
 
to address.
Stakeholders include customers, shareholders,
employees, regulators, and the communities
 
in which we operate.
A company’s reputation is a valuable business
 
asset that is essential to optimizing shareholder
 
value and therefore, is constantly at risk.
 
Reputational risk can
arise as a consequence of negative perceptions
 
about the Bank’s business practices involving
 
any aspect of the Bank’s operations and usually
 
involves concerns
about business ethics and integrity, competence, or the quality or
 
suitability of products and services. Since
 
all risk categories can have an impact
 
on a company’s
reputation, reputational risk is not managed
 
in isolation from the Bank’s other major risk
 
categories and can ultimately impact its brand,
 
earnings, and capital.
WHO MANAGES REPUTATIONAL RISK
Responsibility for managing risks to the Bank’s reputation
 
ultimately lies with the SET and the executive
 
committees that examine reputational risk
 
as part of their
regular mandate. The ERRC is the most
 
senior executive committee for the review of reputational
 
risk matters at TD. The mandate of
 
the ERRC is to oversee the
management of reputational risk within
 
the Bank’s risk appetite. Its main accountability is
 
to review and assess business and
 
corporate initiatives and activities
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 102
where significant reputational risk profiles
 
have been identified and escalated. The
 
ERRC also provides a forum for discussion,
 
review, and escalation for non-
traditional risks.
At the same time, every employee and representative
 
of the Bank has a responsibility to
 
contribute in a positive way to the Bank’s reputation
 
and the management
of reputational risk. This means that every
 
Bank employee is responsible for following
 
ethical practices at all times, complying
 
with applicable policies, legislation,
and regulations and are also supporting positive
 
interactions with the Bank’s stakeholders.
 
Reputational risk is most effectively managed when
 
everyone at the
Bank works continuously to protect and enhance
 
the Bank’s reputation. Where an employee is aware
 
of or suspects any conduct that violates
 
TD’s Code of
Conduct and Ethics, they have an obligation
 
to immediately report such conduct.
HOW TD MANAGES REPUTATIONAL RISK
The Bank’s approach to the management of reputational
 
risk combines the experience and
 
knowledge of individual business segments,
 
corporate shared service
areas and governance, risk and oversight functions.
 
It is based on enabling the Bank’s businesses
 
to understand their risks and developing
 
the policies,
processes, and controls required to manage
 
these risks appropriately and in line with
 
the Bank’s strategy and reputational risk appetite.
 
The Bank’s Reputational
Risk Management Framework provides a
 
comprehensive overview of its approach
 
to the management of this risk. Amongst other
 
significant
 
policies, the Bank’s
Enterprise Reputational Risk Management Policy
 
is approved by the Group Head and
 
CRO and sets out the requirements under which
 
business segments and
corporate shared services are required
 
to manage reputational risk. These requirements
 
include implementing procedures and
 
designating a business-level
committee (where required by the Policy) to review
 
and assess reputational risks and escalation
 
to the ERRC as appropriate.
The Bank also has an enterprise-wide New
 
Business and Product Approval (NBPA) Policy that is approved
 
by the CRO and establishes standard
 
practices to
support consistent processes for approving
 
new businesses, products, and services
 
across the Bank. The policy is supported by
 
business segment specific
processes, which involve independent review
 
from oversight functions, and consideration of
 
all aspects of a new product, including reputational
 
risk.
Environmental and Social Risk
E&S risk is the risk of financial loss, reputational
 
damage or other harm resulting from the
 
Bank’s inability to manage and respond to changing
 
environmental or
social factors that impact or are associated
 
with the Bank’s operations, business activities, products,
 
clients, or the communities in which the Bank
 
operates.
Operating a complex financial institution in
 
multiple jurisdictions exposes the Bank’s businesses
 
and operations to a broad range of financial
 
and non-financial
risks. Environmental and social issues expose
 
the Bank to a set of risks (collectively, E&S risk) that are transverse,
 
meaning they can drive financial and non-
financial risks, including but not limited to credit,
 
strategic, reputational, legal and regulatory
 
compliance risks.
 
WHO MANAGES ENVIRONMENTAL AND SOCIAL RISK
ESG Risk Management (ESG RM) establishes
 
E&S risk frameworks, policies, processes,
 
governance,
 
and
 
reporting structures for business and corporate
functions to identify, assess, measure, control,
 
monitor and report on E&S risks. Business
 
and corporate functions own and
 
manage the risks. Internal polices and
procedures require business and corporate
 
functions to consider the applicability and assessment
 
of E&S risk in current and new business
 
activity. Internal policies
also require business unit governance and business
 
processes to incorporate an assessment
 
of E&S risk and apply an appropriate
 
level of governance and
oversight consistent with their business procedures.
ESG RM is also developing enterprise-wide
 
tools and programs to support measurement
 
and monitoring activities, in addition
 
to business and corporate segment
activities. E&S Risk activities are a component
 
of the Bank’s E&S Target Operating Model (TOM) and Implementation Plans.
 
Senior Management oversight is maintained
 
through monitoring and reporting to the
 
OROC, ERMC and Risk Committee of
 
the Board.
HOW TD MANAGES ENVIRONMENTAL AND SOCIAL RISK
The Bank follows a disciplined approach to
 
managing financial and non-financial risks,
 
driven by E&S risks which may have a present
 
or future impact on the
Bank’s competitive position, brand or long-term
 
shareholder value creation. The Bank considers
 
current and potential E&S risk in the strategies
 
it executes, as
appropriate, by enabling informed decision-making
 
based on internal capabilities, industry
 
practices, legal and regulatory obligations,
 
and stakeholder expectations
– including shareholders and customers -
 
as they continue to evolve.
The Enterprise E&S Risk Framework outlines
 
how the Bank manages E&S risk. This
 
Framework is reinforced by risk-specific
 
policies including the Enterprise E&S
Risk Policy that establishes requirements
 
for business and corporate segments to effectively
 
manage their E&S risk. Business and corporate
 
segments, as
applicable, certify compliance with the E&S
 
Risk Policy requirements on an annual
 
basis.
 
With respect to non-retail lending, the Bank
 
takes a measured, client-focused and risk-based
 
approach to E&S risks. When a risk
 
assessment indicates a
heightened level of risk, the Bank conducts
 
enhanced due diligence that could include
 
the use of tools such as physical risk identification,
 
heatmaps, industry risk
ratings, client engagement and questionnaires,
 
financed emissions estimation and analytics
 
systems, environmental site assessments,
 
site visits, industry
research, and media scans, as applicable.
 
Risk assessment and enhanced due diligence
 
results follow the Bank’s risk governance process,
 
which may include
segment level and enterprise-level reputational
 
risk committee oversight. Following
 
this process, TD makes decisions to conduct
 
transactions based on the risks
presented by an individual customer and
 
the Bank’s ability to manage those risks.
 
The Bank continues to assess the impacts
 
associated with new and material changes
 
made to TD products, services, projects, and initiatives
 
by incorporating an
E&S risk assessment into the Bank’s Change Risk
 
Management process. Additionally, the Bank’s enterprise-wide Business
 
Continuity and Crisis Management
Program continues to support management’s ability
 
to operate the Bank’s businesses and operations
 
in the event of a business disruption incident,
 
including the
incremental impact of climate change.
The Bank’s E&S metrics, targets and performance
 
are publicly reported within its annual
 
sustainability reporting suite. Key performance
 
measures reported by the
Bank are informed by the Global Reporting
 
Initiative (GRI), the Sustainability Accounting
 
Standards Board (SASB) and the
 
FSB’s TCFD recommendations, with
select metrics that are independently assured.
Climate-Related Risk
Climate-related risk is the risk of reputational damage and/or financial
 
loss arising from the physical and transition
 
risks of climate change to the Bank,
 
its clients or
the communities in which the Bank operates.
 
This includes physical risks arising from
 
the consequences of a changing climate,
 
as well as transition risks arising
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 103
from the process of shifting to a low-carbon
 
economy. In its 2023 annual sustainability reporting suite,
 
the Bank highlighted its progress to assess
 
and manage
climate-related risk and effectively manage its business
 
strategies and continues to capture opportunities
 
in light of these evolving risks.
 
The Bank continues to evolve its ESG/Climate
 
TOM to support its work to implement TD’s Climate Action
 
Plan and to manage climate-related risks
 
through
dedicated work streams, including an enterprise
 
Climate Risk Strategy and Climate
 
Risk Scenario Analysis Program. The Bank
 
continues to work towards building
its expertise and capabilities for managing
 
climate-related risks, captured through
 
the E&S TOM via dedicated workstreams including
 
advancing climate-related
risk identification and measurement processes
 
and developing the Bank’s enterprise climate
 
data strategy.
 
TD’s Climate Scenario Analysis program helps
 
the Bank better understand the impacts of
 
climate-related financial risks. Climate
 
scenario analysis evaluates a
range of hypothetical outcomes by considering a
 
variety of alternative plausible future scenarios
 
under a given set of assumptions and
 
constraints. While scenarios
are not designed to deliver precise outcomes
 
or forecasts, they provide a way for the
 
Bank to consider how the future might look
 
and how we can prepare. The
Bank’s continued participation in scenario analysis
 
pilot exercises and programs across a range
 
of climate scenarios supports the development
 
of tools and
capabilities regarding climate data and
 
climate-related risk modelling. Developing these
 
capabilities supports the Bank’s understanding
 
of the transition and
physical risks of climate change, which will
 
help inform the Bank’s approach to further integrate
 
climate-related risk management activities
 
across the enterprise.
The Bank continues to refresh and enhance
 
the scope of its Climate Risk Heatmap,
 
supported by an Industry Risk Review process,
 
to support physical and
transition climate-related risk identification and
 
assessment and to refine its understanding
 
of the industry sector and geographic location
 
sensitivities that climate-
related risk may have on the Bank and its assets,
 
clients, and communities in which it operates.
 
TD is applying its Physical Climate Risk Identification
 
Framework
across its footprint and business lines to inform
 
risk control assessment processes and
 
business strategies.
 
The Bank contributes to public consultations
 
and advocacy initiatives on emerging climate
 
issues, including disclosure frameworks
 
proposed by regulators and
standard setters. The Bank also engages
 
with environmental and community NGOs, industry
 
associations, rating agencies, Indigenous
 
communities and
responsible investment organizations.
 
TD also participates in various North American
 
working groups, and as a member of
 
the Partnership for Carbon Accounting Financials,
 
helps develop and refine calculation methodologies
 
for emerging climate metrics. The Bank continues
 
its membership in the Risk Management
 
Association
Climate Risk Consortium, which focuses on
 
bringing financial institutions together to advance
 
the awareness of and address the risks
 
relevant to climate change,
by developing frameworks, and recommendations
 
for governance, disclosure, and risk management
 
principles.
TD recognizes it faces transition risk
 
from its own activities, as well as from the
 
clients we serve. In 2020, the Bank announced
 
a target to achieve net-zero
greenhouse gas (GHG) emissions associated
 
with the Bank’s operations and financing activities
 
by 2050, in alignment with the associated
 
principles of the Paris
Agreement.
The Bank monitors and assesses legal, policy, regulatory, economic, technological and
 
stakeholder developments regarding E&S
 
matters, including the transition
to net zero, and how those developments
 
may affect its E&S metrics and targets. Accordingly, the Bank may adjust
 
its E&S metrics or targets to reflect these
developments. In addition, E&S methodologies
 
or standards used by regulators, the financial
 
sector, industry groups or associations that the Bank
 
participates in
or belongs to, or that the Bank or its clients
 
use to measure and report on their GHG emissions
 
could result in the Bank amending or restating
 
its baselines,
calculated results or targets, and may result in
 
the Bank withdrawing from or modifying its
 
membership in certain groups or associations.
 
Limitations on the
availability and reliability of data may also
 
impact the Bank’s ability to assess and evaluate
 
E&S risks. The Bank is mindful of data
 
availability and data quality
limitations impacting risk management
 
and financed emissions efforts and work continues
 
through industry forums to address the lack
 
of standardized taxonomies
and methodologies. These limitations are expected
 
to improve over time as the Bank continues
 
to advance its data capabilities by working
 
with internal and
external subject matter experts, leading
 
to more robust and reliable E&S risk monitoring,
 
analysis, and reporting. The Bank assesses,
 
and will continue to assess,
the potential impacts of climate change and
 
related risks on its operations, lending portfolios,
 
investments, and businesses.
Regulatory and Standard Setter Developments
 
Concerning E&S Risk
On March 7, 2023, OSFI issued Guideline B-15:
 
Climate Risk Management (Guideline B-15),
 
which sets out OSFI’s expectations related to the
 
management and
disclosure of climate-related risks and opportunities.
 
Effective dates of Guideline B-15 begin October
 
31, 2024 for certain components, and annual
 
disclosures are
required to be made publicly available no later
 
than 180 days after fiscal year-end. The Bank’s required
 
public disclosures will be released in the
 
2024
sustainability reporting suite.
 
On June 26, 2023, the International Sustainability
 
Standards Board (ISSB) under the IFRS
 
Foundation, issued its first two sustainability
 
standards, IFRS S1
General Requirements for Disclosures of Sustainability-related
 
Financial Information and IFRS S2 Climate-related
 
Disclosures. IFRS S1 sets out the disclosure
requirements for financially material information
 
about sustainability-related risks and
 
opportunities to meet investor information
 
needs, and IFRS S2 specifically
sets the disclosure requirement for Climate-related
 
risks and opportunities. ISSB recommends
 
an effective date for annual reporting periods
 
beginning on or after
January 1, 2024, and this is subject to Canadian
 
jurisdiction’s endorsement. Early application is permitted
 
on or before the date of initial application
 
of IFRS S1 and
IFRS S2. The International Organization of
 
Securities Commissions (IOSCO) has officially endorsed
 
IFRS S1 and IFRS S2 on July 23, 2023,
 
and is now calling its
member jurisdictions to consider ways they
 
may adopt or apply the ISSB standards. The
 
Bank is currently assessing the impact of
 
adopting these standards and
monitoring communications from the Canadian
 
Securities Administrators.
Codes of Conduct and Human Rights
The Bank has several policies, including the
 
Bank’s Code of Conduct and Ethics, which reflect
 
the Bank’s commitment to manage its business
 
responsibly and in
compliance with applicable laws. For additional
 
information on the Code of Conduct and Ethics,
 
refer to the “Legal and Regulatory Compliance
 
(including Financial
Crime) Risk” section above. In 2024, the
 
Bank published a refreshed Statement on
 
Human Rights, which reflects the corporate
 
responsibility to respect human
rights as set out in the United Nations Guiding
 
Principles on Business and Human Rights
 
(UNGP). The Bank and its applicable subsidiaries
 
also publish reports
pursuant to modern slavery legislation
 
to which they are subject. The Bank’s current Human
 
Rights Statement and Modern Slavery
 
and Human Trafficking Report
can be found here: https://www.td.com/ca/en/about-td/for-investors/policies-and-references.
In 2023, the Bank embarked on a process
 
to review its policies, procedures and training
 
programs relating to Indigenous Peoples
 
and free, prior and informed
consent (FPIC) to assess the operationalization
 
of FPIC. In June 2024, the Bank reported
 
on the outcome and progress of this policy
 
and training review.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 104
TD’s Financial Consumer Protection Framework Policy
 
aims to promote responsible conduct
 
across Canadian banks and protect financial
 
services customers. It
also includes components related to promoting
 
transparency for customers to help
 
them make informed decisions and provisions
 
related to fair and equitable
dealing (e.g., requirements for cancelling
 
agreements, access to basic banking services
 
and complaints processes).
 
In the U.S., TD’s Fair & Responsible Banking Policy
 
supports the Bank’s commitment to treat all individuals
 
fairly and equitably in offering and providing banking
products and services: to mitigate risk to
 
the consumer; to prevent discriminatory practices
 
and unfair, deceptive or abusive acts or practices (UDAAP);
 
and to
maintain compliance with applicable federal and
 
state laws and regulations. TD’s Complaint Policy
 
enables it to identify and address customer
 
issues and continue
to enhance its legendary customer experience.
The Bank’s Supplier Code of Conduct also reflects
 
its commitment to respect human rights.
 
New or prospective suppliers providing goods
 
or services through the
Bank’s centralized Strategic Sourcing Group
 
must register through an enterprise procurement
 
system requiring them to represent that they
 
operate in accordance
with the expectations described in its Supplier
 
Code of Conduct, including those relating
 
to the protection of human rights and fair labour
 
practices.
 
In addition, the
Bank’s North American Supplier Diversity Program
 
seeks to promote a level playing field
 
and encourage the inclusion of women,
 
Black, Indigenous and other
minorities, the 2SLGBTQ+ community,
 
people with disabilities, veterans, refugees
 
and other diverse suppliers in its procurement
 
process.
To
reflect this goal, the
Bank’s Statement on Supplier Diversity, recognizes diversity and inclusion
 
as both a core value and a business imperative.
ACCOUNTING STANDARDS AND
 
POLICIES
Critical Accounting Policies
 
and Estimates
ACCOUNTING POLICIES AND ESTIMATES
The Bank’s accounting policies and estimates are
 
essential to understanding its results of
 
operations and financial condition. A
 
summary of the Bank’s material
accounting policies and estimates are presented
 
in the Notes of the 2024 Consolidated
 
Financial Statements. The Bank’s critical accounting
 
policies are reviewed
with the Audit Committee on a periodic basis.
 
Critical accounting policies that require
 
management’s judgment and estimates include
 
the classification and
measurement of financial assets, accounting
 
for impairments of financial assets, accounting
 
for leases, the determination of fair value of financial
 
instruments,
accounting for derecognition, the valuation
 
of goodwill and other intangibles, accounting
 
for employee benefits, accounting for income
 
taxes, accounting for
provisions, accounting for insurance, the consolidation
 
of structured entities,
 
and accounting for revenue from
 
contract with customers.
The Bank’s 2024 Consolidated Financial Statements
 
have been prepared in accordance with
 
IFRS. For details of the Bank’s accounting policies
 
under IFRS,
refer to Note 2 of the Bank’s 2024 Consolidated
 
Financial Statements.
ACCOUNTING JUDGMENTS, ESTIMATES, AND ASSUMPTIONS
The estimates used in the Bank’s accounting policies
 
are essential to understanding its results
 
of operations and financial condition.
 
Some of the Bank’s policies
require subjective, complex judgments and
 
estimates as they relate to matters that
 
are inherently uncertain. Changes in these judgments
 
or estimates and
changes to accounting standards and policies
 
could have a materially adverse impact
 
on the Bank’s Consolidated Financial Statements.
 
The Bank has established
procedures to ensure that accounting policies
 
are applied consistently and that the processes
 
for changing methodologies, determining estimates,
 
and adopting
new accounting standards are well-controlled
 
and occur in an appropriate and systematic
 
manner.
CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS
Business Model Assessment
 
The Bank determines its business models
 
based on the objective under which its
 
portfolios of financial assets are managed.
 
Refer to Note 2 of the Bank’s
2024 Consolidated Financial Statements
 
for details on the Bank’s business models.
 
In determining its business models, the Bank
 
considers the following:
 
●
 
Management’s intent and strategic objectives
 
and the operation of the stated policies in practice;
●
 
The primary risks that affect the performance
 
of the portfolio of assets and how these risks
 
are managed;
 
●
 
How the performance of the portfolio is evaluated
 
and reported to management; and
●
 
The frequency and significance of financial
 
asset sales in prior periods, the reasons
 
for such sales and the expected future sales activities.
Sales in themselves do not determine the business
 
model and are not considered in isolation.
 
Instead, sales provide evidence about
 
how cash flows are realized.
A held-to-collect business model will be reassessed
 
by the Bank to determine whether
 
any sales are consistent with an objective
 
of collecting contractual cash
flows if the sales are more than insignificant
 
in value or more than infrequent.
Solely Payments of Principal and Interest
 
Test
In assessing whether contractual cash flows
 
represent solely payments of principal
 
and interest (SPPI), the Bank considers
 
the contractual terms of the instrument.
This includes assessing whether the
 
financial asset contains contractual terms that
 
could change the timing or amount of contractual
 
cash flows such that they
would not be consistent with a basic lending arrangement.
 
In making the assessment, the Bank considers
 
the primary terms as follows and assesses
 
if the
contractual cash flows of the instrument continue
 
to meet the SPPI test:
●
 
Performance-linked features;
●
 
Terms that limit the Bank’s claim to cash flows
 
from specified assets (non-recourse terms);
●
 
Prepayment and extension terms;
●
 
Leverage features;
●
 
Features that modify elements of the time
 
value of money; and
 
●
 
Sustainability-linked features.
IMPAIRMENT OF FINANCIAL ASSETS
Significant Increase in Credit Risk
 
For retail exposures, criteria for assessing
 
significant increase in credit risk are
 
defined at the appropriate product or
 
portfolio level and vary based on the
exposure’s credit risk at origination. The criteria
 
include relative changes in PD, absolute
 
PD backstop, and delinquency backstop
 
when contractual payments are
more than 30 days past due. Significant increase
 
in credit risk since initial recognition
 
has occurred when one of the criteria is
 
met.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 105
For non-retail exposures, BRR is determined
 
on an individual borrower basis using industry
 
and sector specific credit risk models that
 
are based on historical
data. Current and forward-looking information
 
that is specific to the borrower, industry, and sector is considered based on
 
expert credit judgment. Criteria for
assessing significant increase in credit risk
 
are defined at the appropriate segmentation
 
level and vary based on the BRR of the exposure
 
at origination. Criteria
include relative changes in BRR, absolute
 
BRR backstop, and delinquency backstop
 
when contractual payments are more than 30
 
days past due. Significant
increase in credit risk since initial recognition
 
has occurred when one of the criteria is
 
met.
Measurement of Expected Credit Loss
ECLs are recognized on the initial recognition
 
of financial assets. Allowance for credit losses
 
represents management’s unbiased estimate
 
of the risk of default and
ECLs on the financial assets, including any off-balance
 
sheet exposures, at the balance sheet date.
For retail exposures, ECLs are calculated as
 
the product of PD, LGD, and EAD at
 
each time step over the remaining expected
 
life of the financial asset and
discounted to the reporting date based on
 
the EIR. PD estimates represent the forward-looking
 
PD, updated quarterly based on the Bank’s
 
historical experience,
current conditions, and relevant forward-looking
 
expectations over the expected life of
 
the exposure to determine the lifetime PD
 
curve. LGD estimates are
determined based on historical charge-off events
 
and recovery payments, current information
 
about attributes specific to the borrower, and direct
 
costs. Expected
cash flows from collateral, guarantees, and
 
other credit enhancements are incorporated
 
in LGD if integral to the contractual terms.
 
Relevant macroeconomic
variables are incorporated in determining
 
expected LGD. EAD represents the expected
 
balance at default across the remaining
 
expected life of the exposure. EAD
incorporates forward-looking expectations
 
about repayments of drawn balances and
 
future draws where applicable.
For non-retail exposures, ECLs are calculated
 
based on the present value of cash shortfalls
 
determined as the difference between contractual
 
cash flows and
expected cash flows over the remaining expected
 
life of the financial instrument. Lifetime
 
PD is determined by mapping the exposure’s
 
BRR to forward-looking PD
over the expected life. LGD estimates are
 
determined by mapping the exposure’s FRR
 
to expected LGD which takes into account
 
facility-specific characteristics
such as collateral, seniority ranking of debt,
 
and loan structure. Relevant macroeconomic
 
variables are incorporated in determining
 
expected PD and LGD.
Expected cash flows are determined by applying
 
the PD and LGD estimates to the contractual
 
cash flows to calculate cash shortfalls over
 
the expected life of the
exposure.
Forward-Looking Information
 
In calculating ECLs, the Bank employs internally
 
developed models that utilize parameters
 
for PD, LGD, and EAD. Forward-looking
 
macroeconomic factors
including at the regional level are incorporated
 
in the risk parameters as relevant.
 
Additional risk factors that are industry
 
or segment specific are also incorporated,
where relevant. Forward-looking macroeconomic
 
forecasts are generated by TD Economics
 
as part of the ECL process: A base economic
 
forecast is accompanied
with upside and downside estimates of realistically
 
possible economic conditions by considering
 
the sources of uncertainty around the base
 
forecast. All
macroeconomic forecasts are updated quarterly
 
for each variable on a regional basis where
 
applicable and incorporated as relevant
 
into the quarterly modelling of
base, upside and downside risk parameters
 
used in the calculation of ECL scenarios and
 
probability-weighted ECLs. TD Economics
 
will apply judgment to
recommend probability weights to each forecast
 
on a quarterly basis. The proposed
 
macroeconomic forecasts and probability
 
weightings are subject to robust
management review and challenge process
 
by a cross-functional committee that
 
includes representation from TD Economics,
 
Risk, Finance, and Business. ECLs
calculated under each of the three forecasts are
 
applied against the respective probability
 
weightings to determine the probability-weighted
 
ECLs. Refer to Note 8
for further details on the macroeconomic
 
variables and ECL sensitivity.
Expert Credit Judgment
 
Management’s expert credit judgment is used
 
to determine the best estimate for the qualitative
 
component contributing to ECLs, based on an assessment
 
of
business and economic conditions, historical
 
loss experience, loan portfolio composition,
 
and other relevant indicators and forward-looking
 
information that are not
fully incorporated into the model calculation.
 
There remains elevated economic uncertainty,
 
and management continues to exercise expert
 
credit judgment in assessing if an exposure
 
has experienced
significant increase in credit risk since initial recognition
 
and in determining the amount of ECLs at
 
each reporting date.
To
the extent that certain effects are not
fully incorporated into the model calculations,
 
temporary quantitative and qualitative adjustments
 
have been applied.
LEASES
The Bank applies judgment in determining
 
the appropriate lease term on a lease-by-lease
 
basis. All facts and circumstances that
 
create an economic incentive to
exercise a renewal option or not to exercise
 
a termination option including investments
 
in major leaseholds, branch performance
 
and past business practice are
considered. The periods covered by renewal
 
or termination options are only included
 
in the lease term if it is reasonably certain
 
that the Bank will exercise the
options; management considers “reasonably
 
certain”
 
to be a high threshold. Changes in the economic
 
environment or changes in the industry
 
may impact the
Bank’s assessment of lease term, and any changes
 
in the Bank’s estimate of lease terms
 
may have a material impact on the Bank’s Consolidated
 
Balance Sheet
and Consolidated Statement of Income.
In determining the carrying amount of right-of-use
 
(ROU) assets and lease liabilities,
 
the Bank is required to estimate the incremental
 
borrowing rate specific to
each leased asset or portfolio of leased assets
 
if the interest rate implicit in the lease
 
is not readily determinable. The Bank
 
determines the incremental borrowing
rate of each leased asset or portfolio of leased
 
assets by incorporating the Bank’s creditworthiness,
 
the security, term, and value of the ROU asset, and the
economic environment in which the leased
 
asset operates. The incremental borrowing
 
rates are subject to change mainly due
 
to changes in the macroeconomic
environment.
FAIR VALUE MEASUREMENTS
 
The fair value of financial instruments traded
 
in active markets at the balance
 
sheet date is based on their quoted market prices.
 
For all other financial instruments
not traded in an active market, fair value may
 
be based on other observable current
 
market transactions involving the same
 
or similar instruments, without
modification or repackaging, or is based on
 
a valuation technique which maximizes
 
the use of observable market inputs. Observable
 
market inputs may include
interest rate yield curves, foreign exchange
 
rates, and option volatilities. Valuation techniques include comparisons
 
with similar instruments where observable
market prices exist, discounted cash flow
 
analysis, option pricing models, and
 
other valuation techniques commonly
 
used by market participants.
For certain complex or illiquid financial instruments,
 
fair value is determined using valuation
 
techniques in which current market transactions
 
or observable
market inputs are not available. Judgment is used
 
when determining which valuation techniques
 
to apply, liquidity considerations, and model inputs such as
volatilities, correlations, spreads, discount rates,
 
pre-payment rates, and prices of underlying
 
instruments. Any imprecision in these estimates
 
can affect the
resulting fair value.
 
Judgment is also used in recording valuation
 
adjustments to model fair values to account
 
for system limitations or measurement uncertainty, such as when
valuing complex and less actively traded
 
financial instruments. If the market for a
 
complex financial instrument develops,
 
the pricing for this instrument may
become more transparent, resulting in refinement
 
of valuation models.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 106
DERECOGNITION OF FINANCIAL ASSETS
Certain financial assets transferred may
 
qualify for derecognition from the Bank’s Consolidated
 
Balance Sheet. To qualify for derecognition, certain key
determinations must be made, including
 
whether the Bank’s rights to receive cash flows
 
from the financial assets
 
have been retained or transferred and
 
the extent
to which the risks and rewards of ownership
 
of the financial assets have been retained
 
or transferred. If the Bank neither transfers nor
 
retains substantially all of
the risks and rewards of ownership of the
 
financial assets, a decision must be made as
 
to whether the Bank has retained control of
 
the financial assets.
 
Upon derecognition, the Bank will record a gain
 
or loss on sale of those assets which is
 
calculated as the difference between the carrying amount
 
of the asset
transferred and the sum of any cash proceeds
 
received, including any financial assets received
 
or financial liabilities assumed, and any
 
cumulative gains or losses
allocated to the transferred asset that had been
 
recognized in AOCI. In determining the
 
fair value of any financial assets received, the
 
Bank estimates future cash
flows by relying on estimates of the amount
 
of interest that will be collected on the
 
securitized assets, the yield to be paid to investors,
 
the portion of the securitized
assets that will be prepaid before their
 
scheduled maturity, ECLs, the cost of servicing the assets, and the
 
rate at which to discount these expected
 
future cash
flows. Actual cash flows may differ significantly
 
from those estimated by the Bank.
 
Retained interests are financial interests in
 
transferred assets retained by the Bank.
 
They are classified as trading securities and
 
are initially recognized at
relative fair value on the Bank’s Consolidated Balance
 
Sheet. Subsequently, the fair value of retained interests is
 
determined by estimating the present value
 
of
future expected cash flows. Differences between
 
the actual cash flows and the Bank’s estimated
 
future cash flows are recognized in trading
 
income (loss). These
assumptions are subject to periodic reviews
 
and may change due to significant changes
 
in the economic environment.
GOODWILL
The recoverable amount of the Bank’s cash-generating
 
units (CGUs) or groups of CGUs is determined
 
from internally developed valuation
 
models that consider
various factors and assumptions such as
 
forecasted earnings, growth rates, discount
 
rates, and terminal growth rates.
 
Management is required to use judgment in
estimating the recoverable amount of the
 
CGUs or groups of CGUs, and the use of
 
different assumptions and estimates in the
 
calculations could influence the
determination of the existence of impairment
 
and the valuation of goodwill. Management
 
believes that the assumptions and estimates
 
used are reasonable and
supportable. Where possible, assumptions
 
generated internally are compared to relevant
 
market information. The carrying amounts of
 
the Bank’s CGUs or groups
of CGUs are determined by management
 
using risk-based capital models to adjust
 
net assets and liabilities by CGU. These
 
models consider various factors
including market risk, credit risk, and operational
 
risk, including investment capital (comprised
 
of goodwill and other intangibles). Any
 
capital not directly attributable
to the CGUs is held within the Corporate
 
segment. The Bank’s capital oversight committees provide
 
oversight to the Bank’s capital allocation methodologies.
EMPLOYEE BENEFITS
The projected benefit obligation and expense
 
related to the Bank’s pension and post-retirement
 
defined benefit plans are determined using
 
multiple assumptions
that may significantly influence the value of
 
these amounts. Actuarial assumptions including
 
discount rates, compensation increases,
 
health care cost trend rates,
and mortality rates are management’s best estimates
 
and are reviewed annually with the Bank’s actuaries.
 
The Bank develops each assumption using
 
relevant
historical experience of the Bank in conjunction
 
with market-related data and considers
 
if the market-related data indicates
 
there is any prolonged or significant
impact on the assumptions. The discount
 
rate used to value the projected benefit
 
obligation is determined by reference
 
to market yields on high-quality corporate
bonds with terms matching the plans’ specific
 
cash flows. The other assumptions are also long-term
 
estimates. All assumptions are subject to
 
a degree of
uncertainty. Differences between actual experiences and the assumptions,
 
as well as changes in the assumptions
 
resulting from changes in future expectations,
result in remeasurement gains and losses
 
which are recognized in other comprehensive
 
income (OCI)
 
during the year and also impact expenses
 
in future periods.
INCOME TAXES
 
The Bank is subject to taxation in numerous
 
jurisdictions. There are many transactions
 
and calculations in the ordinary course
 
of business for which the ultimate
tax determination is uncertain. The Bank
 
maintains provisions for uncertain tax positions
 
that it believes appropriately reflect the risk of
 
tax positions under
discussion, audit, dispute, or appeal with
 
tax authorities, or which are otherwise
 
considered to involve uncertainty. These provisions are made using
 
the Bank’s
best estimate of the amount expected to be paid
 
based on an assessment of all relevant
 
factors, which are reviewed at the end of
 
each reporting period. However,
it is possible that at some future date, changes
 
in these liabilities could result from audits by
 
the relevant taxing authorities.
 
Deferred tax assets are recognized only
 
when it is probable that sufficient taxable profit
 
will be available in future periods against
 
which deductible temporary
differences may be utilized. The amount of
 
the deferred tax asset recognized and considered
 
realizable could, however, be reduced if projected income is
 
not
achieved due to various factors, such as
 
unfavourable business conditions. If projected
 
income is not expected to be achieved, the
 
Bank would decrease its
deferred tax assets to the amount that it believes
 
can be realized. The magnitude of the decrease
 
is significantly influenced by the Bank’s forecast
 
of future profit
generation, which determines the extent to
 
which it will be able to utilize the deferred
 
tax assets.
PROVISIONS
Provisions arise when there is some uncertainty
 
in the timing or amount of a loss in the
 
future. Provisions are based on the Bank’s best estimate
 
of all
expenditures required to settle its present obligations,
 
considering all relevant risks and uncertainties,
 
as well as, when material, the effect of
 
the time value of
money.
Many of the Bank’s provisions relate to various
 
legal and regulatory actions that the Bank
 
is involved in during the ordinary course
 
of business. Legal and
regulatory provisions require the involvement
 
of both the Bank’s management and legal counsel
 
when assessing the probability of a loss and estimating
 
any
monetary impact. Throughout the life of a provision,
 
the Bank’s management or legal counsel
 
may learn of additional information that may impact
 
its assessments
about the probability of loss or about the estimates
 
of amounts involved. Changes in these assessments
 
may lead to changes in the amount recorded
 
for
provisions. In addition, the actual costs of resolving
 
these claims may be substantially higher
 
or lower than the amounts recognized.
 
The Bank reviews its legal and
regulatory provisions on a case-by-case basis
 
after considering, among other factors, the
 
progress of each case, the Bank’s experience,
 
the experience of others
in similar cases, and the opinions and views of
 
legal counsel.
Certain of the Bank’s provisions relate to restructuring
 
initiatives initiated by the Bank. Restructuring
 
provisions require management’s best estimate,
 
including
forecasts of economic conditions. Throughout
 
the life of a provision, the Bank may become
 
aware of additional information that may impact
 
the assessment of
amounts to be incurred. Changes in these assessments
 
may lead to changes in the amount recorded
 
for restructuring provisions.
INSURANCE
The assumptions used in establishing the Bank’s
 
insurance contract liabilities are based on best
 
estimates of possible outcomes.
For property and casualty insurance
 
contracts, the ultimate cost of LIC is estimated
 
using a range of standard actuarial claims
 
projection techniques by the
appointed actuary in accordance with
 
Canadian accepted actuarial practices. Additional
 
qualitative judgment is used to assess
 
the extent to which past trends may
or may not apply in the future, in order to arrive
 
at the estimated ultimate claims cost
 
amounts that present the most likely outcome
 
taking into account all the
uncertainties involved.
 
For life and health insurance contracts, insurance
 
contract liabilities consider all future policy
 
cash flows, including premiums, claims, and
 
expenses required to
administer the policies. Critical assumptions
 
used in the measurement of life and health
 
insurance contract liabilities are determined
 
by the appointed actuary.
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 107
Further information on insurance risk assumptions
 
is provided in Note 21 of the 2024 Consolidated
 
Financial Statements.
CONSOLIDATION OF STRUCTURED ENTITIES
Management judgment is required when
 
assessing whether the Bank should consolidate
 
an entity. For instance, it may not be feasible to determine if the Bank
controls an entity solely through an assessment
 
of voting rights for certain structured entities.
 
In these cases, judgment is required
 
to establish whether the Bank
has decision-making power over the key
 
relevant activities of the entity and
 
whether the Bank has the ability to use that power
 
to absorb significant variable returns
from the entity. If it is determined that the Bank has both decision-making
 
power and significant variable returns
 
from the entity, judgment is also used to determine
whether any such power is exercised by
 
the Bank as principal, on its own behalf,
 
or as agent, on behalf of another counterparty.
Assessing whether the Bank has decision-making
 
power includes understanding the purpose
 
and design of the entity in order to determine
 
its key economic
activities. In this context, an entity’s key economic
 
activities are those which predominantly
 
impact the economic performance of the
 
entity. When the Bank has the
current ability to direct the entity’s key economic
 
activities, it is considered to have decision-making
 
power over the entity.
The Bank also evaluates its exposure
 
to the variable returns of a structured entity in
 
order to determine if it absorbs a significant
 
proportion of the variable
returns the entity is designed to create. As part
 
of this evaluation, the Bank considers the purpose
 
and design of the entity in order to determine
 
whether it absorbs
variable returns from the structured entity
 
through its contractual holdings, which
 
may take the form of securities issued by
 
the entity, derivatives with the entity, or
other arrangements such as guarantees, liquidity
 
facilities, or lending commitments.
If the Bank has decision-making power over
 
the entity and absorbs significant variable returns
 
from the entity, it then determines if it is acting as principal
 
or
agent when exercising its decision-making power. Key factors
 
considered include the scope of its decision-making
 
power; the rights of other parties involved
 
with
the entity, including any rights to remove the Bank as decision-maker
 
or rights to participate in key decisions;
 
whether the rights of other parties are exercisable
 
in
practice; and the variable returns absorbed
 
by the Bank and by other parties involved
 
with the entity. When assessing consolidation, a presumption exists
 
that the
Bank exercises decision-making power as principal
 
if it is also exposed to significant variable
 
returns, unless an analysis of the
 
factors above indicates otherwise.
The decisions above are made with reference
 
to the specific facts and circumstances relevant
 
for the structured entity and related transaction(s)
 
under
consideration.
REVENUE FROM CONTRACTS WITH
 
CUSTOMERS
The Bank applies judgment to determine
 
the timing of satisfaction of performance
 
obligations which affects the timing of revenue recognition,
 
by evaluating the
pattern in which the Bank transfers control
 
of services promised to the customer. A performance obligation
 
is satisfied over time when the customer
 
simultaneously
receives and consumes the benefits as the
 
Bank performs the service. For performance
 
obligations satisfied over time, revenue is generally
 
recognized using the
time-elapsed method which is based on time
 
elapsed in proportion to the period over
 
which the service is provided, for example,
 
personal deposit account bundle
fees. The time-elapsed method is a faithful
 
depiction of the transfer of control
 
for these services as control is transferred
 
evenly to the customer when the Bank
provides a stand-ready service or effort is expended
 
evenly by the Bank to provide a service
 
over the contract period. In contracts
 
where the Bank has a right to
consideration from a customer in an amount
 
that corresponds directly with the value to the
 
customer of the Bank’s performance completed
 
to date, the Bank
recognizes revenue in the amount to which
 
it has a right to invoice.
The Bank satisfies a performance obligation
 
at a point in time if the customer obtains
 
control of the promised services at that
 
date. Determining when control is
transferred requires the use of judgment.
 
For transaction-based services, the Bank determines
 
that control is transferred to the customer
 
at a point in time when
the customer obtains substantially all of
 
the benefits from the service rendered
 
and the Bank has a present right to payment,
 
which generally coincides with the
moment the transaction is executed.
The Bank exercises judgment in determining
 
whether costs incurred in connection with acquiring
 
new revenue contracts would meet the requirement
 
to be
capitalized as incremental costs to obtain or
 
fulfil a contract with customers.
 
INTEREST RATE BENCHMARK REFORM PHASE 2
Effective November 1, 2020, the Bank was an early adopter
 
of the Interest Rate Benchmark Reform Phase
 
2 and no transitional adjustment was required.
Interest Rate Benchmark Reform Phase 2 addresses
 
issues affecting financial reporting when
 
changes are made to contractual cash
 
flows of financial
instruments or hedging relationships
 
as a result of IBOR reform. The amendments
 
permit modification to financial assets,
 
financial liabilities and lease
liabilities required as a direct consequence of IBOR
 
reform and made on an economically
 
equivalent basis to be accounted for by updating
 
the EIR
prospectively. If the modification does not meet the practical expedient
 
requirements, existing IFRS requirements
 
are applied. Relief is also provided
 
for an
entity’s hedge accounting relationships in circumstances
 
where changes to hedged items and hedging
 
instruments arise as a result of IBOR reform.
 
The
amendments enable entities to reflect these
 
changes without discontinuing, or resulting in
 
a new formal designation of, the existing
 
hedging relationship. Permitted
changes include redefining the hedged risk
 
to reference an ARR (contractually or non-contractually
 
specified), amending the description of
 
the hedged item and
hedging instrument to reflect the ARR, and
 
amending the description of how the entity
 
will assess hedge effectiveness. Hedging relationships
 
within the scope of
Interest Rate Benchmark Reform Phase 2
 
are the same as those within the scope of
 
Interest Rate Benchmark Reform Phase 1.
 
Interest Rate Benchmark Reform
Phase 2 also amended IFRS 7, introducing expanded
 
qualitative and quantitative disclosures about
 
the risks arising from IBOR reform, how
 
an entity is managing
those risks, its progress in completing
 
the transition to ARRs, and how it is managing
 
the transition.
Interest rate benchmarks (such as the London
 
Interbank Offered Rate (LIBOR) and the Canadian
 
Dollar Offered Rate (CDOR)) have been reformed
 
and
replaced by ARRs. From June 30, 2023, all remaining
 
USD LIBOR settings (overnight, one-month,
 
three-month, six-month and twelve-month)
 
have either ceased
or were published only on a synthetic basis
 
for the use in legacy contracts that had no other
 
fallback solution. The remaining settings
 
of CDOR (one-month, two-
month, and three-month) ceased following
 
a final publication on June 28, 2024. The Bank’s
 
exposure to non-derivative financial assets,
 
non-derivative financial
liabilities, derivative notional amounts and off-balance
 
sheet commitments referencing CDOR is no
 
longer significant to its financial statements
 
as at
October 31, 2024 (October 31, 2023 – $17 billion,
 
$12 billion, $2,645 billion and $64 billion,
 
respectively).
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 108
ACCOUNTING STANDARDS AND
 
POLICIES
C
urrent and Future
 
Changes in Accounting
 
Policies
CURRENT CHANGES IN ACCOUNTING
 
POLICIES
The following new standard was adopted by
 
the Bank on November 1, 2023.
Insurance Contracts
The IASB issued IFRS 17 which replaced
 
the guidance in IFRS 4 and became effective
 
for annual reporting periods beginning on or
 
after January 1, 2023, which
was November 1, 2023 for the Bank. IFRS 17
 
establishes principles for recognition,
 
measurement, presentation and disclosure
 
of insurance contracts.
The Bank initially applied IFRS 17 on
 
November 1, 2023 and restated the comparative
 
period. The Bank transitioned by primarily
 
applying the full retrospective
approach which resulted in the measurement
 
of insurance contracts as if IFRS 17
 
had always applied to them. The following
 
table sets out adjustments to the
Bank’s insurance-related balances reported under
 
IFRS 4 as at October 31, 2022 used to derive
 
the insurance contract liabilities and reinsurance
 
contract assets
recognized by the Bank as at November
 
1, 2022 under IFRS 17.
 
(millions of Canadian dollars)
Amount
Insurance-related liabilities
$
7,468
Other liabilities
131
Other assets
(2,361)
Net insurance-related balances as at October
 
31, 2022
$
5,238
Changes in actuarial assumptions, including
 
risk adjustment and discount factor
 
(192)
Recognition of losses on onerous contracts
113
Other adjustments
(93)
Net insurance-related balances as at November
 
1, 2022
$
5,066
Insurance contract liabilities
$
5,761
Reinsurance contract assets
(695)
Net insurance-related balances as at November
 
1, 2022
$
5,066
On November 1, 2022, IFRS 17 transition
 
adjustments resulted in a decrease
 
to the Bank’s deferred tax assets of $60 million
 
and an after-tax increase to retained
earnings of $112 million.
 
Upon the initial application of IFRS 17 on
 
November 1, 2023, the Bank applied transitional
 
guidance and reclassified certain securities
 
supporting insurance
operations to minimize accounting mismatches
 
arising from the application of the new discount
 
factor under IFRS 17. The transitional guidance
 
for such securities
is applicable for entities that previously used
 
IFRS 9 and was applied without a restatement
 
of comparatives. The reclassification resulted
 
in a decrease to retained
earnings and an increase in AOCI of $10
 
million.
FUTURE CHANGES IN ACCOUNTING
 
POLICIES
The following standard and amendments
 
have been issued but are not yet effective
 
on the date of issuance of the Bank’s Consolidated
 
Financial Statements.
 
Presentation and Disclosure in Financial
 
Statements
In April 2024, the IASB issued IFRS 18,
Presentation and Disclosure in Financial
 
Statements
 
(IFRS 18), which replaces the guidance
 
in IAS 1,
Presentation of
Financial Statements
 
and sets out requirements for presentation
 
and disclosure of information, focusing
 
on providing relevant information to users
 
of the financial
statements. IFRS 18 introduces changes
 
to the structure of the statement of profit
 
or loss, aggregation and disaggregation of
 
financial information, and
management-defined performance
 
measures to be disclosed in the notes to
 
the financial statements. It will be effective for the Bank’s annual
 
period beginning
November 1, 2027. Early application is permitted.
 
The standard will be applied retrospectively
 
with restatement of comparatives.
 
The Bank is currently assessing
the impact of adopting this standard.
Amendments to the Classification and Measurement
 
of Financial Instruments
In May 2024, the IASB issued
Amendments to the Classification
 
and Measurement of Financial Instruments,
which amended IFRS 9 and IFRS 7
.
The
amendments address matters identified during
 
the post-implementation review of the
 
classification and measurement requirements
 
of IFRS 9. The amendments
clarify how to assess the contractual
 
cash flow characteristics of financial assets
 
that include environmental, social, and governance
 
linked features and other
similar contingent features. The amendments
 
also clarify the treatment of non-recourse
 
assets and contractually linked instruments.
 
Furthermore, the amendments
clarify that a financial liability is derecognized
 
on the settlement date and provide an accounting
 
policy choice to derecognize a financial liability
 
settled using an
electronic payment system before the
 
settlement date if certain conditions are
 
met. Finally, the amendments introduce additional disclosure requirements
 
for
financial instruments with contingent
 
features and equity instruments classified at
 
FVOCI.
The amendments will be effective for the Bank’s annual
 
period beginning November 1, 2026. Early
 
adoption is permitted, with an option to early
 
adopt the
amendments related to the classification
 
of financial assets and associated disclosures
 
only.
 
The Bank is required to apply the amendments
 
retrospectively, but is
not required to restate prior periods. The Bank
 
is currently assessing the impact of adopting
 
these amendments.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 109
ACCOUNTING STANDARDS
AND POLICIES
Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
An evaluation was performed under the supervision
 
and with the participation of the Bank’s
 
management, including the Chief Executive
 
Officer and Chief Financial
Officer, of the effectiveness of the Bank’s disclosure controls and procedures,
 
as defined in the rules of the SEC and
 
Canadian Securities Administrators, as of
October 31, 2024. Based on that evaluation,
 
the Bank’s management, including the Chief Executive
 
Officer and Chief Financial Officer, concluded that the Bank’s
disclosure controls and procedures were effective
 
as of October 31, 2024.
MANAGEMENT’S REPORT ON INTERNAL
 
CONTROL OVER FINANCIAL REPORTING
The Bank’s management is responsible for establishing
 
and maintaining adequate internal control
 
over financial reporting for the Bank.
 
The Bank’s internal control
over financial reporting includes those policies
 
and procedures that (1) pertain to the
 
maintenance of records, that, in reasonable
 
detail, accurately and fairly reflect
the transactions and dispositions of the assets
 
of the Bank; (2) provide reasonable assurance
 
that transactions are recorded as necessary
 
to permit preparation of
financial statements in accordance with
 
IFRS, and that receipts and expenditures
 
of the Bank are being made only in accordance
 
with authorizations of the Bank’s
management and directors; and (3) provide
 
reasonable assurance regarding prevention
 
or timely detection of unauthorized acquisition,
 
use, or disposition of the
Bank’s assets that could have a material effect on the
 
financial statements.
 
The Bank’s management has used the criteria established
 
in the 2013 Internal Control – Integrated
 
Framework issued by the Committee of
 
Sponsoring
Organizations of the Treadway Commission to assess,
 
with the participation of the Chief Executive
 
Officer and Chief Financial Officer, the effectiveness of the
Bank’s internal control over financial reporting.
 
Based on this assessment management
 
has concluded that as at October 31, 2024,
 
the Bank’s internal control over
financial reporting was effective based on the applicable
 
criteria. The effectiveness of the Bank’s internal control
 
over financial reporting has been audited by
 
the
independent auditors, Ernst & Young LLP, a registered public accounting firm that has also audited the Consolidated
 
Financial Statements of the Bank as of, and
for the year ended October 31, 2024. Their Report
 
on Internal Control over Financial Reporting
 
under Standards of the Public Company
 
Accounting Oversight
Board (United States),
 
included in the Report of Independent
 
Registered Public Accounting Firm - Internal
 
Control over Financial Reporting,
 
expresses an
unqualified opinion on the effectiveness of
 
the Bank’s internal control over financial reporting
 
as of October 31, 2024.
CHANGES IN INTERNAL CONTROL OVER
 
FINANCIAL REPORTING
 
During the year and quarter ended October 31,
 
2024, there have been no changes in
 
the Bank’s policies and procedures and other processes
 
that comprise its
internal control over financial reporting, that
 
have materially affected, or are reasonably likely
 
to materially affect, the Bank’s internal control over
 
financial reporting.
Refer to Note 2 and Note 3 of the Bank’s 2024
 
Consolidated Financial Statements for further
 
information regarding the Bank’s changes
 
to accounting policies,
procedures, and estimates.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 110
Additional Financial Information
Unless otherwise indicated, all amounts are
 
expressed in Canadian dollars and have
 
been primarily derived from the Bank’s 2024
 
Consolidated Financial
Statements,
 
prepared in accordance with IFRS as issued
 
by the IASB.
 
TABLE 59: SELECT ANNUAL
 
INFORMATION
1
(millions of Canadian dollars, except
 
as noted)
2024
2023
2022
Total revenue
$
57,223
$
50,690
$
49,032
Net income available to common shareholders
8,316
10,071
17,170
Basic earnings per share
4.73
5.53
9.48
Diluted earnings per share
4.72
5.52
9.47
Dividends declared per common share
4.08
3.84
3.56
Total Assets (billions of Canadian
 
dollars)
2,061.8
1,955.1
1,917.5
Deposits (billions of Canadian dollars)
1,268.7
1,198.2
1,230.0
1
 
For the year ended October 31, 2023, certain amounts have been restated for the adoption of IFRS 17. Refer to
 
Note 4 of the Bank’s 2024 Consolidated Financial Statements for further
details.
TABLE 60: INVESTMENT PORTFOLIO
 
– Securities Maturity Schedule
1,2
(millions of Canadian dollars)
Remaining terms to maturities
3
Over 1
Over 3
Over 5
With no
Within
year to
years to
years to
Over 10
 
specific
1 year
3 years
5 years
10 years
years
maturity
Total
October 31
October 31
2024
2023
Securities at fair value through other comprehensive income
Government and government-
related securities
Canadian government debt
Federal
Fair value
$
4,587
$
1,070
$
3,447
$
8,651
$
384
$
–
$
18,139
$
18,210
Amortized cost
4,584
1,065
3,451
8,733
448
–
18,281
18,334
Yield
1.06
%
1.16
%
2.51
%
2.98
%
2.92
%
–
%
2.30
%
2.26
%
Provinces
Fair value
2,807
2,376
6,346
9,609
132
–
21,270
19,940
Amortized cost
2,796
2,366
6,314
9,653
134
–
21,263
19,953
Yield
2.25
%
2.56
%
2.29
%
2.92
%
4.31
%
–
%
2.61
%
2.56
%
U.S. federal government debt
Fair value
16,801
3,093
1,770
7,839
–
–
29,503
4,676
Amortized cost
16,802
3,098
1,780
7,873
–
–
29,553
4,738
Yield
4.33
%
1.98
%
3.74
%
4.22
%
–
%
–
%
4.02
%
1.90
%
U.S. states, municipalities, and agencies
 
Fair value
3,036
240
10
340
2,068
–
5,694
6,326
Amortized cost
3,035
244
10
340
2,189
–
5,818
6,522
Yield
0.01
%
2.74
%
4.09
%
4.84
%
4.68
%
–
%
2.17
%
2.30
%
Other OECD government-guaranteed debt
Fair value
863
521
173
122
–
–
1,679
1,498
Amortized cost
870
520
174
123
–
–
1,687
1,521
Yield
0.97
%
2.40
%
2.70
%
3.80
%
–
%
–
%
1.80
%
1.59
%
Canadian mortgage-backed securities
Fair value
5
1,539
593
–
–
–
2,137
2,277
Amortized cost
5
1,533
587
–
–
–
2,125
2,313
Yield
4.55
%
2.33
%
2.68
%
–
%
–
%
–
%
2.43
%
3.25
%
Other debt securities
Asset-backed securities
Fair value
–
–
38
94
1,252
–
1,384
4,114
Amortized cost
–
–
39
95
1,263
–
1,397
4,146
Yield
–
%
–
%
5.67
%
6.09
%
5.76
%
–
%
5.78
%
3.92
%
Non-agency CMO
4
Fair value
–
–
–
–
–
–
–
–
Amortized cost
–
–
–
–
–
–
–
–
Yield
–
%
–
%
–
%
–
%
–
%
–
%
–
%
–
%
Corporate and other debt
Fair value
1,391
2,600
1,679
2,097
1,679
–
9,446
8,890
Amortized cost
1,391
2,595
1,675
2,082
1,675
1
9,419
8,945
Yield
2.31
%
1.97
%
3.29
%
3.02
%
4.88
%
–
%
3.01
%
3.76
%
Equity securities
Common shares
 
Fair value
–
–
–
–
–
3,914
3,914
3,170
Cost
–
–
–
–
–
3,810
3,810
3,190
Yield
–
%
–
%
–
%
–
%
–
%
5.59
%
5.59
%
4.07
%
Preferred shares
Fair value
–
–
–
–
–
501
501
343
Cost
–
–
–
–
–
632
632
567
Yield
–
%
–
%
–
%
–
%
–
%
3.82
%
3.82
%
3.02
%
Total securities at fair value through other comprehensive
income
Fair value
$
29,490
$
11,439
$
14,056
$
28,752
$
5,515
$
4,415
$
93,667
$
69,444
Amortized cost
29,483
11,421
14,030
28,899
5,709
4,443
93,985
70,229
Yield
2.98
%
2.10
%
2.68
%
3.34
%
4.83
%
5.34
%
3.16
%
2.72
%
1
Yields represent the weighted-average yield of each security owned at the end of the period. The effective yield includes the contractual
 
interest or stated dividend rate and is adjusted for the amortization of premiums and
discounts; the effect of related hedging activities is excluded.
2
There were no securities from a single issuer where the book value was greater than 10% as at October
 
31, 2024 and October 31, 2023.
3
Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the
 
applicable contract.
4
Collateralized mortgage
obligation.
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 111
TABLE 60: INVESTMENT PORTFOLIO
 
– Securities Maturity Schedule
(continued)
1,2
(millions of Canadian dollars)
Remaining terms to maturities
3
Over 1
Over 3
Over 5
With no
Within
year to
years to
years to
Over 10
 
specific
1 year
3 years
5 years
10 years
years
maturity
Total
October 31
October 31
2024
2023
Debt securities at amortized cost
Government and government-related
securities
Canadian government debt
Federal
Fair value
$
1,856
$
12,336
$
5,243
$
2,077
$
1,313
$
–
$
22,825
$
24,898
Amortized cost
1,858
12,431
5,222
2,095
1,385
–
22,991
25,344
Yield
1.49
%
2.04
%
2.56
%
2.80
%
4.83
%
–
%
2.35
%
3.07
%
Provinces
Fair value
1,581
2,472
5,169
9,292
–
–
18,514
17,291
Amortized cost
1,587
2,496
5,192
9,339
–
–
18,614
17,474
Yield
1.17
%
2.00
%
2.74
%
3.07
%
–
%
–
%
2.67
%
2.28
%
U.S. federal government and agencies debt
Fair value
852
12,636
22,464
–
13,329
–
49,281
65,386
Amortized cost
928
13,370
23,560
–
13,468
–
51,326
68,413
Yield
2.62
%
0.66
%
1.35
%
–
%
2.14
%
–
%
1.40
%
1.19
%
U.S. states, municipalities, and agencies
 
Fair value
2,628
5,490
4,485
27,113
30,531
–
70,247
73,604
Amortized cost
2,637
5,658
4,597
28,363
31,518
–
72,773
77,804
Yield
2.70
%
1.96
%
2.89
%
1.84
%
5.38
%
–
%
3.48
%
3.67
%
Other OECD government-guaranteed debt
Fair value
12,027
18,015
7,946
2,921
–
–
40,909
39,781
Amortized cost
11,134
18,391
7,133
2,736
–
–
39,394
41,269
Yield
1.02
%
1.15
%
3.14
%
3.04
%
–
%
–
%
1.61
%
1.36
%
Other debt securities
Asset-backed securities
Fair value
49
6,606
3,697
6,658
12,412
–
29,422
38,619
Amortized cost
49
6,653
3,821
6,734
12,451
–
29,708
39,888
Yield
6.61
%
2.57
%
2.57
%
4.85
%
5.71
%
–
%
4.41
%
4.30
%
Non-agency CMO
Fair value
–
–
–
206
14,668
–
14,874
15,779
Amortized cost
–
–
–
209
15,153
–
15,362
16,791
Yield
–
%
–
%
–
%
2.97
%
3.02
%
–
%
3.02
%
3.01
%
Canadian issuers
Fair value
308
2,801
393
1,118
–
–
4,620
4,341
Amortized cost
309
2,899
392
1,122
–
–
4,722
4,552
Yield
3.85
%
1.94
%
2.68
%
1.81
%
–
%
–
%
2.10
%
2.28
%
Other issuers
 
Fair value
2,329
5,745
5,510
1,900
–
–
15,484
15,511
Amortized cost
2,547
6,099
6,044
2,035
–
–
16,725
16,481
Yield
2.15
%
2.32
%
2.23
%
3.02
%
–
%
–
%
2.71
%
2.80
%
Total debt securities at amortized cost
Fair value
$
21,630
$
66,101
$
54,907
$
51,285
$
72,253
$
–
$
266,176
$
295,210
Amortized cost
21,049
67,997
55,961
52,633
73,975
–
271,615
308,016
Yield
1.55
%
1.59
%
2.24
%
2.59
%
4.35
%
–
%
2.67
%
2.66
%
1
Yields represent the weighted-average yield of each security owned at the end of the period. The effective yield includes
 
the contractual interest or stated
 
dividend rate and is adjusted for the amortization of premiums and
discounts; the effect of related hedging activities is excluded.
2
There were no securities from a single issuer where the book value was greater than 10% as at
 
October 31, 2024 and October 31, 2023.
3
Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 112
TABLE 61: LOAN PORTFOLIO – Maturity Schedule
(millions of Canadian dollars)
 
 
 
 
 
As at
Remaining term-to-maturity
Within 1
 
Over 1 to 5
Over 5 years
Over
 
year
 
years
to 15 years
15 years
Total
October 31
October 31
2024
2023
Canada
 
 
 
 
 
 
Residential mortgages
$
51,833
$
218,132
$
3,097
$
7
$
273,069
$
263,733
Consumer instalment and other personal
 
 
 
 
HELOC
56,781
 
66,195
 
60
 
–
123,036
117,618
 
Indirect auto
837
 
14,958
 
14,042
 
–
29,837
28,786
 
Other
18,186
 
631
 
1,068
 
–
19,885
18,587
Credit card
20,510
 
–
 
–
 
–
20,510
18,815
Total personal
148,147
 
299,916
 
18,267
 
7
466,337
447,539
Real estate
 
 
 
 
Residential
14,500
 
11,220
 
2,152
 
2
27,874
27,784
 
Non-residential
13,813
 
9,841
 
2,308
 
–
25,962
24,849
Total real estate
28,313
 
21,061
 
4,460
 
2
53,836
52,633
Total business and government
 
 
 
(including real estate)
102,619
54,112
7,187
40
163,958
156,217
Total loans – Canada
250,766
 
354,028
 
25,454
 
47
630,295
603,756
United States
 
 
 
 
Residential mortgages
748
 
494
 
1,922
 
55,416
58,580
56,548
Consumer instalment and other personal
 
 
 
HELOC
8,938
 
82
 
782
 
1,723
11,525
10,585
Indirect auto
502
 
24,750
 
17,729
 
–
42,981
41,051
Other
232
 
864
 
5
 
(2)
1,099
901
Credit card
20,123
 
–
 
–
 
–
20,123
19,839
Total personal
30,543
 
26,190
 
20,438
 
57,137
134,308
128,924
Real estate
 
 
 
 
Residential
2,872
 
6,853
 
3,604
 
398
13,727
11,958
 
Non-residential
5,813
 
16,567
 
4,919
 
853
28,152
28,537
Total real estate
8,685
 
23,420
 
8,523
 
1,251
41,879
40,495
Total business and government
 
 
 
(including real estate)
47,985
89,120
38,408
7,594
183,107
178,259
Total loans – United States
78,528
 
115,310
 
58,846
 
64,731
317,415
307,183
Other International
 
 
 
Personal
25
 
–
 
–
 
–
25
19
Business and government
6,878
 
2,151
 
1,109
 
–
10,138
10,024
Total loans – Other international
6,903
 
2,151
 
1,109
 
–
10,163
10,043
Other loans
Debt securities classified as loans
–
 
–
 
–
 
–
–
–
Acquired credit-impaired loans
–
 
–
 
–
 
–
–
91
Total other loans
–
–
–
–
–
91
Total loans
$
336,197
$
471,489
$
85,409
$
64,778
$
957,873
$
921,073
TABLE 62: LOAN PORTFOLIO – Rate Sensitivity
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Over 1 to
Over 5 to
 
Over
Over 1 to
Over 5 to
Over
5 years
15 years
15 years
5 years
15 years
15 years
Fixed rate
$
302,548
$
68,990
$
44,741
$
290,973
$
69,964
$
44,764
Variable rate
168,941
16,419
20,037
185,130
18,607
17,663
Total
$
471,489
$
85,409
$
64,778
$
476,103
$
88,571
$
62,427
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 113
TABLE 63: ALLOWANCE FOR LOAN LOSSES
(millions of Canadian dollars, except as noted)
 
2024
 
2023
Allowance for loan losses – Balance at beginning of year
$
7,136
$
6,432
Provision for credit losses
4,253
2,933
Write-offs
Canada
 
Residential mortgages
5
6
Consumer instalment and other personal
 
 
HELOC
 
8
5
 
Indirect Auto
 
437
293
 
Other
 
281
225
Credit card
 
587
457
Total personal
 
1,318
986
Real estate
 
 
Residential
 
3
2
 
Non-residential
 
4
1
Total real estate
 
7
3
Total business and government (including real estate)
 
264
128
Total Canada
 
1,582
1,114
United States
 
Residential mortgages
 
3
4
Consumer instalment and other personal
 
 
HELOC
 
3
5
 
Indirect Auto
 
501
325
 
Other
 
266
251
Credit card
 
1,293
968
Total personal
 
2,066
1,553
Real estate
 
 
Residential
 
8
2
 
Non-residential
 
100
61
Total real estate
 
108
63
Total business and government (including real estate)
 
336
179
Total United States
 
2,402
1,732
Other International
 
Personal
 
–
–
Business and government
 
–
–
Total other international
 
–
–
Other loans
Debt securities classified as loans
 
–
–
Acquired credit-impaired loans
1,2
 
–
–
Total other loans
 
–
–
Total write-offs against portfolio
3,984
2,846
Recoveries
Canada
Residential mortgages
–
–
Consumer instalment and other personal
 
HELOC
1
2
 
Indirect Auto
77
82
 
Other
47
45
Credit card
107
95
Total personal
232
224
Real estate
 
Residential
–
–
 
Non-residential
–
–
Total real estate
–
–
Total business and government (including real estate)
23
19
Total Canada
255
243
United States
Residential mortgages
1
3
Consumer instalment and other personal
 
HELOC
3
4
 
Indirect Auto
163
134
 
Other
32
31
Credit card
212
193
Total personal
411
365
Real estate
 
Residential
2
1
 
Non-residential
14
1
Total real estate
16
2
Total business and government (including real estate)
41
26
Total United States
452
391
Other International
Personal
–
–
Business and government
–
–
Total other international
–
–
Other loans
Debt securities classified as loans
–
–
Acquired credit-impaired loans
1,2
–
1
Total other loans
–
1
Total recoveries on portfolio
707
635
Net write-offs
(3,277)
(2,211)
Disposals
(39)
–
Foreign exchange and other adjustments
15
100
Total allowance for loan losses, including off-balance sheet
 
positions
8,088
7,254
Less: Change in allowance for off-balance sheet positions
3
(6)
118
Total allowance for loan losses, at end of period
$
8,094
$
7,136
Ratio of net write-offs in the period to average loans outstanding
0.35
%
0.25
%
1
Includes all FDIC covered loans and other ACI loans.
2
Other adjustments are required as a result of the accounting for FDIC covered loans.
3
The allowance for loan losses for off-balance sheet positions is recorded in Other liabilities on the Consolidated
 
Balance Sheet.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 114
TABLE 64: AVERAGE DEPOSITS
(millions of Canadian dollars, except as noted)
For the years ended
October 31, 2024
October 31, 2023
Total
Total
Average
interest
Average
Average
interest
Average
balance
expense
rate paid
balance
expense
rate paid
Deposits booked in Canada
1
Non-interest-bearing demand deposits
$
18,246
$
–
–
%
$
21,354
$
–
–
%
Interest-bearing demand deposits
87,264
7,291
8.36
84,808
4,231
4.99
Notice deposits
312,014
1,595
0.51
320,061
2,325
0.73
Term deposits
383,720
16,730
4.36
335,069
14,049
4.19
Total deposits booked in Canada
801,244
25,616
3.20
761,292
20,605
2.71
Deposits booked in the United States
Non-interest-bearing demand deposits
11,233
–
–
12,611
–
–
Interest-bearing demand deposits
34,784
1,377
3.96
27,067
953
3.52
Notice deposits
363,171
8,780
2.42
406,534
7,869
1.94
Term deposits
131,054
6,985
5.33
119,670
5,760
4.81
Total deposits booked in the United States
540,242
17,142
3.17
565,882
14,582
2.58
Deposits booked in the other international
Non-interest-bearing demand deposits
5
–
–
24
–
–
Interest-bearing demand deposits
1,532
81
5.29
32
3
9.38
Notice deposits
–
–
–
–
–
–
Term deposits
79,611
4,021
5.05
79,229
3,161
3.99
Total deposits booked in other international
81,148
4,102
5.05
79,285
3,164
3.99
Total average deposits
$
1,422,634
$
46,860
3.29
%
$
1,406,459
$
38,351
2.73
%
1
 
As at October 31, 2024, deposits by foreign depositors in TD’s Canadian bank offices
 
amounted to $218 billion (October 31, 2023 – $187 billion).
 
TABLE 65: DEPOSITS – Denominations of $100,000
 
or greater
1
(millions of Canadian dollars)
As at
Remaining term-to-maturity
Within 3
3 months to
6 months to
Over 12
months
6 months
12 months
months
Total
October 31, 2024
Canada
$
87,189
$
39,584
$
68,581
$
162,097
$
357,451
United States
2
41,824
33,614
27,596
3,336
106,370
Other international
36,401
9,911
35,960
258
82,530
Total
$
165,414
$
83,109
$
132,137
$
165,691
$
546,351
October 31, 2023
Canada
$
72,295
$
37,289
$
51,887
$
148,244
$
309,715
United States
2
48,481
24,335
36,868
3,939
113,623
Other international
32,895
18,287
37,304
142
88,628
Total
$
153,671
$
79,911
$
126,059
$
152,325
$
511,966
1
 
Deposits in Canada, U.S., and Other international include wholesale and retail deposits.
2
 
Includes deposits based on denominations of US$250,000 or greater of $36.9 billion in ‘within 3 months’, $30.5
 
billion in ‘over 3 months to 6 months’, $30.0 billion in ‘over 6 months to
12 months’, and $3.2 billion in ‘over 12 months’ (October 31, 2023 – $44.9 billion in ‘within 3 months’, $21.2 billion
 
in ‘over 3 months to 6 months’, $34.8 billion in ‘over 6 months to
12 months’, $3.3 billion in ‘over 12 months’).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 115
TABLE 66: NET INTEREST INCOME ON
 
AVERAGE INTEREST-EARNING BALANCES
1,2
(millions of Canadian dollars, except as noted)
2024
2023
Average
Average
Average
Average
balance
Interest
3
rate
balance
Interest
3
rate
Interest-earning assets
Interest-bearing deposits with Banks
Canada
$
29,251
$
1,833
6.27
%
$
40,932
$
2,417
5.90
%
U.S.
72,331
3,446
4.76
58,220
2,433
4.18
Securities
 
 
 
 
 
 
Trading
 
 
 
 
 
 
Canada
77,792
3,110
4.00
79,415
3,209
4.04
U.S.
26,410
999
3.78
24,377
1,006
4.13
Non-trading
 
 
 
 
 
 
Canada
117,514
6,067
5.16
109,955
5,452
4.96
U.S.
226,820
10,293
4.54
268,597
9,988
3.72
Securities purchased under reverse
 
 
 
 
 
 
 
repurchase agreements
 
 
 
 
 
 
Canada
86,905
4,253
4.89
84,646
3,869
4.57
U.S.
74,237
4,837
6.52
61,839
3,630
5.87
Loans
 
 
 
 
 
 
Residential mortgages
4
 
 
 
 
 
 
Canada
287,609
12,772
4.44
266,016
10,882
4.09
U.S.
56,771
2,203
3.88
51,329
1,802
3.51
Consumer instalment and other personal
 
 
 
 
 
 
Canada
165,582
8,377
5.06
158,980
6,244
3.93
U.S.
52,340
3,243
6.20
47,692
2,405
5.04
Credit card
 
 
 
 
 
 
Canada
20,581
2,712
13.18
18,683
2,393
12.81
U.S.
18,953
3,652
19.27
18,226
3,384
18.57
Business and government
4
 
 
 
 
 
 
Canada
173,410
10,364
5.98
151,034
8,152
5.40
U.S.
163,744
10,097
6.17
156,970
8,985
5.72
International
5
124,093
5,131
4.13
121,324
4,423
3.65
Total interest-earning assets
6
1,774,343
93,389
5.26
1,718,235
80,674
4.70
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
Personal
7
 
 
 
 
 
 
Canada
328,798
7,124
2.17
314,227
4,852
1.54
U.S.
264,636
7,647
2.89
283,287
6,335
2.24
Banks
8,9
 
 
 
 
 
 
Canada
20,121
1,078
5.36
19,939
1,098
5.51
U.S.
24,319
908
3.73
25,486
942
3.70
Business and government
8,9
 
 
 
 
 
 
Canada
394,345
17,414
4.42
360,857
14,655
4.06
U.S.
179,530
8,587
4.78
175,719
7,305
4.16
Subordinated notes and debentures
10,417
436
4.19
11,112
436
3.92
Obligations related to securities sold short
 
 
 
 
 
 
and under repurchase agreements
 
 
 
 
 
 
Canada
77,529
3,596
4.64
83,935
3,662
4.36
U.S.
109,960
7,015
6.38
78,421
4,408
5.62
Securitization liabilities
10
30,503
1,002
3.28
27,629
915
3.31
Other liabilities
 
 
 
 
 
 
Canada
4,092
156
3.81
3,796
126
3.32
U.S.
20,321
1,137
5.60
17,162
817
4.76
International
8,9
135,392
6,817
5.04
127,126
5,179
4.07
Total interest-bearing liabilities
6
1,599,963
62,917
3.93
1,528,696
50,730
3.32
Total interest-earning assets, net interest
 
 
 
 
 
 
income, and net interest margin
$
1,774,343
$
30,472
1.72
%
$
1,718,235
$
29,944
1.74
%
Add: non-interest earning assets
201,032
–
–
203,948
–
–
Total assets, net interest income and
 
 
 
 
 
 
margin
$
1,975,375
$
30,472
1.54
%
$
1,922,183
$
29,944
1.56
%
1
 
Net interest income includes dividends on securities.
2
 
Geographic classification of assets and liabilities is based on the domicile of the booking point of assets and liabilities.
3
Interest income includes loan fees earned by the Bank, which are recognized in net interest income over the life
 
of the loan through the effective interest rate method (EIRM).
4
 
Includes average trading loans of $20 billion (2023 – $15 billion).
5
Comprised of interest-bearing deposits with Banks, securities, securities purchased under reverse repurchase
 
agreements, and business and government loans.
6
Average interest-earning assets and average interest-bearing liabilities are non-GAAP financial measures
 
that depict the Bank’s financial position, and are calculated using daily
balances. For additional information about the Bank’s use of non-GAAP financial measures, refer to “Non
 
-GAAP and Other Financial Measures” in the “Financial Results Overview”
section of this document.
7
Includes charges incurred on the Schwab IDA Agreement of $0.9 billion (2023 – $0.9 billion).
8
 
Includes average trading deposits with a fair value of $31 billion (2023 – $26 billion).
9
Includes average deposit designated at FVTPL of $188 billion (2023 – $188 billion).
10
Includes average securitization liabilities at fair value of $18 billion (2023
 
– $13 billion) and average securitization liabilities at amortized cost of $13 billion (2023 – $14
 
billion).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 116
The following table presents an analysis of the
 
change in net interest income due to volume
 
and interest rate changes. In this analysis,
 
changes due to
volume/interest rate variance have been
 
allocated to average interest rate.
 
TABLE 67: ANALYSIS OF CHANGE
 
IN NET INTEREST INCOME
1,2
(millions of Canadian dollars)
2024 vs. 2023
Increase (decrease) due to changes in
Average volume
Average rate
Net change
Interest-earning assets
Interest-bearing deposits with banks
Canada
$
(690)
$
106
$
(584)
U.S.
590
423
1,013
Securities
 
 
 
Trading
 
 
 
Canada
(66)
(33)
(99)
U.S.
84
(91)
(7)
Non-trading
 
 
 
Canada
375
240
615
U.S.
(1,553)
1,858
305
Securities purchased under reverse
 
 
 
repurchase agreements
 
 
 
 
Canada
103
281
384
U.S.
728
479
1,207
Loans
 
 
 
Residential mortgages
 
 
 
Canada
883
1,007
1,890
U.S.
191
210
401
Consumer instalment and other personal
 
 
 
Canada
259
1,874
2,133
U.S.
234
604
838
Credit card
 
 
 
Canada
243
76
319
U.S.
135
133
268
Business and government
 
 
 
Canada
1,208
1,004
2,212
U.S.
388
724
1,112
International
30
678
708
Total interest income
3,142
9,573
12,715
 
 
 
Interest-bearing liabilities
 
 
 
Deposits
 
 
 
Personal
 
 
 
Canada
225
2,047
2,272
U.S.
(418)
1,730
1,312
Banks
 
 
 
Canada
10
(30)
(20)
U.S.
(43)
9
(34)
Business and government
 
 
 
Canada
1,360
1,399
2,759
U.S.
158
1,124
1,282
Subordinated notes and debentures
(27)
27
–
Obligations related to securities sold
 
 
 
 
short and under repurchase agreements
 
 
 
Canada
(280)
214
(66)
U.S.
1,773
834
2,607
Securitization liabilities
95
(8)
87
Other liabilities
 
 
 
Canada
10
20
30
U.S.
150
170
320
International
362
1,276
1,638
Total interest expense
3,375
8,812
12,187
Net interest income
$
(233)
$
761
$
528
1
Geographic classification of assets and liabilities is based on the domicile of the booking point of assets and liabilities.
2
 
Interest income includes loan fees earned by the Bank, which are recognized in net interest income over the life
 
of the loan through the EIRM.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 117
GLOSSARY
Financial and Banking Terms
Adjusted Results:
 
Non-GAAP financial measures
 
used to assess each of the
Bank’s businesses and to measure the Bank’s overall
 
performance. To arrive at
adjusted results, the Bank adjusts for “items
 
of note”, from reported results. The
items of note relate to items which management
 
does not believe are indicative
of underlying business performance.
Allowance for Credit Losses:
 
Represent expected credit losses (ECLs)
 
on
financial assets, including any off-balance sheet
 
exposures, at the balance
sheet date. Allowance for credit losses consists
 
of Stage 3 allowance for
impaired financial assets and Stage 2 and
 
Stage 1 allowance for performing
financial assets and off-balance sheet instruments.
 
The allowance is increased
by the provision for credit losses,
 
decreased by write-offs net of recoveries and
disposals,
 
and impacted by foreign exchange.
Amortized Cost:
 
The amount at which a financial asset or
 
financial liability is
measured at initial recognition minus principal
 
repayments, plus or minus the
cumulative amortization, using EIRM, of any
 
differences between the initial
amount and the maturity amount, and
 
minus any reduction for impairment.
 
Assets under Administration (AUA):
 
Assets that are beneficially owned by
customers where the Bank provides services
 
of an administrative nature, such
as the collection of investment income and
 
the placing of trades on behalf of the
clients (where the client has made his or
 
her own investment selection). The
majority of these assets are not reported on
 
the Bank’s Consolidated Balance
Sheet.
Assets under Management (AUM):
 
Assets that are beneficially owned by
customers, managed by the Bank, where
 
the Bank has discretion to make
investment selections on behalf of the
 
client (in accordance with an investment
policy). In addition to the TD family of mutual
 
funds, the Bank manages assets
on behalf of individuals, pension funds, corporations,
 
institutions, endowments
and foundations. These assets are not reported
 
on the Bank’s Consolidated
Balance Sheet. Some assets under management
 
that are also administered by
the Bank are included in assets under administration.
Asset-Backed Commercial Paper (ABCP):
 
A form of commercial paper that is
collateralized by other financial assets.
 
Institutional investors usually purchase
such instruments in order to diversify their assets
 
and generate short-term
gains.
Asset-Backed Securities (ABS):
 
A security whose value and income
payments are derived from and collateralized
 
(or “backed”) by a specified pool
of underlying assets.
Average Common Equity:
Average common equity for the business
 
segments
reflects the average allocated capital. The
 
Bank’s methodology for allocating
capital to its business segments is largely aligned
 
with the common equity
capital requirements under Basel III.
Average Interest-Earning Assets:
 
A non-GAAP financial measure that depicts
the Bank’s financial position, and is calculated
 
as the average carrying value of
deposits with banks, loans and securities based
 
on daily balances for the period
ending October 31 in each fiscal year.
Basic Earnings per Share (EPS)
: A performance measure calculated by
dividing net income attributable to common
 
shareholders by the weighted
average number of common shares outstanding
 
for the period. Adjusted basic
EPS is calculated in the same manner using
 
adjusted net income.
Basis Points
 
(bps):
 
A unit equal to 1/100 of 1%. Thus, a 1%
 
change is equal to
100 basis points.
 
 
Book Value per Share:
 
A measure calculated by dividing common
shareholders’
 
equity by number of common shares at the
 
end of the period.
 
Carrying Value:
 
The value at which an asset or liability
 
is carried at on the
Consolidated Balance Sheet.
Catastrophe Claims:
 
Insurance claims that relate to any single
 
event that
occurred in the period, for which the aggregate
 
insurance claims are equal to
or greater than an internal threshold of $5
 
million before reinsurance. The
Bank’s internal threshold may change from time
 
to time.
Collateralized Mortgage Obligation (CMO):
 
They are collateralized debt
obligations consisting of mortgage-backed
 
securities that are separated and
issued as different classes of mortgage pass-through
 
securities with different
terms, interest rates, and risks. CMOs by private
 
issuers are collectively
referred to as non-agency CMOs.
Common Equity Tier 1 (CET1) Capital:
This is a primary Basel III capital
measure comprised mainly of common equity, retained earnings and
 
qualifying
non-controlling interest in subsidiaries. Regulatory
 
deductions made to arrive
at the CET1 Capital include goodwill
 
and intangibles, unconsolidated
investments in banking, financial, and insurance
 
entities, deferred tax assets,
defined benefit pension fund assets, and
 
shortfalls in allowances.
Common Equity Tier 1 (CET1) Capital Ratio:
CET1 Capital ratio represents
the predominant measure of capital adequacy
 
under Basel III
and equals CET1 Capital divided by RWA.
Compound Annual Growth Rate (CAGR):
 
A measure of growth over multiple
time periods from the initial investment value
 
to the ending investment value
assuming that the investment has been compounding
 
over the time period.
Credit Valuation Adjustment (CVA):
CVA represents a capital charge that
measures credit risk due to default of derivative
 
counterparties. This charge
requires banks to capitalize for the potential
 
changes in counterparty credit
spread for the derivative portfolios.
Diluted EPS
: A performance measure calculated by dividing
 
net income
attributable to common shareholders by the
 
weighted average number of
common shares outstanding adjusting
 
for the effect of all potentially dilutive
common shares. Adjusted diluted EPS is
 
calculated in the same manner using
adjusted net income.
Dividend Payout Ratio
: A ratio represents the percentage of
 
Bank’s earnings
being paid to common shareholders in
 
the form of dividends and is calculated
by dividing common dividends by net income
 
available to common
shareholders. Adjusted dividend payout ratio
 
is calculated in the same manner
using adjusted net income.
Dividend Yield:
 
A ratio calculated as the dividend per
 
common share for the
year divided by the daily average closing
 
stock price during the year.
Effective Income Tax Rate:
A rate and performance indicator calculated
 
by
dividing the provision for income taxes as a percentage
 
of net income before
taxes. Adjusted effective income tax rate is calculated
 
in the same manner
using adjusted results.
Effective Interest Rate (EIR):
 
The rate that discounts expected future cash
flows for the expected life of the financial instrument
 
to its carrying value. The
calculation takes into account the contractual
 
interest rate, along with any fees
or incremental costs that are directly
 
attributable to the instrument and all other
premiums or discounts.
Effective Interest Rate Method (EIRM):
 
A technique for calculating the actual
interest rate in a period based on the amount
 
of a financial instrument’s book
value at the beginning of the accounting period.
 
Under EIRM,
 
the effective
interest rate, which is a key component of
 
the calculation, discounts the
expected future cash inflows and outflows expected
 
over the life of a financial
instrument.
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 118
Efficiency Ratio:
 
The efficiency ratio measures operating efficiency and
 
is
calculated by taking the non-interest expenses
 
as a percentage of total revenue.
A lower ratio indicates a more efficient business
 
operation. Adjusted efficiency
ratio is calculated in the same manner using
 
adjusted non-interest expenses
and total revenue.
Enhanced Disclosure Task Force (EDTF):
Established by the Financial
Stability Board in May 2012, comprised of
 
banks, analysts, investors, and
auditors, with the goal of enhancing the risk
 
disclosures of banks and other
financial institutions.
Expected Credit Losses (ECLs):
ECLs are the probability-weighted present
value of expected cash shortfalls over
 
the remaining expected life of the
financial instrument and considers reasonable
 
and supportable information
about past events, current conditions, and forecasts
 
of future events and
economic conditions that impact the Bank’s
 
credit risk assessment.
Fair Value:
 
The price that would be received to sell an
 
asset or paid to transfer
a liability in an orderly transaction between
 
market participants at the
measurement date, under current market
 
conditions.
Fair value through other comprehensive
 
income (FVOCI):
Under IFRS 9, if
the asset passes the contractual cash
 
flows test (named SPPI), the business
model assessment determines how the instrument
 
is classified. If the instrument
is being held to collect contractual cash flows,
 
that is, if it is not expected to be
sold, it is measured as amortized cost. If the
 
business model for the instrument
is to both collect contractual cash flows and
 
potentially sell the asset, it is
measured at FVOCI.
Fair value through profit or loss (FVTPL):
Under IFRS 9, the classification is
dependent on two tests, a contractual
 
cash flow test (named SPPI) and a
business model assessment. Unless the
 
asset meets the requirements of both
tests, it is measured at fair value with all
 
changes in fair value reported in profit
or loss.
Federal Deposit Insurance Corporation
 
(FDIC):
A U.S. government
corporation which provides deposit insurance
 
guaranteeing the safety of a
depositor’s accounts in member banks.
 
The FDIC also examines and
supervises certain financial institutions for
 
safety and soundness, performs
certain consumer-protection functions, and
 
manages banks in receiverships
(failed banks).
Forward Contracts:
 
Over-the-counter contracts between two parties
 
that oblige
one party to the contract to buy and the other
 
party to sell an asset for a fixed
price at a future date.
Futures:
 
Exchange-traded contracts to buy or
 
sell a security at a predetermined
price on a specified future date.
Hedging:
 
A risk management technique intended
 
to mitigate the Bank’s
exposure to fluctuations in interest rates,
 
foreign currency exchange rates, or
other market factors. The elimination or
 
reduction of such exposure is
accomplished by engaging in capital markets
 
activities to establish offsetting
positions.
Impaired Loans:
 
Loans where, in management’s opinion,
 
there has been a
deterioration of credit quality to the extent
 
that the Bank no longer has
reasonable assurance as to the timely collection
 
of the full amount of principal
and interest.
Loss Given Default (LGD):
 
It is the amount of the loss the Bank
 
would likely
incur when a borrower defaults on a loan,
 
which is expressed as a percentage
of exposure at default.
Mark-to-Market (MTM):
 
A valuation that reflects current market rates
 
as at the
balance sheet date for financial instruments
 
that are carried at fair value.
Master Netting Agreements:
 
Legal agreements between two parties
 
that have
multiple derivative contracts with each other
 
that provide for the net settlement
of all contracts through a single payment, in
 
a single currency, in the event of
default or termination of any one contract.
Net Corporate Expenses:
Non-interest expenses related to corporate
 
service
and control groups which are not allocated to a
 
business segment.
 
Net Interest Margin:
 
A non-GAAP ratio calculated as net interest
 
income as a
percentage of average interest-earning assets
 
to measure performance. This
metric is an indicator of the profitability of
 
the Bank’s earning assets less the
cost of funding. Adjusted net interest
 
margin is calculated in the same manner
using adjusted net interest income.
Non-Viability Contingent Capital (NVCC):
Instruments (preferred shares and
subordinated debt) that contain a feature or
 
a provision that allows the financial
institution to either permanently convert these
 
instruments into common shares
or fully write-down the instrument, in the event
 
that the institution is no longer
viable.
Notional:
 
A reference amount on which payments
 
for derivative financial
instruments are based.
Office of the Superintendent of Financial
 
Institutions Canada (OSFI):
The
regulator of Canadian federally chartered
 
financial institutions and federally
administered pension plans.
Options:
 
Contracts in which the writer of the option grants
 
the buyer the future
right, but not the obligation, to buy or to sell a
 
security, exchange rate, interest
rate, or other financial instrument or commodity
 
at a predetermined price at or
by a specified future date.
Price-Earnings Ratio
: A ratio calculated by dividing the closing
 
share price by
EPS based on a trailing four quarters to indicate
 
market performance.
 
Adjusted
price-earnings ratio is calculated in the
 
same manner using adjusted EPS.
 
Probability of Default (PD):
 
It is the likelihood that a borrower will not
 
be able
to meet its scheduled repayments.
Provision for Credit Losses (PCL):
 
Amount added to the allowance for credit
losses to bring it to a level that management
 
considers adequate to reflect
expected credit-related losses on its
 
portfolio.
Return on Common Equity (ROE):
 
The consolidated Bank ROE is calculated
as net income available to common shareholders
 
as a percentage of average
common shareholders’
 
equity,
 
utilized in assessing the Bank’s use of equity.
ROE for the business segments is calculated
 
as the segment net income
attributable to common shareholders as a percentage
 
of average allocated
capital. Adjusted ROE is calculated in
 
the same manner using adjusted net
income.
 
Return on Risk-weighted Assets:
Net income available to common
shareholders as a percentage of average risk-weighted
 
assets.
Return on Tangible Common Equity (ROTCE):
 
A non-GAAP financial
measure calculated as reported net income
 
available to common shareholders
after adjusting for the after-tax amortization
 
of acquired intangibles,
 
which are
treated as an item of note, as a percentage of average
 
Tangible common
equity. Adjusted ROTCE is calculated in the same manner using
 
adjusted net
income.
 
Both measures can be utilized in assessing
 
the Bank’s use of equity.
Risk-Weighted Assets (RWA):
Assets calculated by applying a regulatory
risk-weight factor to on and off-balance sheet
 
exposures. The risk-weight
factors are established by the OSFI to
 
convert on and off-balance sheet
exposures to a comparable risk level.
Securitization:
 
The process by which financial assets,
 
mainly loans, are
transferred to structures,
 
which normally issue a series of asset-backed
securities to investors to fund the purchase
 
of loans.
Solely Payments of Principal and Interest
 
(SPPI):
 
Contractual cash flows of
a financial asset that are consistent with a
 
basic lending arrangement.
Swaps:
 
Contracts that involve the exchange of fixed
 
and floating interest rate
payment obligations and currencies on a notional
 
principal for a specified
period of time.
 
TD BANK GROUP • 2024 ANNUAL REPORT • MANAGEMENT’S DISCUSSION AND ANALYSIS
Page 119
Tangible common equity (TCE):
 
A non-GAAP financial measure calculated
 
as
common shareholders’ equity less goodwill,
 
imputed goodwill, and intangibles
on an investment in Schwab and TD
 
Ameritrade and other acquired intangible
assets, net of related deferred tax liabilities.
 
It can be utilized in assessing the
Bank’s use of equity.
Taxable Equivalent Basis (TEB):
 
A calculation method (not defined in GAAP)
that increases revenues and the provision
 
for income taxes on certain tax-
exempt securities to an equivalent before-tax
 
basis to facilitate comparison of
net interest income from both taxable and
 
tax-exempt sources.
Tier 1 Capital Ratio:
 
Tier 1 Capital represents the more permanent
 
forms of
capital, consisting primarily of common
 
shareholders’
 
equity, retained earnings,
preferred shares and innovative instruments.
 
Tier 1 Capital ratio is calculated as
Tier 1 Capital divided by RWA.
Total Capital Ratio:
 
Total Capital is defined as the total of net Tier 1 and Tier 2
Capital. Total Capital ratio is calculated as Total Capital divided by RWA.
Total Shareholder Return (TSR):
 
The total return earned on an investment
 
in
TD’s common shares. The return measures the
 
change in shareholder value,
assuming dividends paid are reinvested in
 
additional shares.
Trading-Related Revenue:
 
A non-GAAP financial measure that is
 
the total of
trading income (loss), net interest income on
 
trading positions, and income from
financial instruments designated at FVTPL
 
that are managed within a trading
portfolio. Trading-related revenue (TEB) in the Wholesale
 
Banking segment is
also a non-GAAP financial measure and is
 
calculated in the same manner,
including TEB adjustments. Both are used
 
for measuring trading performance.
Value-at-Risk (VaR):
 
A metric used to monitor and control overall
 
risk levels
and to calculate the regulatory capital required
 
for market risk in trading
activities. VaR measures the adverse impact that potential changes
 
in market
rates and prices could have on the value
 
of a portfolio over a specified period of
time.
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 1
CONSOLIDATED FINANCIAL STATEMENTS
Page
Management’s Responsibility for Financial Information
2
Report of Independent Registered Public
 
Accounting Firm – Public Company Accounting
 
Oversight Board Standards (United States)
7
Report of Independent Registered Public
 
Accounting Firm – Internal Control over
 
Financial Reporting
10
Consolidated Financial Statements
Consolidated Balance Sheet
11
Consolidated Statement of Income
12
Consolidated Statement of Comprehensive
 
Income
13
Consolidated Statement of Changes in Equity
14
Consolidated Statement of Cash Flows
15
Notes to Consolidated Financial Statements
Note 1
Nature of Operations
16
Note 2
Summary of Material Accounting Policies
 
16
Note 3
Significant Accounting Judgments, Estimates,
 
and Assumptions
27
Note 4
Current and Future Changes in Accounting
 
Policies
31
Note 5
Fair Value Measurements
32
Note 6
Offsetting Financial Assets and Financial Liabilities
41
Note 7
Securities
42
Note 8
Loans, Impaired Loans, and Allowance for
 
Credit Losses
45
Note 9
Transfers of Financial Assets
52
Note 10
Structured Entities
53
Note 11
Derivatives
56
Note 12
Investment in Associates and Joint Ventures
64
Note 13
Significant Transactions
65
Note 14
Goodwill and Other Intangibles
65
Note 15
Land, Buildings, Equipment, Other Depreciable
 
Assets, and Right-of-Use Assets
67
Note 16
Other Assets
68
Note 17
Deposits
68
Note 18
Other Liabilities
69
Note 19
Subordinated Notes and Debentures
70
Note 20
Equity
70
Note 21
Insurance
73
Note 22
Share-Based Compensation
76
Note 23
Employee Benefits
78
Note 24
Income Taxes
83
Note 25
Earnings Per Share
85
Note 26
Provisions, Contingent Liabilities, Commitments,
 
Guarantees, Pledged Assets, and
 
Collateral
86
Note 27
Related Party Transactions
89
Note 28
Segmented Information
90
Note 29
Interest Income and Expense
92
Note 30
Credit Risk
93
Note 31
Regulatory Capital
94
Note 32
Information on Subsidiaries
96
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 2
FINANCIAL RESULTS
Consolidated Financial Statements
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL
 
INFORMATION
The management of The Toronto-Dominion Bank and its subsidiaries (the “Bank”)
 
is responsible for the integrity, consistency, objectivity,
 
and reliability of the
Consolidated Financial Statements of the Bank
 
and related financial information as
 
presented. International Financial Reporting
 
Standards as issued by the
International Accounting Standards Board,
 
as well as the requirements of the
Bank Act
 
(Canada),
 
and related regulations have been applied
 
and management has
exercised its judgment and made best estimates
 
where appropriate.
The Bank’s accounting system and related internal
 
controls are designed, and supporting procedures
 
maintained, to provide reasonable assurance
 
that
financial records are complete and accurate,
 
and that assets are safeguarded against
 
loss from unauthorized use or disposition.
 
These supporting procedures
include the careful selection and training
 
of qualified staff, the establishment of organizational
 
structures providing a well-defined division
 
of responsibilities and
accountability for performance, and the
 
communication of policies and guidelines
 
of business conduct throughout the Bank.
Management has assessed the effectiveness of the
 
Bank’s internal control over financial reporting
 
as at October 31, 2024,
 
using the framework found in
Internal Control – Integrated Framework issued
 
by the Committee of Sponsoring Organizations
 
of the Treadway Commission 2013 Framework. Based upon
 
this
assessment, management has concluded
 
that as at October 31, 2024,
 
the Bank’s internal control over financial reporting
 
is effective.
The Bank’s Board of Directors, acting through the
 
Audit Committee, which is composed entirely
 
of independent directors, oversees management’s
responsibilities for financial reporting. The
 
Audit Committee reviews the Consolidated
 
Financial Statements and recommends them
 
to the Board for approval.
Other responsibilities of the Audit Committee
 
include monitoring the Bank’s system of internal
 
control over the financial reporting process
 
and making
recommendations to the Board and shareholders
 
regarding the appointment of the external
 
auditor.
The Bank’s Chief Auditor, who has full and free access to the Audit
 
Committee, conducts an extensive program
 
of audits. This program supports the
 
system of
internal control and is carried out by a professional
 
staff of auditors.
The Office of the Superintendent of Financial
 
Institutions Canada, makes such examination
 
and enquiry into the affairs of the Bank as deemed
 
necessary to
ensure that the provisions of the
Bank Act (Canada)
, having reference to the safety of the depositors,
 
are being duly observed and that the Bank
 
is in sound
financial condition.
Ernst & Young LLP,
 
the independent auditors appointed by
 
the shareholders of the Bank, have audited
 
the effectiveness of the Bank’s internal control over
financial reporting as of October 31, 2024, in addition
 
to auditing the Bank’s Consolidated Financial
 
Statements as of the same date. Their
 
reports, which
expressed unqualified opinions, can be found
 
on the following pages. Ernst & Young LLP have full and free access
 
to, and meet periodically with, the Audit
Committee to discuss their audit and
 
matters arising therefrom, such as, comments
 
they may have on the fairness of financial
 
reporting and the adequacy of
internal controls.
 
Bharat B. Masrani
 
Kelvin Tran
Group President and
 
Group Head and
Chief Executive Officer
 
Chief Financial Officer
Toronto, Canada
December 4, 2024
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TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 7
REPORT OF INDEPENDENT REGISTERED
 
PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of The Toronto-Dominion Bank
Opinion on the Consolidated Financial
 
Statements
We have audited the accompanying Consolidated
 
Balance Sheets of The Toronto-Dominion Bank (TD) as of October 31, 2024
 
and 2023, the related Consolidated
Statements of Income, Comprehensive
 
Income, Changes in Equity, and Cash Flows for the years then
 
ended, and the related notes (collectively referred
 
to as the
“consolidated financial statements”). In our opinion,
 
the consolidated financial statements present
 
fairly, in all material respects, the consolidated financial position
of TD at October 31, 2024 and 2023, its
 
consolidated financial performance and its
 
consolidated cash flows for the years then ended,
 
in conformity with
International Financial Reporting Standards
 
(IFRS) as issued by the International Accounting
 
Standards Board.
 
We also have audited, in accordance with the
 
standards of the Public Company Accounting
 
Oversight Board (United States) (PCAOB),
 
TD’s internal control over
financial reporting as of October 31, 2024, based
 
on criteria established in Internal Control –
 
Integrated Framework issued by the Committee
 
of Sponsoring
Organizations of the Treadway Commission (2013 framework)
 
and our report dated December 4, 2024,
 
expressed an unqualified opinion
 
thereon.
Basis for Opinion
 
These consolidated financial statements are
 
the responsibility of TD’s management. Our responsibility
 
is to express an opinion on TD’s consolidated
 
financial
statements based on our audits. We are a public
 
accounting firm registered with the PCAOB
 
and are required to be independent with respect
 
to TD in accordance
with the U.S. federal securities laws and
 
the applicable rules and regulations of
 
the Securities and Exchange Commission
 
and the PCAOB.
We conducted our audits in accordance with
 
the standards of the PCAOB. Those standards
 
require that we plan and perform the audit
 
to obtain reasonable
assurance about whether the financial
 
statements are free of material misstatement,
 
whether due to error or fraud. Our audits
 
included performing procedures to
assess the risks of material
 
misstatement of the financial statements,
 
whether due to error or fraud, and performing
 
procedures that respond to those risks. Such
procedures included examining, on a test basis,
 
evidence regarding the amounts and disclosures
 
in the consolidated financial statements.
 
Our audits also included
evaluating the accounting principles used and
 
significant estimates made by management,
 
as well as evaluating the overall presentation
 
of the consolidated
financial statements. We believe that our audits
 
provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below
 
are matters arising from the current
 
period audit of the consolidated financial
 
statements that were communicated
or required to be communicated to the audit
 
committee and that: (1) relate to accounts
 
or disclosures that are material to the consolidated
 
financial statements,
and (2) involved our especially challenging,
 
subjective, or complex judgments.
 
The communication of critical audit
 
matters does not alter in any way our opinion
 
on
the consolidated financial statements, taken
 
as a whole, and we are not, by communicating
 
the critical audit matters below, providing separate opinions
 
on the
critical audit matters or on the accounts or
 
disclosures to which they relate.
Allowance for credit losses
Description of
 
the Matter
TD describes its significant accounting judgments,
 
estimates, and assumptions in relation
 
to the allowance for credit losses in Note 3
of the consolidated financial statements. As
 
disclosed in Note 8 to the consolidated financial
 
statements, TD recognized $9,141 million
in allowances for credit losses on its
 
consolidated balance sheet using an expected
 
credit loss model (ECL). The ECL is an
 
unbiased
and probability-weighted estimate of credit losses
 
expected to occur in the future, which is
 
based on the probability of default (PD),
loss given default (LGD) and exposure at
 
default (EAD) or the expected cash
 
shortfall relating to the underlying financial asset.
 
The
ECL is determined by evaluating a range
 
of possible outcomes incorporating the time
 
value of money and reasonable and supportable
information about past events, current conditions,
 
and future economic forecasts. ECL allowances
 
are measured at amounts equal to
either (i) 12-month ECL; or (ii) lifetime ECL
 
for those financial instruments that have experienced
 
a significant increase in credit risk
(SICR) since initial recognition or when
 
there is objective evidence of impairment.
Auditing the allowance for credit losses was
 
complex and required the application of
 
significant judgment and involvement of
specialists because of the sophistication of
 
the models, the forward-looking nature
 
of the key assumptions, and the inherent
interrelationship of the critical variables used
 
in measuring the ECL. Key areas of judgment
 
include evaluating: (i) the models
 
and
methodologies used for measuring both the
 
12-month and lifetime expected credit losses;
 
(ii) the assumptions used in the ECL
scenarios including forward-looking information
 
(FLI) and assigning probability weighting;
 
(iii) the determination of SICR; and (iv)
 
the
assessment of the qualitative component applied
 
to the modelled ECL based on management’s
 
expert credit judgment.
 
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design,
 
and tested the operating effectiveness of
 
management’s controls over the
allowance for credit losses. The controls
 
we tested included, amongst others, the development
 
and validation of models and selection
of appropriate inputs including economic forecasting,
 
determination of non-retail borrower
 
risk ratings, the integrity of the data used
including the associated controls over relevant
 
information technology (IT) systems,
 
and the governance and oversight over the
modelled results and the use of expert credit judgment.
To test the allowance for credit losses, our audit procedures included, amongst
 
others, involving our credit risk specialists
 
to assess
whether the methodology and assumptions,
 
including management’s SICR triggers, used in
 
significant models that estimate the ECL
across various portfolios are consistent
 
with the requirements of IFRS. This included
 
reperforming the model validation procedures
 
for
a sample of models to evaluate whether management’s
 
conclusions were appropriate. With the assistance
 
of our economic specialists,
we evaluated the models, methodology and
 
process used by management to develop
 
the FLI variable forecasts for each scenario
 
and
the scenario probability weights. For a
 
sample of FLI variables, we compared management’s
 
FLI to independently derived forecasts
and publicly available information. On a sample
 
basis, we recalculated the ECL to test
 
the mathematical accuracy of management’s
models. We tested the completeness and accuracy
 
of data used in measuring the ECL
 
by agreeing to source documents and systems
and evaluated a sample of management’s non-retail
 
borrower risk ratings against TD’s risk rating
 
policy. With the assistance of our
credit risk specialists, we also evaluated
 
management’s methodology and governance
 
over the application of expert credit judgment
 
by
evaluating that the amounts recorded
 
were reflective of underlying credit quality and
 
macroeconomic trends. We also assessed the
adequacy of disclosures related to the allowance
 
for credit losses.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 8
Fair value measurement of derivatives
Description of
 
the Matter
TD describes its significant accounting judgments,
 
estimates, and assumptions in relation
 
to the fair value measurement of derivatives
in Note 3 of the consolidated financial
 
statements. As disclosed in Note 5 of the
 
consolidated financial statements, TD
 
has derivative
assets of $78,061 million and derivative liabilities
 
of $68,368 million recorded at fair value.
 
Certain of these derivatives are complex
and illiquid and require valuation techniques
 
that may include complex models and
 
non-observable inputs, requiring management’s
estimation and judgment.
Auditing the valuation of certain derivatives required
 
the application of significant auditor judgment
 
and involvement of valuation
specialists in assessing the complex models
 
and non-observable inputs used. Certain
 
valuation inputs used to determine fair
 
value
that may be non-observable include volatilities,
 
correlations, and credit spreads. The
 
valuation of certain derivatives is sensitive
 
to
these inputs as they are forward-looking and
 
could be affected by future economic and market
 
conditions.
 
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design,
 
and tested the operating effectiveness of
 
management’s controls, including the
associated controls over relevant IT systems,
 
over the valuation of TD’s derivative portfolio.
 
The controls we tested included, amongst
others, the controls over the suitability and
 
mechanical accuracy of models used in the
 
valuation of derivatives, and controls over
management’s independent assessment of
 
fair values, including the integrity of data used
 
in the valuation such as the significant
inputs noted above.
 
To test the valuation of these derivatives, our audit procedures included,
 
amongst others, an evaluation of the
 
methodologies and
significant inputs used by TD. With the assistance
 
of our valuation specialists, we performed
 
an independent valuation for a sample of
derivatives to assess the modelling assumptions
 
and significant inputs used to estimate
 
the fair value, which involved obtaining
significant inputs from independent external
 
sources, where available. We also assessed
 
the adequacy of the disclosures related to
the fair value measurement of derivatives.
Measurement of provision for uncertain
 
tax positions
Description of
 
the Matter
TD describes its significant accounting judgments,
 
estimates, and assumptions in relation
 
to income taxes in Note 3 and Note 24 of
 
the
consolidated financial statements. As a
 
financial institution operating in multiple jurisdictions,
 
TD is subject to complex and constantly
evolving tax legislation. Uncertainty in a tax position
 
may arise as tax laws are subject to interpretation.
 
TD uses significant judgment in
i) determining whether it is probable that TD
 
will have to make a payment to tax authorities
 
upon their examination of certain uncertain
tax positions and ii) measuring the amount of
 
the provision.
 
Auditing TD’s provision for uncertain tax positions
 
involved the application of judgment and
 
is based on interpretation of tax legislation
and jurisprudence.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design,
 
and tested the operating effectiveness of
 
management’s controls over TD’s
provision for uncertain tax positions.
 
The controls we tested included, amongst others,
 
the controls over the assessment of the
technical merits of tax positions and management’s
 
process to measure the provision for uncertain
 
tax positions.
With the assistance of our tax professionals,
 
we assessed the technical merits and the
 
amount recorded for uncertain tax positions.
Our audit procedures included, amongst others,
 
using our knowledge of, and experience
 
with, the application of tax laws by the
relevant income tax authorities to evaluate
 
TD’s interpretations and assessment of tax laws
 
with respect to uncertain tax positions.
 
We
assessed the implications of correspondence
 
received by TD from the relevant tax authorities
 
and evaluated income tax opinions or
other third-party advice obtained. We also assessed
 
the adequacy of the disclosures related
 
to uncertain tax positions.
 
Valuation of Goodwill in the U.S. Personal and
 
Commercial Banking group of Cash Generating
 
Units
Description of
 
the Matter
TD describes its significant accounting judgments,
 
estimates, and assumptions in relation
 
to the recoverable amount of its cash
generating units (‘CGU”) or group of
 
CGUs to which goodwill has been allocated
 
in Note 3 of the consolidated financial
 
statements. As
disclosed in Note 14 of the consolidated financial
 
statements, TD has $14,663 million of goodwill
 
in the U.S. Retail segment, which
predominantly relates to the U.S. Personal
 
and Commercial Banking group of cash generating
 
units (“US P&C CGUs”). Goodwill is
assessed for impairment annually, or more frequently if impairment
 
indicators are present.
 
Auditing the recoverable amount for the
 
U.S. P&C CGUs was complex and required
 
the application of significant auditor judgment
 
and
involvement of valuation specialists in assessing
 
certain significant assumptions in the impairment
 
test. Significant assumptions in the
estimate of the recoverable amount included
 
the discount rate and certain forward-looking
 
assumptions, such as the terminal
 
growth
rate, and forecasted earnings, which are affected by
 
expectations about future market or economic
 
conditions.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 9
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design,
 
and tested the operating effectiveness of
 
management’s controls over the
recoverable amount of TD’s U.S. P&C CGUs.
 
The controls we tested included, amongst
 
others, the controls over management’s
review of TD’s forecast as well as controls over
 
management’s review of the model and methodology
 
over significant assumptions
such as the discount rate and the terminal
 
growth rate. We also tested controls over
 
management’s review of the integrity of the data
used and the mathematical accuracy of
 
their valuation model.
 
To test the estimated recoverable amount of the U.S. P&C CGUs, our audit
 
procedures included, amongst others,
 
with the assistance
of our valuation specialists, assessing the
 
methodology and testing the significant assumptions
 
and underlying data used by TD in its
assessment. We considered the selection and
 
application of the discount rate by evaluating
 
the inputs and mathematical accuracy of
the calculation, while also developing an independent
 
estimate and comparing it to the discount
 
rate selected by management. We
considered the selection and application of
 
the terminal growth rate by evaluating the
 
selected rate against relevant market and
economic forecast data. We evaluated the reasonability
 
of the forecasted earnings by comparing
 
to historical results and considering
our current understanding of the business as
 
well as current economic trends. We assessed
 
the historical accuracy of management’s
prior year estimates by performing a comparison
 
of management’s prior year projections to actual
 
results. We performed sensitivity
analysis on the significant assumptions to
 
consider the impact of changes in the recoverable
 
amount that would result from changes in
the assumptions. We also assessed the adequacy
 
of the disclosures related to the valuation
 
of goodwill.
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
We have served as TD’s sole auditor since 2006. Prior
 
to 2006, we or our predecessor firm have
 
served as joint auditor with various other firms
 
since 1955.
Toronto, Canada
December 4, 2024
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 10
REPORT OF INDEPENDENT REGISTERED
 
PUBLIC ACCOUNTING FIRM
 
To the Shareholders and the Board of Directors of The Toronto-Dominion Bank
Opinion on Internal Control over Financial
 
Reporting
We have audited The Toronto-Dominion Bank’s (TD) internal control over financial reporting
 
as of October 31, 2024, based on
 
criteria established in Internal
Control – Integrated Framework issued by
 
the Committee of Sponsoring Organizations
 
of the Treadway Commission (2013 framework) (the
 
COSO criteria). In our
opinion, TD maintained, in all material respects,
 
effective internal control over financial
 
reporting as of October 31, 2024, based on
 
the COSO criteria.
We also have audited, in accordance with the
 
standards of the Public Company Accounting
 
Oversight Board (United States) (PCAOB),
 
the Consolidated Balance
Sheets of TD as of October 31, 2024 and 2023,
 
the related Consolidated Statements of
 
Income, Comprehensive Income, Changes in
 
Equity and Cash Flows for
the years then ended, and the related notes,
 
and our report dated December 4, 2024,
 
expressed an unqualified opinion
 
thereon.
Basis for Opinion
TD’s management is responsible for maintaining
 
effective internal control over financial reporting,
 
and for its assessment of the effectiveness of
 
internal control
over financial reporting included in the accompanying
 
Management’s Report on Internal Control over
 
Financial Reporting contained in the accompanying
Management’s Discussion and Analysis. Our responsibility
 
is to express an opinion on TD’s internal control over
 
financial reporting based on our audit.
 
We are a
public accounting firm registered with the PCAOB
 
and are required to be independent with respect
 
to TD in accordance with the U.S. federal securities
 
laws and
the applicable rules and regulations of the
 
Securities and Exchange Commission and
 
the PCAOB.
We conducted our audit in accordance with the
 
standards of the PCAOB. Those standards
 
require that we plan and perform the audit
 
to obtain reasonable
assurance about whether effective internal control
 
over financial reporting was maintained in
 
all material respects.
 
Our audit included obtaining an understanding
 
of internal control over financial reporting,
 
assessing the risk that a material weakness
 
exists, testing and evaluating
the design and operating effectiveness of internal
 
control based on the assessed risk, and performing
 
such other procedures as we considered necessary
 
in the
circumstances. We believe that our audit provides
 
a reasonable basis for our opinion.
Definition and Limitations of Internal Control
 
over Financial Reporting
A company’s internal control over financial
 
reporting is a process designed to provide reasonable
 
assurance regarding the reliability of financial
 
reporting and the
preparation of financial statements for external
 
purposes in accordance with International
 
Financial Reporting Standards as issued by the
 
International Accounting
Standards Board. A company’s internal control over
 
financial reporting includes those policies and
 
procedures that (1) pertain to the
 
maintenance of records that,
in reasonable detail, accurately and fairly reflect
 
the transactions and dispositions of
 
the assets of the company; (2) provide reasonable
 
assurance that
transactions are recorded as necessary to
 
permit preparation of financial statements
 
in accordance with International Financial
 
Reporting Standards as issued by
the International Accounting Standards Board,
 
and that receipts and expenditures of the
 
company are being made only in accordance
 
with authorizations of
management and directors of the company;
 
and (3) provide reasonable assurance regarding
 
prevention or timely detection of unauthorized
 
acquisition, use, or
disposition of the company’s assets that could have
 
a material effect on the financial statements.
Because of its inherent limitations, internal
 
control over financial reporting may not prevent
 
or detect misstatements. Also, projections
 
of any evaluation of
effectiveness to future periods are subject to
 
the risk that controls may become inadequate
 
because of changes in conditions, or that
 
the degree of compliance
with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
December 4, 2024
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 11
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
(As at and in millions of Canadian dollars)
October 31, 2024
October 31, 2023
ASSETS
Cash and due from banks
$
6,437
$
6,721
Interest-bearing deposits with banks
169,930
98,348
176,367
105,069
Trading loans, securities, and other
(Note 5)
175,770
152,090
Non-trading financial assets at fair value through
 
profit or loss
(Note 5)
5,869
7,340
Derivatives
(Notes 5, 11)
78,061
87,382
Financial assets designated at fair value through
 
profit or loss
(Notes 5, 7)
6,417
5,818
Financial assets at fair value through other
 
comprehensive income
(Note 5)
93,897
69,865
360,014
322,495
Debt securities at amortized cost, net
 
of allowance for credit losses (Notes 5,
 
7)
271,615
308,016
Securities purchased under reverse repurchase
 
agreements (Note 6)
208,217
204,333
Loans (Notes 5, 8)
Residential mortgages
331,649
320,341
Consumer instalment and other personal
228,382
217,554
Credit card
40,639
38,660
Business and government
356,973
326,528
957,643
903,083
Allowance for loan losses
(Note 8)
(8,094)
(7,136)
Loans, net of allowance for loan losses
949,549
895,947
Other
Customers’ liability under acceptances
(Note 8)
–
17,569
Investment in Schwab
(Note 12)
9,024
8,907
Goodwill
(Note 14)
18,851
18,602
Other intangibles
 
(Note 14)
3,044
2,771
Land, buildings, equipment, other depreciable
 
assets, and right-of-use assets
(Note 15)
9,837
9,434
Deferred tax assets
1
 
(Note 24)
4,937
3,951
Amounts receivable from brokers, dealers,
 
and clients
 
22,115
30,416
Other assets
1
 
(Note 16)
28,181
27,629
95,989
119,279
Total assets
1
$
2,061,751
$
1,955,139
LIABILITIES
Trading deposits
(Notes 5, 17)
$
30,412
$
30,980
Derivatives
(Notes 5, 11)
68,368
71,640
Securitization liabilities at fair value
(Notes 5, 9)
20,319
14,422
Financial liabilities designated at fair value
 
through profit or loss
(Notes 5, 17)
207,914
192,130
327,013
309,172
Deposits (Notes 5, 17)
Personal
 
641,667
 
626,596
Banks
57,698
31,225
Business and government
569,315
540,369
1,268,680
1,198,190
Other
Acceptances
(Note 8)
–
17,569
Obligations related to securities sold
 
short
(Note 5)
39,515
44,661
Obligations related to securities sold
 
under repurchase agreements
(Note 6)
201,900
166,854
Securitization liabilities at amortized
 
cost
(Notes 5, 9)
12,365
12,710
Amounts payable to brokers, dealers, and
 
clients
26,598
30,872
Insurance contract liabilities
1
 
(Note 21)
7,169
5,846
Other liabilities
1
 
(Note 18)
51,878
47,574
339,425
326,086
Subordinated notes and debentures (Notes
 
5, 19)
11,473
9,620
Total liabilities
1
1,946,591
1,843,068
EQUITY
Shareholders’ Equity
Common shares
(Note 20)
25,373
25,434
Preferred shares and other equity instruments
(Note 20)
10,888
10,853
Treasury – common shares
(Note 20)
(17)
(64)
Treasury – preferred shares and other equity instruments
(Note 20)
(18)
(65)
Contributed surplus
204
155
Retained earnings
1
70,826
73,008
Accumulated other comprehensive income (loss)
7,904
2,750
Total equity
1
115,160
112,071
Total liabilities and equity
1
$
2,061,751
$
1,955,139
1
 
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17,
Insurance Contracts
 
(IFRS 17). Refer to Note 4 for details.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
 
Bharat B. Masrani
 
Nancy G. Tower
 
 
Group President and Chief Executive Officer
 
Chair, Audit Committee
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 12
CONSOLIDATED STATEMENT OF INCOME
(millions of Canadian dollars, except
 
as noted)
For the years ended October 31
2024
2023
Interest income
1
 
(Note 29)
Loans
$
53,676
$
44,518
Reverse repurchase agreements
11,621
9,520
Securities
Interest
20,295
19,029
Dividends
2,371
2,289
Deposits with banks
5,426
5,318
93,389
80,674
Interest expense (Note 29)
Deposits
46,860
38,351
Securitization liabilities
1,002
915
Subordinated notes and debentures
436
436
Repurchase agreements and short sales
13,322
10,083
Other
1,297
945
62,917
50,730
Net interest income
30,472
29,944
Non-interest income
Investment and securities services
7,400
6,420
Credit fees
1,898
1,796
Trading income (loss)
3,628
2,417
Service charges
2
2,626
2,514
Card services
2,947
2,932
Insurance revenue
2
 
(Note 21)
6,952
6,311
Other income (loss)
2
 
(Notes 12, 13)
1,300
(1,644)
26,751
20,746
Total revenue
2
57,223
50,690
Provision for (recovery of) credit losses
 
(Note 8)
4,253
2,933
Insurance service expenses
2
 
(Note 21)
6,647
5,014
Non-interest expenses
Salaries and employee benefits
16,733
15,753
Occupancy, including depreciation
1,958
1,799
Technology and equipment, including depreciation
2,656
2,308
Amortization of other intangibles
702
672
Communication and marketing
1,516
1,452
Restructuring charges
 
(Note 26)
566
363
Brokerage-related and sub-advisory fees
498
456
Professional, advisory and outside services
2
3,064
2,493
Other
2
 
(Notes 13, 26)
7,800
4,559
35,493
29,855
Income before income taxes and share
 
of net income from investment in Schwab
2
10,830
12,888
Provision for (recovery of) income taxes
2
 
(Note 24)
2,691
3,118
Share of net income from investment
 
in Schwab (Note 12)
703
864
Net income
2
8,842
10,634
Preferred dividends and distributions
 
on other equity instruments
526
563
Net income available to common shareholders
2
$
8,316
$
10,071
Earnings per share
 
(Canadian dollars)
 
(Note 25)
Basic
2
$
4.73
$
5.53
Diluted
2
4.72
5.52
Dividends per common share
 
(Canadian dollars)
4.08
3.84
1
 
Includes $84,324 million for the year ended October 31, 2024 (October 31, 2023 – $72,403 million), which has
 
been calculated based on the effective interest rate method (EIRM).
2
Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for
 
details.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 13
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Net income
1
$
8,842
$
10,634
Other comprehensive income (loss)
Items that will be subsequently reclassified
 
to net income
Net change in unrealized gain/(loss) on
 
financial assets at fair value through
other comprehensive income
 
Change in unrealized gain/(loss)
 
285
96
Reclassification to earnings of net loss/(gain)
(23)
(9)
Changes in allowance for credit losses recognized
 
in earnings
(1)
–
Income taxes relating to:
Change in unrealized gain/(loss)
(68)
(32)
Reclassification to earnings of net loss/(gain)
12
8
205
63
Net change in unrealized foreign currency
 
translation gain/(loss) on
investments in foreign operations, net
 
of hedging activities
Unrealized gain/(loss)
540
2,233
Reclassification to earnings of net loss/(gain)
(19)
11
Net gain/(loss) on hedges
(457)
(1,821)
Reclassification to earnings of net loss/(gain)
 
on hedges
41
(15)
Income taxes relating to:
Net gain/(loss) on hedges
122
217
Reclassification to earnings of net loss/(gain)
 
on hedges
(11)
4
216
629
Net change in gain/(loss) on derivatives
 
designated as cash flow hedges
 
Change in gain/(loss)
3,354
(78)
Reclassification to earnings of loss/(gain)
173
238
Income taxes relating to:
Change in gain/(loss)
(929)
137
Reclassification to earnings of loss/(gain)
(50)
(52)
2,548
245
Share of other comprehensive income (loss)
 
from investment in Schwab
2,007
91
Items that will not be subsequently reclassified
 
to net income
 
Remeasurement gain/(loss) on employee
 
benefit plans
Gain/(loss)
(151)
(95)
Income taxes
40
9
(111)
(86)
Change in net unrealized gain/(loss)
 
on equity securities designated at
fair value through other comprehensive income
Change in net unrealized gain/(loss)
222
(204)
Income taxes
(60)
54
162
(150)
Gain/(loss) from changes in fair value due
 
to own credit risk on
financial liabilities designated at fair value
 
through profit or loss
Gain/(loss)
22
(158)
Income taxes
(6)
42
16
(116)
Total other comprehensive income (loss)
5,043
676
Total comprehensive income (loss)
1
$
13,885
$
11,310
Attributable to:
Common shareholders
1
$
13,359
$
10,747
Preferred shareholders and other equity instrument
 
holders
1
 
526
 
563
1
 
Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for
 
details.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 14
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Common shares (Note 20)
Balance at beginning of year
$
25,434
$
24,363
Proceeds from shares issued on exercise of stock options
112
83
Shares issued as a result of dividend reinvestment plan
529
1,720
Purchase of shares for cancellation and other
(702)
(732)
Balance at end of year
25,373
25,434
Preferred shares and other equity instruments (Note 20)
Balance at beginning of year
10,853
11,253
Issuance of shares and other equity instruments
1,335
–
Redemption of shares and other equity instruments
(1,300)
(400)
Balance at end of year
10,888
10,853
Treasury – common shares (Note 20)
Balance at beginning of year
(64)
(91)
Purchase of shares
(11,209)
(7,959)
Sale of shares
11,256
7,986
Balance at end of year
(17)
(64)
Treasury – preferred shares and other equity instruments (Note 20)
Balance at beginning of year
(65)
(7)
Purchase of shares and other equity instruments
(625)
(590)
Sale of shares and other equity instruments
672
532
Balance at end of year
(18)
(65)
Contributed surplus
Balance at beginning of year
155
179
Net premium (discount) on sale of treasury instruments
20
(21)
Issuance of stock options, net of options exercised
22
27
Other
7
(30)
Balance at end of year
204
155
Retained earnings
Balance at beginning of year
1
73,008
73,698
Impact on adoption of IFRS 17
2
–
112
Impact of reclassification of securities supporting insurance operations
related to the adoption of IFRS 17
2
(10)
–
Net income attributable to equity instrument holders
1
8,842
10,634
Common dividends
(7,163)
(6,982)
Preferred dividends and distributions on other equity instruments
(526)
(563)
Share and other equity instrument issue expenses
(7)
–
Net premium on repurchase of common shares and redemption of preferred shares and other equity instruments
 
(Note 20)
(3,295)
(3,553)
Remeasurement gain/(loss) on employee benefit plans
(111)
(86)
Realized gain/(loss) on equity securities designated at fair value through other comprehensive income
88
(252)
Balance at end of year
1
70,826
73,008
Accumulated other comprehensive income (loss)
 
Net unrealized gain/(loss) on financial assets at fair value through other comprehensive income:
Balance at beginning of year
(413)
(476)
Impact of reclassification of securities supporting insurance operations
related to the adoption of IFRS 17
2
10
–
Other comprehensive income (loss)
196
63
Allowance for credit losses
(1)
–
Balance at end of year
 
(208)
(413)
Net unrealized gain/(loss) on equity securities designated at fair value through other comprehensive income:
Balance at beginning of year
(127)
23
Other comprehensive income (loss)
250
(402)
Reclassification of loss/(gain) to retained earnings
(88)
252
Balance at end of year
 
35
(127)
Gain/(loss) from changes in fair value due to own credit risk on financial liabilities designated at fair value
 
through profit or loss:
Balance at beginning of year
(38)
78
Other comprehensive income (loss)
16
(116)
Balance at end of year
 
(22)
(38)
Net unrealized foreign currency translation gain/(loss) on investments in foreign operations, net of hedging activities:
Balance at beginning of year
12,677
12,048
Other comprehensive income (loss)
216
629
Balance at end of year
 
12,893
12,677
Net gain/(loss) on derivatives designated as cash flow hedges:
 
Balance at beginning of year
(5,472)
(5,717)
Other comprehensive income (loss)
2,548
245
Balance at end of year
 
(2,924)
(5,472)
Share of accumulated other comprehensive income (loss) from Investment in Schwab
(1,870)
(3,877)
Total accumulated other comprehensive income
7,904
2,750
Total equity
1
$
115,160
$
112,071
1
 
Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for
 
details.
2
 
Refer to Note 4 for details on the adoption of IFRS 17.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 15
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Cash flows from (used in) operating activities
Net income
1
$
8,842
$
10,634
Adjustments to determine net cash flows from (used in) operating activities
Provision for (recovery of) credit losses
 
(Note 8)
4,253
2,933
Depreciation
 
(Note 15)
1,325
1,239
Amortization of other intangibles
 
(Note 14)
702
672
Net securities loss/(gain)
 
(Note 7)
358
48
Share of net income from investment in Schwab
 
(Note 12)
(703)
(864)
Gain on sale of Schwab shares
 
(Note 12)
(1,022)
–
Deferred taxes
1
 
(Note 24)
(1,061)
(1,306)
Changes in operating assets and liabilities
Interest receivable and payable
 
(Notes 16, 18)
1,133
812
Securities sold under repurchase agreements
35,046
36,832
Securities purchased under reverse repurchase agreements
(3,884)
(41,873)
Securities sold short
(5,146)
(2,722)
Trading loans, securities, and other
(23,680)
(5,332)
Loans net of securitization and sales
(57,908)
(67,766)
Deposits
69,922
(25,487)
Derivatives
6,049
(2,341)
Non-trading financial assets at fair value through profit or loss
1,471
3,897
Financial assets and liabilities designated at fair value through profit or loss
15,185
28,565
Securitization liabilities
5,552
(552)
Current taxes
658
1,228
Brokers, dealers, and clients amounts receivable and payable
4,027
(5,128)
Other, including unrealized foreign currency translation loss/(gain)
1
(6,182)
1,209
Net cash from (used in) operating activities
54,937
(65,302)
Cash flows from (used in) financing activities
Issuance of subordinated notes and debentures
 
(Note 19)
3,324
–
Redemption or repurchase of subordinated notes and debentures
 
(Note 19)
(1,544)
(1,716)
Common shares issued, net of issuance costs
 
(Note 20)
100
74
Repurchase of common shares, including tax on net value of share repurchases
 
(Note 20)
(3,997)
(4,285)
Preferred shares and other equity instruments issued, net of issuance costs
 
(Note 20)
1,328
–
Redemption of preferred shares and other equity instruments
 
(Note 20)
(1,300)
(400)
Sale of treasury shares and other equity instruments
 
(Note 20)
11,948
8,497
Purchase of treasury shares and other equity instruments
 
(Note 20)
(11,834)
(8,549)
Dividends paid on shares and distributions paid on other equity instruments
(7,160)
(5,825)
Repayment of lease liabilities
(678)
(643)
Net cash from (used in) financing activities
(9,813)
(12,847)
Cash flows from (used in) investing activities
Interest-bearing deposits with banks
(71,153)
41,446
Activities in financial assets at fair value through other comprehensive income
Purchases
(42,542)
(24,336)
Proceeds from maturities
18,825
17,893
Proceeds from sales
4,130
5,838
Activities in debt securities at amortized cost
Purchases
(11,306)
(26,987)
Proceeds from maturities
49,606
52,819
Proceeds from sales
5,772
12,021
Net purchases of land, buildings, equipment, other depreciable assets, and other intangibles
 
(Note 15)
(2,177)
(1,844)
Net cash acquired from (paid for) divestitures and acquisitions
 
(Notes 12, 13)
3,423
(624)
Net cash from (used in) investing activities
(45,422)
76,226
Effect of exchange rate changes on cash and due from banks
14
88
Net increase (decrease) in cash and due from banks
(284)
(1,835)
Cash and due from banks at beginning of year
6,721
8,556
Cash and due from banks at end of year
$
6,437
$
6,721
Supplementary disclosure of cash flows from operating activities
Amount of income taxes paid (refunded) during the year
$
3,812
$
3,036
Amount of interest paid during the year
61,779
48,179
Amount of interest received during the year
91,013
76,646
Amount of dividends received during the year
2,694
2,247
1
 
Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for
 
details.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 16
Notes to Consolidated Financial Statements
NOTE 1: NATURE OF OPERATIONS
CORPORATE INFORMATION
The Toronto-Dominion Bank is a bank chartered under the
Bank Act (Canada)
. The shareholders of a bank are not, as
 
shareholders, liable for any liability, act, or
default of the bank except as otherwise provided
 
under the
Bank Act (Canada)
. The Toronto-Dominion Bank and its subsidiaries are collectively known as
 
TD
Bank Group (“TD” or the “Bank”). The Bank
 
was formed through the amalgamation
 
on February 1, 1955,
 
of The Bank of Toronto (chartered in 1855) and The
Dominion Bank (chartered in 1869). The Bank
 
is incorporated and domiciled in Canada
 
with its registered and principal business
 
offices located at 66 Wellington
Street West, Toronto, Ontario. TD serves customers in four business segments
 
operating in a number of locations in key
 
financial centres around the globe:
Canadian Personal and Commercial Banking,
 
U.S. Retail, Wealth Management and Insurance,
 
and Wholesale Banking.
BASIS OF PREPARATION
The accompanying Consolidated Financial
 
Statements and accounting principles
 
followed by the Bank have been prepared in
 
accordance with International
Financial Reporting Standards (IFRS), as issued
 
by the International Accounting Standards
 
Board (IASB), including the accounting
 
requirements of the Office of
the Superintendent of Financial Institutions
 
Canada (OSFI). The Consolidated Financial Statements
 
are presented in Canadian dollars, unless
 
otherwise indicated.
These Consolidated Financial Statements
 
were prepared using the accounting policies
 
as described in Note 2. Certain comparative
 
amounts have been revised
to conform with the presentation adopted in
 
the current period.
The preparation of the Consolidated Financial
 
Statements requires that management
 
make judgments, estimates, and assumptions
 
regarding the reported
amount of assets, liabilities, revenue and expenses,
 
and disclosure of contingent assets and
 
liabilities, as further described
 
in Note 3. Accordingly, actual results
may differ from estimated amounts as future
 
confirming events occur.
The accompanying Consolidated Financial Statements
 
of the Bank were approved and authorized
 
for issue by the Bank’s Board of Directors, in
 
accordance
with a recommendation of the Audit Committee,
 
on December 4, 2024.
The risk management policies and procedures
 
of the Bank are provided in the Management’s
 
Discussion and Analysis (MD&A).
 
The shaded sections of the
“Managing Risk” section of the 2024 MD&A,
 
relating to market, liquidity, and insurance risks, are an integral
 
part of these Consolidated Financial Statements,
 
as
permitted by IFRS.
NOTE 2: SUMMARY OF MATERIAL ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The Consolidated Financial Statements include
 
the assets, liabilities, results of operations,
 
and cash flows of the Bank and its subsidiaries
 
including certain
structured entities which it controls.
The Bank’s Consolidated Financial Statements have
 
been prepared using uniform accounting policies
 
for like transactions and events in similar
 
circumstances.
All intercompany transactions, balances,
 
and unrealized gains and losses on transactions
 
are eliminated on consolidation.
Subsidiaries
Subsidiaries are corporations or other legal
 
entities controlled by the Bank, generally
 
through directly holding more than half of
 
the voting power of the entity.
Control of subsidiaries is determined based
 
on the power exercisable through ownership
 
of voting rights and is generally aligned with
 
the risks and/or returns
(collectively referred to as “variable returns”)
 
absorbed from subsidiaries through those voting
 
rights. As a result, the Bank controls and
 
consolidates subsidiaries
when it holds the majority of the voting rights
 
of the subsidiary, unless there is evidence that another investor
 
has control over the subsidiary. The existence and
effect of potential voting rights that are currently
 
exercisable or convertible are considered
 
in assessing whether the Bank controls
 
an entity. Subsidiaries are
consolidated from the date the Bank obtains
 
control and continue to be consolidated until
 
the date when control ceases to exist.
The Bank may consolidate certain subsidiaries
 
where it owns 50% or less of the voting rights.
 
Most of those subsidiaries are structured entities
 
as described in the
following section.
Structured Entities
Structured entities are entities created
 
to accomplish a narrow and well-defined objective.
 
Structured entities may take the form
 
of a corporation, trust, partnership,
or unincorporated entity. They are often created with legal arrangements
 
that impose limits on the decision-making powers
 
of their governing board, trustee, or
management. Structured entities are consolidated
 
when the substance of the relationship
 
between the Bank and the structured entity
 
indicates that the Bank
controls the entity. When assessing whether the Bank has to consolidate
 
a structured entity, the Bank evaluates three primary criteria in order
 
to conclude
whether, in substance:
●
 
The Bank has the power to direct the activities
 
of the structured entity that have the most
 
significant impact on the entity’s variable returns;
●
 
The Bank is exposed to significant variable
 
returns arising from the entity; and
●
 
The Bank has the ability to use its power
 
to affect the variable returns to which it is exposed.
 
Consolidation conclusions are reassessed at
 
the end of each financial reporting period.
 
The Bank’s policy is to consider the impact on consolidation
 
of all
significant changes in circumstances,
 
focusing on the following:
●
 
Substantive changes in ownership, such as
 
the purchase or disposal of more than
 
an insignificant interest in an entity;
●
 
Changes in contractual or governance arrangements
 
of an entity;
●
 
Additional activities undertaken, such as providing
 
a liquidity facility beyond the original terms
 
or entering into a transaction not originally
 
contemplated;
 
●
 
Changes in the financing structure of an entity;
 
and
●
 
Changes in the rights to exercise power over
 
an entity.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 17
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Entities over which the Bank has significant
 
influence are associates and entities over
 
which the Bank has joint control are joint
 
ventures. Significant influence is
the power to participate in the financial and
 
operating policy decisions of an investee,
 
but is not control or joint control over these
 
entities. Significant influence is
presumed to exist where the Bank holds between
 
20% and 50% of the voting rights of an
 
entity. Significant influence may also exist where the Bank holds less
than 20% of the voting rights and has influence
 
over financial and operating policy-making
 
processes, through board representation
 
and significant commercial
arrangements. Associates and joint ventures
 
are accounted for using the equity method
 
of accounting. Investments in associates and
 
joint ventures are carried on
the Consolidated Balance Sheet initially at
 
cost and increased or decreased to recognize
 
the Bank’s share of the profit or loss of the associate
 
or joint venture,
capital transactions, including the receipt of any
 
dividends, and write-downs to reflect
 
any impairment in the value of such entities.
 
These increases or decreases,
together with any gains and losses realized
 
on disposition, are reported on the
 
Consolidated Statement of Income. The
 
carrying amount of the investments also
includes the Bank’s share of the investee’s other comprehensive
 
income or loss, which is reported in the relevant
 
section of the Consolidated Statement of
Comprehensive Income.
At each balance sheet date, the Bank assesses
 
whether there is any objective evidence that
 
the investment in an associate or joint venture
 
is impaired. The
Bank calculates the amount of impairment
 
as the difference between the higher of fair
 
value or value-in-use and its carrying value.
CASH AND DUE FROM BANKS
Cash and due from banks consist of cash and amounts
 
due from banks which are issued by
 
investment grade financial institutions.
 
These amounts are due on
demand or have an original maturity of three
 
months or less.
REVENUE RECOGNITION
Revenue is recognized at an amount that reflects
 
the consideration the Bank expects to be
 
entitled to in exchange for transferring
 
services to a customer,
excluding amounts collected on behalf of
 
third parties. The Bank recognizes revenue
 
when it transfers control of a good or a service
 
to a customer at a point in
time or over time. The determination
 
of when performance obligations are satisfied
 
requires the use of judgment. Refer
 
to Note 3 for further details.
The Bank identifies contracts with customers
 
subject to IFRS 15,
Revenue from Contracts with Customers
, which create enforceable rights and obligations.
 
The
Bank determines the performance obligations
 
based on distinct services promised to
 
the customers in the contracts. The Bank’s contracts
 
generally have a term of
one year or less, consist of a single performance
 
obligation, and the performance obligations
 
generally reflect services.
For each contract, the Bank determines the
 
transaction price, which includes estimating
 
variable consideration and assessing whether
 
the price is constrained.
Variable consideration is included in the transaction
 
price to the extent that it is highly probable
 
that a significant reversal of the amount will not
 
occur when the
uncertainty associated with the amount of
 
variable consideration is subsequently resolved.
 
As such, the estimate of the variable consideration
 
is constrained until
the end of the invoicing period. The
 
uncertainty is generally resolved at the end
 
of the reporting period and as such, no significant
 
judgment is required when
recognizing variable consideration in revenues.
The Bank’s receipt of payment from customers
 
generally occurs subsequent to the
 
satisfaction of performance obligations or a
 
short time thereafter. As such,
the Bank has not recognized any material contract
 
assets (unbilled receivables) or contract
 
liabilities (deferred revenues) and there
 
is no significant financing
component associated with the consideration
 
due to the Bank.
When another party is involved in the transfer
 
of services to a customer, an assessment is made to evaluate
 
whether the Bank is the principal such that
revenues are reported on a gross basis or
 
the agent such that revenues are reported
 
on a net basis. The Bank is the principal
 
when it controls the services in the
contract promised to the customer before
 
they are transferred. Control is demonstrated
 
by the Bank being primarily responsible
 
for fulfilling the transfer of the
services to the customer, having discretion in establishing pricing
 
of the services, or both.
Investment and securities services
Investment and securities services income
 
includes
 
asset management fees, administration
 
and commission fees, and investment banking
 
fees. The Bank
recognizes asset management and administration
 
fees based on time elapsed, which depicts
 
the rendering of investment management
 
and related services over
time. The fees are primarily calculated based
 
on average daily or point in time assets
 
under management (AUM) or assets under administration
 
(AUA) depending
on the investment mandate.
Commission fees include sales, trailer and
 
brokerage commissions. Sales and brokerage
 
commissions are generally recognized at a
 
point in time when the
transaction is executed. Trailer commissions are recognized
 
over time and are generally calculated based
 
on the average daily net asset value of
 
the fund during
the period.
Investment banking fees include advisory
 
fees and underwriting fees and are generally
 
recognized at a point in time upon successful
 
completion of the
engagement.
Credit fees
Credit fees include liquidity fees, restructuring
 
fees, letter of credit fees, and loan syndication
 
fees. Liquidity, restructuring,
 
and letter of credit fees are recognized
 
in
income over the period in which the service
 
is provided. Loan syndication fees are
 
generally recognized at a point in time
 
upon completion of the financing
placement.
Service charges
Service charges income is earned on personal
 
and commercial deposit accounts and
 
consists of account fees and transaction-based
 
service charges. Account
fees relate to account maintenance activities
 
and are recognized in income over the
 
period in which the service is provided.
 
Transaction-based service charges are
recognized as earned at a point in time
 
when the transaction is complete.
Card services
Card services income includes interchange
 
income as well as card fees such as annual
 
and transactional fees. Interchange income
 
is recognized at a point in time
when the transaction is authorized and funded.
 
Card fees are recognized as earned at the
 
transaction date with the exception of annual
 
fees, which are recognized
over a twelve-month period.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 18
FINANCIAL INSTRUMENTS
Interest Rate Benchmark Reform Phase
 
1
The Bank adopted Interest Rate Benchmark
 
Reform, Amendments to IFRS 9,
Financial Instruments
 
(IFRS 9), IAS 39,
Financial Instruments: Recognition and
Measurement
(IAS 39) and IFRS 7,
Financial Instruments: Disclosures
 
(IFRS 7) (Interest Rate Benchmark
 
Reform Phase 1), including the applicable
 
amendments
to IFRS 7 relating to hedge accounting, in
 
the fourth quarter of 2019. Under these
 
amendments, it is assumed that the hedged
 
interest rate benchmark is not
altered and thus hedge accounting continues
 
through to the date of replacement of
 
the existing interest rate benchmark with its
 
alternative reference rate (ARR).
The Bank is not required to discontinue hedge
 
accounting if the actual results of the hedge
 
do not meet the effectiveness requirements as a result
 
of interbank
offered rate (IBOR) reform. Refer to Note 11 for disclosures related
 
to the Bank’s hedge accounting relationships
 
impacted by IBOR reform.
Refer to Note 3 for details of Interest Rate
 
Benchmark Reform – Phase 2, Amendments
 
to IFRS 9, IAS 39, IFRS 7, IFRS 4,
Insurance Contracts
 
(IFRS 4) and
IFRS 16,
Leases
 
(IFRS 16) (Interest Rate Benchmark
 
Reform Phase 2), issued on August 27, 2020
 
and early adopted by the Bank on November
 
1, 2020.
Classification and Measurement of Financial
 
Assets
The Bank classifies its financial assets into
 
the following categories:
●
 
Amortized cost;
●
 
Fair value through other comprehensive income
 
(FVOCI);
 
●
 
Held-for-trading;
●
 
Non-trading fair value through profit or loss
 
(FVTPL); and
●
 
Designated as measured at FVTPL.
The Bank recognizes financial assets on a
 
settlement date basis, except for derivatives
 
and securities, which are recognized on a
 
trade date basis.
Debt Instruments
The classification and measurement for debt
 
instruments is based on the Bank’s business
 
models for managing its financial assets
 
and whether the contractual
cash flows represent solely payments of principal
 
and interest (SPPI). Refer to Note 3 for judgment
 
with respect to the determination of the Bank’s
 
business
models and whether contractual cash flows represent
 
SPPI.
The Bank has determined its business
 
models as follows:
●
 
Held-to-collect: the objective is to collect
 
contractual cash flows;
●
 
Held-to-collect-and-sell: the objective is both
 
to collect contractual cash flows and
 
sell the financial assets; and
●
 
Held-for-sale and other business models: the
 
objective is neither of the above.
 
The Bank performs the SPPI test for
 
financial assets held within the held-to-collect
 
and held-to-collect-and-sell business models.
 
If these financial assets have
contractual cash flows which are inconsistent
 
with a basic lending arrangement that do
 
not pass the SPPI test,
 
they are classified as non-trading financial
 
assets
measured at FVTPL. In a basic lending arrangement,
 
interest includes only consideration for
 
time value of money, credit risk, other basic lending risks, and a
reasonable profit margin.
Debt Securities and Loans Measured at Amortized
 
Cost
Debt securities and loans held within a held-to-collect
 
business model where their contractual
 
cash flows pass the SPPI test are measured
 
at amortized cost. The
carrying amount of these financial assets is
 
adjusted by an allowance for credit losses
 
recognized and measured as described
 
in the Impairment – Expected Credit
Loss Model
section of this Note, as well as any write-offs and unearned
 
income which includes prepaid interest,
 
loan origination fees and costs, commitment
 
fees,
loan syndication fees, and unamortized discounts
 
or premiums. Interest income is recognized
 
using EIRM. The effective interest rate (EIR) is
 
the rate that
discounts expected future cash flows for
 
the expected life of the financial instrument
 
to its carrying value. The calculation takes
 
into account the contractual interest
rate, along with any fees or incremental
 
costs that are directly attributable to the instrument
 
and all other premiums or discounts. Loan
 
origination fees and costs
are considered to be adjustments to the loan
 
yield and are recognized in interest income
 
over the term of the loan. Commitment fees
 
are recognized in credit fees
over the commitment period when it is
 
unlikely that the commitment will be
 
called upon; otherwise, they are recognized
 
in interest income over the term of the
resulting loan. Loan syndication fees are recognized
 
in credit fees upon completion of the financing
 
placement unless the yield on any loan retained
 
by the Bank is
less than that of other comparable lenders involved
 
in the financing syndicate. In such cases,
 
an appropriate portion of the fee is recognized
 
as a yield adjustment
in interest income over the term of the loan.
Debt Securities and Loans Measured at Fair
 
Value through Other Comprehensive Income
Debt securities and loans held within a held-to-collect-and-sell
 
business model where their contractual cash
 
flows pass the SPPI test are measured at
 
FVOCI. Fair
value changes are recognized in other
 
comprehensive income,
 
except for impairment gains or losses,
 
interest income and foreign exchange gains
 
and losses on
the instrument’s amortized cost, which are recognized
 
in the Consolidated Statement of Income.
 
Interest income is recognized using EIRM.
 
The expected credit
loss (ECL) allowance is recognized and
 
measured as described in the Impairment
 
– Expected Credit Loss Model section of
 
this Note. When the financial asset is
derecognized, the cumulative gain or loss previously
 
recognized in other comprehensive income is
 
reclassified from equity to income and
 
recognized in other
income (loss).
Financial Assets Held-for-Trading
The held-for-sale business model includes
 
financial assets held within a trading portfolio,
 
which have been originated, acquired,
 
or incurred principally for the
purpose of selling in the near term, or if they
 
form part of a portfolio of identified financial
 
instruments that are managed together
 
and for which there is evidence of
short-term profit-taking. Financial assets
 
held within this business model consist of
 
trading securities, trading loans, as well
 
as certain securities purchased under
reverse repurchase agreements.
Trading portfolio assets are accounted for at fair value
 
with changes in fair value recognized in
 
trading income (loss). Transaction costs are expensed
 
as
incurred. Dividends are recognized on
 
the ex-dividend date and interest is recognized
 
on an accrual basis. Both dividends and interest
 
are included in interest
income.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 19
Non-Trading Financial Assets Measured at Fair Value through Profit or Loss
Non-trading financial assets measured at
 
FVTPL include financial assets held
 
within the held-for-sale and other business
 
models, for example debt securities and
loans managed on a fair value basis. Financial
 
assets held within the held-to-collect or held-to-collect-and-sell
 
business models that do not pass the SPPI
 
test are
also classified as non-trading financial assets
 
measured at FVTPL. Changes in fair value
 
as well as any gains or losses realized on
 
disposal are recognized in
other income (loss). Interest income from
 
debt instruments is included in interest
 
income on an accrual basis.
Financial Assets Designated at Fair Value through Profit
 
or Loss
Debt instruments in a held-to-collect
 
or held-to-collect-and-sell business model can be
 
designated at initial recognition as measured
 
at FVTPL, provided the
designation can eliminate or significantly reduce
 
an accounting mismatch that would
 
otherwise arise from measuring these
 
financial assets on a different basis.
The FVTPL designation is available only
 
for those financial instruments for which a
 
reliable estimate of fair value can be obtained.
 
Once financial assets are
designated at FVTPL,
 
the designation is irrevocable. Changes in
 
fair value as well as any gains or losses realized
 
on disposal are recognized in other income
(loss). Interest income from these financial
 
assets is included in interest income on an accrual
 
basis.
Customers’ Liability under Acceptances
Acceptances represent a form of negotiable
 
short-term debt issued by customers,
 
which the Bank guarantees for a fee. Revenue
 
is recognized on an accrual
basis. The potential obligation of the Bank is
 
reported as a liability under Acceptances
 
on the Consolidated Balance Sheet.
 
The Bank’s recourse against the
customer in the event of a call on any of
 
these commitments is reported as an asset
 
of the same amount.
Equity Instruments
Equity investments are required to be measured
 
at FVTPL, except where the Bank has
 
elected at initial recognition to irrevocably designate
 
an equity investment,
held for purposes other than trading, at FVOCI.
 
If such an election is made, the fair value
 
changes, including any associated foreign exchange
 
gains or losses, are
recognized in other comprehensive income
 
and are not subsequently reclassified
 
to net income, including upon disposal.
 
Realized gains and losses are
transferred directly to retained earnings
 
upon disposal. Consequently, there is no review required for impairment.
 
Dividends will normally be recognized in interest
income unless the dividends represent a recovery
 
of part of the cost of the investment. Gains and
 
losses on trading and non-trading equity investments
 
measured
at FVTPL are included in trading income (loss)
 
and other income (loss), respectively.
Classification and Measurement for
 
Financial Liabilities
The Bank classifies its financial liabilities into
 
the following categories:
●
 
Held-for-trading;
●
 
Designated at FVTPL; and
●
 
Other liabilities.
Financial Liabilities Held-for-Trading
Financial liabilities are held within a trading
 
portfolio if they have been incurred principally
 
for the purpose of repurchasing in the near
 
term, or form part of a
portfolio of identified financial instruments
 
that are managed together and for which
 
there is evidence of a recent actual pattern
 
of short-term profit-taking. Financial
liabilities held-for-trading are primarily trading
 
deposits, securitization liabilities at
 
fair value, obligations related to securities
 
sold short and certain obligations
related to securities sold under repurchase agreements.
Trading portfolio liabilities are accounted for at fair
 
value, with changes in fair value as well as any
 
gains or losses realized on disposal recognized
 
in trading
income (loss). Transaction costs are expensed as incurred.
 
Interest is recognized on an accrual basis
 
in interest expense.
Financial Liabilities Designated at Fair Value through
 
Profit or Loss
Certain financial liabilities may be designated
 
at FVTPL at initial recognition. To be designated at FVTPL, financial liabilities
 
must meet one of the following criteria:
(1) the designation eliminates or significantly
 
reduces a measurement or recognition
 
inconsistency; (2) the financial liabilities
 
or a group of financial assets and
financial liabilities are managed, and their performance
 
is evaluated, on a fair value basis in accordance
 
with a documented risk management or
 
investment
strategy; or (3) the instrument contains one
 
or more embedded derivatives unless
 
a) the embedded derivative does not significantly
 
modify the cash flows that
otherwise would be required by the contract,
 
or b) it is clear with little or no analysis
 
that separation of the embedded derivative
 
from the financial instrument is
prohibited. In addition, the FVTPL designation
 
is available only for those financial instruments
 
for which a reliable estimate
 
of fair value can be obtained. Once
financial liabilities are designated at FVTPL,
 
the designation is irrevocable.
Financial liabilities designated at FVTPL are
 
carried at fair value on the Consolidated Balance
 
Sheet, with changes in fair value as
 
well as any gains or losses
realized on disposal recognized in other income
 
(loss), except for the amount of change in
 
fair value attributable to changes in the Bank’s own
 
credit risk, which is
presented in other comprehensive income.
 
Amounts recognized in other comprehensive
 
income are not subsequently reclassified
 
to net income upon
derecognition of the financial liability;
 
instead,
 
they are transferred directly to retained
 
earnings.
Changes in fair value attributable to changes in
 
the Bank’s own credit risk are measured as
 
the difference between: (i) the period-over-period
 
change in the
present value of the expected cash flows
 
using an all-in discount curve reflecting both
 
the interest rate benchmark curve and
 
the Bank’s own credit curve; and (ii)
the period-over-period change in the present
 
value of the same expected cash flows using
 
a discount curve based solely on the interest
 
rate benchmark curve.
For loan commitments and financial guarantee
 
contracts that are designated at FVTPL,
 
the full change in fair value of the liability is recognized
 
in other income
(loss).
Interest is recognized on an accrual basis
 
in interest expense.
Other Financial Liabilities
Deposits
Deposits, other than deposits included in a
 
trading portfolio and deposits designated at
 
FVTPL, are accounted for at amortized cost.
 
Accrued interest on deposits
is included in Other liabilities on the Consolidated
 
Balance Sheet. Interest, including capitalized
 
transaction costs, is recognized on an accrual
 
basis using EIRM as
Interest expense on the Consolidated Statement
 
of Income.
Subordinated Notes and Debentures
Subordinated notes and debentures are
 
accounted for at amortized cost. Accrued
 
interest on subordinated notes and debentures
 
is included in Other liabilities on
the Consolidated Balance Sheet. Interest, including
 
capitalized transaction costs, is recognized
 
on an accrual basis using EIRM as Interest
 
expense on the
Consolidated Statement of Income.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 20
Reclassification of Financial Assets and
 
Financial Liabilities
Financial assets and financial liabilities are
 
not reclassified subsequent to their initial
 
recognition, except for financial assets
 
for which the Bank changes its
business model for managing financial assets.
 
Such reclassifications of financial assets are
 
expected to be rare in practice.
Impairment – Expected Credit Loss Model
The ECL model applies to financial assets, including
 
loans and debt securities measured
 
at amortized cost, loans and debt securities
 
measured at FVOCI, loan
commitments, and financial guarantees
 
that are not measured at FVTPL.
The ECL model consists of three stages:
 
Stage 1 – Twelve-month ECLs for performing
 
financial assets, Stage 2 – Lifetime ECLs
 
for financial assets that have
experienced a significant increase in credit
 
risk since initial recognition, and Stage 3 – Lifetime
 
ECLs for financial assets that are credit-impaired.
 
ECLs are the
difference between all the contractual cash flows
 
that are due to the Bank in accordance with
 
the contract and all the cash flows the
 
Bank expects to receive,
discounted at the original EIR. If a significant
 
increase in credit risk has occurred
 
since initial recognition, impairment is
 
measured as lifetime ECLs. Otherwise,
impairment is measured as twelve-month ECLs
 
which represent the portion of lifetime ECLs
 
that are expected to occur based on default
 
events that are possible
within twelve months after the reporting date.
 
If credit quality improves in a subsequent
 
period such that the increase in credit risk
 
since initial recognition is no
longer considered significant, the loss allowance
 
reverts to being measured based on twelve-month
 
ECLs.
Significant Increase in Credit Risk
For retail exposures, significant increase in
 
credit risk is assessed based on changes in
 
the twelve-month probability of default (PD)
 
since initial recognition, using
a combination of individual and collective information
 
that incorporates borrower and account
 
specific attributes and relevant forward-looking
 
macroeconomic
variables.
For non-retail exposures, significant increase
 
in credit risk is assessed based on
 
changes in the internal risk rating (borrower risk
 
ratings (BRR)) since initial
recognition. Refer to the shaded areas of
 
the “Managing Risk” section of the 2024
 
MD&A for further details on the Bank’s 21-point BRR
 
scale to risk levels.
For both retail and non-retail exposures,
 
delinquency backstop when contractual payments
 
are more than 30 days past due is also used
 
in assessing significant
increase in credit risk.
The Bank defines default as delinquency of 90
 
days or more for most retail products
 
and BRR of 9 for non-retail exposures.
 
Exposures are considered credit-
impaired and migrate to Stage 3 when the definition
 
of default is met or when there is objective
 
evidence that there has been a deterioration
 
of credit quality to the
extent the Bank no longer has reasonable
 
assurance as to the timely collection of the
 
full amount of principal and interest.
When assessing whether there has been a
 
significant increase in credit risk since
 
the initial recognition of a financial asset,
 
the Bank considers all reasonable
and supportable information that is available
 
without undue cost or effort about past events,
 
current conditions, and forecast of future economic
 
conditions. Refer to
Note 3 for additional details.
Measurement of Expected Credit Losses
ECLs are measured as the probability-weighted
 
present value of expected cash shortfalls over
 
the remaining expected life of the financial instrument
 
and consider
reasonable and supportable information about
 
past events, current conditions, and forecasts
 
of future events and economic conditions
 
that impact the Bank’s
credit risk assessment. Expected life is
 
the maximum contractual period the Bank is
 
exposed to credit risk, including extension
 
options for which the borrower has
unilateral right to exercise. For certain
 
financial instruments that include both a loan
 
and an undrawn commitment,
 
and the Bank’s contractual ability to demand
repayment and cancel the undrawn commitment
 
does not limit the Bank’s exposure to credit losses
 
to the contractual notice period, ECLs are
 
measured over the
period the Bank is exposed to credit risk.
 
For example, ECLs for credit cards are
 
measured over the borrowers’ expected
 
behavioural life, incorporating
survivorship assumptions and borrower-specific
 
attributes.
The Bank leverages
 
its Advanced Internal Ratings-Based
 
models used for regulatory capital purposes
 
and incorporates adjustments where appropriate
 
to
calculate ECLs.
Forward-Looking Information and Expert
 
Credit Judgment
Forward-looking information is considered
 
when determining significant increase in
 
credit risk and measuring ECLs. Forward-looking
 
macroeconomic factors are
incorporated in the risk parameters as relevant.
Qualitative factors that are not already considered
 
in the quantitative models are incorporated
 
by applying expert credit judgment in determining
 
the final ECLs.
Refer to Note 3 for additional details.
Modified Loans
In cases where a borrower experiences financial
 
difficulties, the Bank may grant certain modifications
 
to the terms and conditions of a loan.
 
Modifications may
include payment deferrals, extension of amortization
 
periods, rate reductions, principal forgiveness,
 
debt consolidation, forbearance and other
 
modifications
intended to minimize the economic loss and
 
to avoid foreclosure or repossession
 
of collateral. The Bank has policies in place
 
to determine the appropriate
remediation strategy based on the individual
 
borrower.
If the Bank determines that a modification
 
results in expiry of cash flows, the original
 
asset is derecognized and a new asset
 
is recognized based on the new
contractual terms. Significant increase in
 
credit risk is assessed relative to the risk of
 
default on the date of modification.
If the Bank determines that a modification
 
does not result in derecognition, significant
 
increase in credit risk is assessed based
 
on the risk of default at initial
recognition of the original asset. Expected cash
 
flows arising from the modified contractual
 
terms are considered when calculating ECLs
 
for the modified asset. For
loans that were modified while having lifetime
 
ECLs, the loans can revert to having
 
twelve-month ECLs after a period of performance
 
and improvement in the
borrower’s financial condition.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 21
Allowance for Loan Losses, Excluding
 
Acquired Credit-Impaired Loans
The allowance for loan losses represents
 
management’s calculation of probability-weighted
 
ECLs in the lending portfolios, including
 
any off-balance sheet
exposures, at the balance sheet date. The
 
allowance for loan losses for lending portfolios
 
reported on the Consolidated Balance
 
Sheet, which includes credit-
related allowances for residential mortgages,
 
consumer instalment and other personal,
 
credit card, business and government loans, and
 
customers’ liability under
acceptances, is deducted from Loans on
 
the Consolidated Balance Sheet. The allowance
 
for loan losses for loans measured at
 
FVOCI is included in the
Consolidated Statement of Changes in Equity. The allowance for loan losses
 
for off-balance sheet instruments, which relates
 
to certain guarantees, letters of
credit, and undrawn lines of credit, is recognized
 
in Other liabilities on the Consolidated Balance
 
Sheet. Allowances for lending portfolios
 
reported on the balance
sheet and off-balance sheet exposures are
 
calculated using the same methodology. The allowance is increased
 
by the provision for credit losses and
 
decreased
by write-offs net of recoveries and disposals.
 
Each
 
quarter, allowances are reassessed and adjusted based
 
on any changes in management’s estimate
 
of ECLs.
Loan losses on impaired loans in Stage 3
 
continue to be recognized by means of an allowance
 
for loan losses until a loan is written off.
A loan is written off against the related allowance
 
for loan losses when there is no realistic
 
prospect of recovery. Non-retail loans are generally written off
 
when
all reasonable collection efforts have been exhausted,
 
such as when a loan is sold, when all security
 
has been realized, or when all security has
 
been resolved
with the receiver or bankruptcy court.
 
Non-real estate retail loans are generally
 
written off when contractual payments are
 
180 days past due, or when a loan is
sold. Real estate secured retail loans are generally
 
written off when the security is realized. The time period
 
over which the Bank performs collection
 
activities on
the contractual amount outstanding of financial
 
assets that are written off varies from one
 
jurisdiction to another and generally spans
 
between less than one year to
five years.
Allowance for Credit Losses on Debt Securities
The allowance for credit losses on debt securities
 
represents management’s calculation of probability-weighted
 
ECLs. Debt securities measured at amortized
 
cost
are presented net of the allowance for credit
 
losses on the Consolidated Balance Sheet.
 
The allowance for credit losses on debt securities
 
measured at FVOCI are
included in the Consolidated Statement of
 
Changes in Equity. The allowance for credit losses is increased
 
by the provision for credit losses and
 
decreased by
write-offs net of recoveries and disposals.
Acquired Performing Loans
Acquired performing loans are initially measured
 
at fair value, which considers incurred
 
and expected future credit losses estimated
 
at the acquisition date and
also reflects adjustments based on the acquired
 
loan’s interest rate in comparison to current
 
market rates. On acquisition, twelve-month
 
ECLs are recognized on
the acquired performing loans, resulting in
 
the carrying amount being lower than fair
 
value. Acquired performing loans are subsequently
 
accounted for at amortized
cost based on their contractual cash flows and
 
any acquisition related discount or premium,
 
including credit-related discounts, is
 
considered to be an adjustment to
the loan yield and is recognized in interest income
 
using EIRM over the term of the loan, or the expected
 
life of the loan for acquired performing
 
loans with
revolving terms.
Acquired Credit-Impaired Loans
When loans are acquired with evidence of incurred
 
credit loss where it is probable at the purchase
 
date that the Bank will be unable to collect
 
all contractually
required principal and interest payments,
 
they are generally considered to be acquired
 
credit-impaired (ACI) loans, with no ECLs recognized
 
on acquisition. ACI
loans are identified as impaired at acquisition
 
based on specific risk characteristics of
 
the loans, including past due status, performance
 
history, and recent
borrower credit scores. ACI loans are accounted
 
for based on the present value of expected
 
cash flows as opposed to their contractual
 
cash flows. The Bank
determines the fair value of these loans at
 
the acquisition date by discounting expected
 
cash flows at a discount rate that reflects
 
factors a market participant
would use when determining fair value, including
 
management assumptions relating to default rates,
 
loss severities, the amount and timing of prepayments,
 
and
other factors that are reflective of current
 
market conditions. With respect to certain
 
individually significant ACI loans, accounting
 
is applied individually at the loan
level. The remaining ACI loans are aggregated
 
provided they are acquired in the same
 
fiscal quarter and have common risk
 
characteristics. Aggregated loans are
accounted for as a single asset with aggregated
 
cash flows and a single composite interest
 
rate. Subsequent to acquisition, the Bank
 
regularly reassesses and
updates its cash flow estimates for changes
 
to assumptions relating to default rates, loss
 
severities, the amount and timing of prepayments,
 
and other factors that
are reflective of current market conditions.
 
Probable decreases in expected cash flows
 
trigger the recognition of additional impairment,
 
which is measured based
on the present value of the revised expected
 
cash flows discounted at the loan’s EIR as
 
compared to the carrying value of the loan.
 
The ECL in excess of the initial
credit-related discount is recorded through
 
the provision for credit losses. Interest
 
income on ACI loans is calculated by applying
 
the credit-adjusted EIR to the
amortized cost of ACI loans.
SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS
The Bank classifies financial instruments
 
that it issues as either financial liabilities,
 
equity instruments, or compound instruments.
Issued instruments that are mandatorily redeemable
 
or convertible into a variable number of
 
the Bank’s common shares at the holder’s option
 
are classified as
liabilities on the Consolidated Balance Sheet.
 
Dividend or interest payments on these instruments
 
are recognized in Interest expense on
 
the Consolidated
Statement of Income.
Issued instruments are classified as
 
equity when there is no contractual obligation
 
to transfer cash or other financial assets
 
to redeem or convert these
instruments. Such instruments, if not
 
mandatorily redeemable or convertible into a
 
variable number of the Bank’s common shares at the
 
holder’s option, are
classified as equity on the Consolidated Balance
 
Sheet.
 
Incremental costs directly attributable
 
to the issue of equity instruments are included
 
in equity as a
deduction from the proceeds, net of tax.
 
Dividends and distributions on these instruments
 
are recognized as a reduction in equity.
Compound instruments are comprised of
 
both liability and equity components in accordance
 
with the substance of the contractual arrangement.
 
The liability
component is initially measured at fair value
 
with any residual amount assigned to the equity
 
component. Issuance costs are allocated
 
proportionately to the
liability and equity components.
Common shares, preferred shares, and other
 
equity instruments issued and held by the Bank
 
are classified as treasury instruments
 
in equity, and the cost of
these instruments is recorded as a reduction in
 
equity. Upon the sale of treasury instruments, the difference between
 
the sale proceeds and the cost of the
instruments is recorded in or against contributed
 
surplus.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 22
GUARANTEES
The Bank issues guarantee contracts that require
 
payments to be made to guaranteed parties
 
based on: (1) changes in the underlying
 
economic characteristics
relating to an asset or liability of the guaranteed
 
party; (2) failure of another party to perform
 
under an obligating agreement; or (3) failure
 
of another third party to
pay its indebtedness when due. Guarantees
 
are initially measured and recorded
 
at their fair value. The fair value of a
 
guarantee liability at initial recognition
 
is
normally equal to the present value of the guarantee
 
fees received over the life of the contract.
 
The Bank’s release from risk is recognized
 
over the term of the
guarantee using a systematic and rational amortization
 
method.
If a guarantee meets the definition of a derivative,
 
it is carried at fair value on the Consolidated
 
Balance Sheet and reported as a derivative asset
 
or derivative
liability at fair value. Guarantees that are
 
considered derivatives are over-the-counter
 
(OTC) credit derivative contracts designed
 
to transfer the credit risk in an
underlying financial instrument from one
 
counterparty to another.
DERIVATIVES
Derivatives are instruments that derive
 
their value from changes in underlying interest
 
rates, foreign exchange rates, credit spreads,
 
commodity prices, equities, or
other financial or non-financial measures.
 
Such instruments include interest rate, foreign
 
exchange, equity, commodity, and credit derivative contracts. The Bank
uses these instruments for trading and non-trading
 
purposes. Derivatives are carried at
 
their fair value on the Consolidated Balance
 
Sheet.
Derivatives Held for Trading Purposes
The Bank enters into trading derivative contracts
 
to meet the needs of its customers,
 
to provide liquidity and market-making
 
related activities, and in certain cases,
to manage risks related to its trading portfolios.
 
The realized and unrealized gains or losses
 
on trading derivatives are recognized
 
in trading income (loss).
Derivatives Held for Non-trading Purposes
Non-trading derivatives are primarily used
 
to manage interest rate, foreign exchange, and
 
other market risks of the Bank’s traditional
 
banking activities. When
derivatives are held for non-trading purposes
 
and when the transactions meet the hedge accounting
 
requirements of IAS 39, they are presented
 
as non-trading
derivatives and receive hedge accounting
 
treatment, as appropriate. Certain derivative
 
instruments that are held for economic hedging
 
purposes, and do not meet
the hedge accounting requirements of IAS
 
39, are also presented as non-trading derivatives
 
with the change in fair value of these derivatives
 
recognized in non-
interest income.
Hedging Relationships
Hedge Accounting
The Bank has an accounting policy choice
 
to apply the hedge accounting requirements
 
of IFRS 9 or IAS 39. The Bank has
 
made the decision to continue applying
the IAS 39 hedge accounting requirements
 
and complies with the revised annual
 
hedge accounting disclosures as required
 
by the related amendments to IFRS 7.
At the inception of a hedging relationship, the
 
Bank documents the relationship between
 
the hedging instrument and the hedged item,
 
its risk management
objective, and its strategy for undertaking
 
the hedge. The Bank also requires a documented
 
assessment, both at hedge inception
 
and on an ongoing basis, of
whether or not the derivatives that are used in
 
hedging relationships are highly effective in offsetting
 
the changes attributable to the hedged risks
 
in the fair values
or cash flows of the hedged items. In order
 
to be considered highly effective, the hedging instrument
 
and the hedged item must be highly and inversely
 
correlated
such that the changes in the fair value of
 
the hedging instrument will substantially offset
 
the effects of the hedged exposure throughout
 
the term of the hedging
relationship. If a hedging relationship becomes
 
ineffective, it no longer qualifies for hedge accounting
 
and any subsequent change in the fair value
 
of the hedging
instrument
 
is recognized in Non-interest income
 
on the Consolidated Statement of Income.
Changes in fair value relating to the derivative
 
component excluded from the assessment
 
of hedge effectiveness are recognized in
 
Net interest income or Non-
interest income, as applicable, on the
 
Consolidated Statement of Income.
When derivatives are designated in hedge accounting
 
relationships,
 
the Bank classifies them either as: (1) hedges
 
of the changes in fair value of recognized
assets, liabilities or firm commitments (fair
 
value hedges); (2) hedges of the variability in
 
highly probable future cash flows attributable
 
to recognized assets,
liabilities or forecast transactions (cash flow
 
hedges); or (3) hedges of net investments
 
in foreign operations (net investment hedges).
Interest Rate Benchmark Reform
A hedging relationship is affected by IBOR reform
 
if the reform gives rise to uncertainties about
 
(a) the interest rate benchmark (contractually
 
or non-contractually
specified) designated as a hedged risk; and/or
 
(b) the timing or the amount of interest
 
rate benchmark-based cash flows of the hedged
 
item or of the hedging
instrument.
For such hedging relationships, the following
 
temporary exceptions apply during the period
 
of uncertainty:
●
 
When assessing whether a forecast transaction
 
is highly probable or expected to occur, it is assumed that
 
the interest rate benchmark on which the hedged
cash flows (contractually or non-contractually
 
specified) are based is not altered as a result
 
of IBOR reform;
●
 
When assessing whether a hedge is expected
 
to be highly effective, it is assumed that the interest
 
rate benchmark on which the hedged cash
 
flows and/or the
hedged risk (contractually or non-contractually
 
specified) are based, or the interest rate benchmark
 
on which the cash flows of the hedging
 
instrument are
based, is not altered as a result of IBOR reform;
 
●
 
A hedge is not required to be discontinued
 
if the actual results of the hedge are outside
 
of a range of 80–125 per cent as a result
 
of IBOR reform; and
●
 
For a hedge of a non-contractually specified benchmark
 
portion of interest rate risk, the requirement
 
that the risk component is separately
 
identifiable need only
be met at the inception of the hedging relationship.
Fair Value Hedges
The Bank’s fair value hedges principally consist of
 
interest rate swaps that are used to protect
 
against changes in the fair value of fixed-rate
 
financial instruments
due to movements in market interest rates.
The change in the fair value of the derivative
 
that is designated and qualifies as a fair value
 
hedge, as well as the change in the
 
fair value of the hedged item
attributable to the hedged risk, is recognized
 
in net interest income to the extent that the
 
hedging relationship is effective. Any change in
 
fair value relating to the
ineffective portion of the hedging relationship
 
is recognized immediately in non-interest
 
income.
The cumulative adjustment to the carrying
 
amount of the hedged item (the basis adjustment)
 
is amortized to Net interest income on
 
the Consolidated Statement
of Income based on a recalculated EIR over
 
the remaining expected life of the hedged item,
 
with amortization beginning no later than
 
when the hedged item
ceases to be adjusted for changes in its fair value
 
attributable to the hedged risk. Where the
 
hedged item has been derecognized, the
 
basis adjustment is
immediately released to Net interest
 
income or Non-interest income, as applicable,
 
on the Consolidated Statement of Income.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 23
Cash Flow Hedges
The Bank is exposed to variability in
 
future cash flows attributable to interest rate,
 
foreign exchange rate, and equity price risks.
 
The amounts and timing of future
cash flows are projected for each hedged
 
exposure on the basis of their contractual
 
terms and other relevant factors, including estimates
 
of prepayments and
defaults.
The effective portion of the change in the fair value
 
of the derivative that is designated and qualifies
 
as a cash flow hedge is initially recognized in
 
other
comprehensive income. The change in fair
 
value of the derivative relating to the ineffective
 
portion is recognized immediately in
 
non-interest income. Amounts in
accumulated other comprehensive income
 
(AOCI) are reclassified to Net interest
 
income or Non-interest income, as applicable,
 
on the Consolidated Statement of
Income in the same period during which
 
the hedged item affects income.
When a hedging instrument expires or is sold,
 
or when a hedge no longer meets the
 
criteria for hedge accounting, any cumulative
 
gain or loss existing in AOCI
at that time remains in AOCI until the forecast
 
transaction impacts the Consolidated Statement
 
of Income. When a forecast transaction is no
 
longer expected to
occur, the cumulative gain or loss that was reported in AOCI
 
is immediately reclassified to Net interest
 
income or Non-interest income, as
 
applicable, on the
Consolidated Statement of Income.
Net Investment Hedges
Hedges of net investments in foreign operations
 
are accounted for similar to cash flow hedges.
 
The change in fair value on the hedging instrument
 
relating to the
effective portion is recognized in other comprehensive
 
income. The change in fair value of the
 
hedging instrument relating to the ineffective
 
portion is recognized
immediately in non-interest income. Gains
 
and losses in AOCI are reclassified as
 
non-interest income in the Consolidated
 
Statement of Income upon the disposal
or partial disposal of the investment in
 
the foreign operation. The Bank designates derivatives
 
and non-derivatives (such as foreign currency
 
deposit liabilities) as
hedging instruments in net investment hedges.
Embedded Derivatives
Derivatives may be embedded in financial liabilities
 
or other host contracts. Embedded derivatives
 
are treated as separate derivatives when
 
their economic
characteristics and risks are not closely
 
related to those of the host instrument,
 
a separate instrument with the same terms
 
as the embedded derivative would meet
the definition of a derivative, and the combined
 
contract is not measured at fair value
 
with changes in fair value recognized in income,
 
such as held-for-trading or
designated at FVTPL.
 
These embedded derivatives, which are bifurcated
 
from the host contract, are recognized as
 
Derivatives on the Consolidated Balance Sheet
and measured at fair value with subsequent
 
changes in fair value recognized in
 
Non-interest income on the Consolidated Statement
 
of Income.
TRANSLATION AND PRESENTATION OF FOREIGN CURRENCIES
The Bank’s Consolidated Financial Statements
 
are
 
presented in Canadian dollars.
 
Items included in the financial statements
 
of each of the Bank’s entities are
measured using their functional currency, which is the currency
 
of the primary economic environment in
 
which they operate.
Monetary assets and liabilities denominated
 
in a currency that differs from an entity’s functional
 
currency are translated into the functional
 
currency of the entity
at exchange rates prevailing at the balance
 
sheet date. Non-monetary assets and liabilities
 
are translated at historical exchange
 
rates. Income and expenses are
translated into an entity’s functional currency at
 
average exchange rates for the period.
 
Translation gains and losses are included in non-interest income
 
except for
equity investments designated at FVOCI where
 
unrealized translation gains and losses
 
are recorded in other comprehensive income.
Foreign operations are those with a functional
 
currency other than Canadian dollars. For
 
the purpose of translation into the Bank’s presentation
 
currency, all
assets and liabilities are first measured in
 
the functional currency of the foreign operation
 
and subsequently, translated at exchange rates prevailing at
 
the balance
sheet date. Income and expenses are
 
translated at average exchange rates for the
 
period. Unrealized translation gains
 
and losses relating to these foreign
operations, net of gains or losses arising
 
from net investment hedges and applicable
 
income taxes, are included in other
 
comprehensive income. Translation gains
and losses in AOCI are recognized on
 
the Consolidated Statement of Income upon
 
the disposal or partial disposal of the foreign
 
operation. The investment
balance of foreign entities accounted for
 
by the equity method, including the Bank’s investment
 
in The Charles Schwab Corporation, is
 
translated into Canadian
dollars using exchange rates prevailing at
 
the balance sheet date with exchange gains
 
or losses recognized in other comprehensive
 
income.
OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and liabilities are offset, with
 
the net amount presented on the Consolidated
 
Balance Sheet, only if the Bank currently has
 
a legally enforceable
right to set off the recognized amounts, and intends
 
either to settle on a net basis or to realize
 
the asset and settle the liability simultaneously. In all other
situations,
 
assets and liabilities are presented on
 
a gross basis.
DETERMINATION OF FAIR VALUE
The fair value of a financial instrument on
 
initial recognition is normally the transaction
 
price, as evidenced by the fair value of the
 
consideration given or received.
The best evidence of fair value is quoted prices
 
in active markets. When there is no
 
active market for the instrument, the fair
 
value may be based on other
observable current market transactions
 
involving the same or similar instruments,
 
without modification or repackaging, or based
 
on a valuation technique which
maximizes the use of observable market
 
inputs.
When financial assets and liabilities have offsetting
 
market risks or credit risks, the Bank applies
 
a measurement exception, as described
 
in Note 5 under
Portfolio Exception
. The value determined from application
 
of the portfolio exception must be allocated
 
to the individual financial instruments
 
within the group to
arrive at the fair value of an individual financial
 
instrument. Balance
 
sheet offsetting presentation requirements, as described
 
above under the Offsetting of
Financial Instruments section of this Note, are
 
then applied, if applicable.
Valuation adjustments reflect the Bank’s assessment of factors that market participants
 
would use in pricing the asset or liability. The Bank recognizes
 
various
types of valuation adjustments including, but
 
not limited to, adjustments for bid-offer spreads, adjustments
 
for the unobservability of inputs used in
 
pricing models,
and adjustments for assumptions about risk,
 
such as the creditworthiness of either counterparty
 
and market implied unsecured funding
 
costs and benefits for OTC
derivatives.
If there is a difference between the initial transaction
 
price and the value based on a valuation
 
technique, the difference is referred to as inception
 
profit or loss.
Inception profit or loss is recognized
 
upon initial recognition of the instrument only
 
if the fair value is based on observable
 
inputs. When an instrument is measured
using a valuation technique that utilizes significant
 
non-observable inputs, it is initially valued at
 
the transaction price, which is considered
 
the best estimate of fair
value. Subsequent to initial recognition, any
 
difference between the transaction price and
 
the value determined by the valuation technique
 
at initial recognition is
recognized as non-observable inputs become
 
observable.
If the fair value of a financial asset measured
 
at fair value becomes negative, it is recognized
 
as a financial liability until either its fair
 
value becomes positive, at
which time it is recognized as a financial asset,
 
or until it is extinguished.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 24
DERECOGNITION OF FINANCIAL INSTRUMENTS
Financial Assets
The Bank derecognizes a financial asset
 
when the contractual rights to that asset have
 
expired. Derecognition may also be appropriate
 
where the contractual right
to receive future cash flows from the
 
asset have been transferred, or where
 
the Bank retains the rights to future cash
 
flows from the asset, but assumes an
obligation to pay those cash flows to a third party
 
subject to certain criteria.
When the Bank transfers a financial asset,
 
it is necessary to assess the extent
 
to which the Bank has retained the risks and rewards
 
of ownership of the
transferred asset. If substantially all the risks
 
and rewards of ownership of the financial
 
asset have been retained, the Bank continues
 
to recognize the financial
asset and also recognizes a financial liability
 
for the consideration received. Certain transaction
 
costs incurred are also capitalized and amortized
 
using EIRM. If
substantially all the risks and rewards of ownership
 
of the financial asset have been transferred,
 
the Bank will derecognize the financial asset
 
and recognize
separately as assets or liabilities any rights
 
and obligations created or retained in the
 
transfer. The Bank determines whether substantially all
 
the risks and rewards
have been transferred by quantitatively comparing
 
the variability in cash flows before and
 
after the transfer. If the variability in cash flows does not
 
change
significantly as a result of the transfer, the Bank has retained
 
substantially all of the risks and rewards of ownership.
If the Bank neither transfers nor retains
 
substantially all the risks and rewards of
 
ownership of the financial asset, the Bank
 
derecognizes the financial asset
where it has relinquished control of the financial
 
asset. The Bank is considered to have
 
relinquished control of the financial asset
 
where the transferee has the
practical ability to sell the transferred financial
 
asset. Where the Bank has retained control
 
of the financial asset, it continues to recognize
 
the financial asset to the
extent of its continuing involvement in
 
the financial asset. Under these circumstances,
 
the Bank usually retains the rights to future
 
cash flows relating to the asset
through a residual interest and is exposed
 
to some degree of risk associated with the
 
financial asset.
The derecognition criteria are also applied
 
to the transfer of part of an asset, rather
 
than the asset as a whole, or to a group of
 
similar financial assets in their
entirety, when applicable. If transferring a part of an asset, it
 
must be a specifically identified cash flow, a fully proportionate
 
share of the asset, or a fully
proportionate share of a specifically identified
 
cash flow.
Securitization
Securitization is the process by which
 
financial assets are transformed into
 
securities. The Bank securitizes financial
 
assets by transferring those financial assets
to a third party and as part of the securitization,
 
certain financial assets may be retained and
 
may consist of an interest-only strip and, in
 
some cases, a cash
reserve account (collectively referred to as
 
“retained interests”). If the transfer qualifies
 
for derecognition, a gain or loss on sale
 
of the financial assets is recognized
immediately in other income (loss) after considering
 
the effect of hedge accounting on the assets
 
sold, if applicable. The amount of the gain
 
or loss is calculated as
the difference between the carrying amount of the
 
asset transferred and the sum of any cash
 
proceeds received, the fair value of any financial
 
asset received or
financial liability assumed, and any cumulative
 
gain or loss allocated to the transferred
 
asset that had been recognized in AOCI.
 
To determine the value of the
retained interest initially recorded, the previous
 
carrying value of the transferred asset is allocated
 
between the amount derecognized from
 
the balance sheet and
the retained interest recorded, in proportion
 
to their relative fair values on the date of transfer. Subsequent
 
to initial recognition, as market prices are generally
 
not
available for retained interests, fair value
 
is determined by estimating the present
 
value of future expected cash flows using management’s
 
best estimates of key
assumptions that market participants would
 
use in determining such fair value. Refer
 
to Note 3 for assumptions used by management
 
in determining the fair value
of retained interests. Retained interest is classified
 
as trading securities with subsequent
 
changes in fair value recorded in trading income
 
(loss).
Where the Bank retains the servicing rights,
 
the benefits of servicing are assessed
 
against market expectations. When the benefits
 
of servicing are more than
adequate, a servicing asset is recognized.
 
Similarly, when the benefits of servicing are less than adequate,
 
a servicing liability is recognized. Servicing
 
assets and
servicing liabilities are initially recognized
 
at fair value and subsequently carried
 
at amortized cost.
Financial Liabilities
The Bank derecognizes a financial liability when
 
the obligation under the liability is discharged,
 
cancelled,
 
or expires. If an existing financial
 
liability is replaced by
another financial liability from the same lender
 
on substantially different terms or where
 
the terms of the existing liability are substantially
 
modified, the original
liability is derecognized and a new liability is
 
recognized with the difference in the respective
 
carrying amounts recognized on the Consolidated
 
Statement of
Income.
Securities Purchased Under Reverse Repurchase
 
Agreements, Securities Sold Under Repurchase
 
Agreements, and Securities Borrowing
 
and Lending
Securities purchased under reverse repurchase
 
agreements involve the purchase of securities
 
by the Bank under agreements to resell
 
the securities at a future
date. These agreements are treated as collateralized
 
lending transactions whereby the Bank
 
takes possession of the purchased securities, but
 
does not acquire
the risks and rewards of ownership. The Bank
 
monitors the market value of the purchased
 
securities relative to the amounts due under the
 
reverse repurchase
agreements, and when necessary, requires transfer of additional
 
collateral. In the event of counterparty default,
 
the agreements provide the Bank with the right
 
to
liquidate the collateral held and offset the proceeds
 
against the amount owing from the counterparty.
Obligations related to securities sold
 
under repurchase agreements involve the sale
 
of securities by the Bank to counterparties
 
under agreements to repurchase
the securities at a future date. These agreements
 
do not result in the risks and rewards of
 
ownership being relinquished and are treated
 
as collateralized borrowing
transactions. The Bank monitors the market
 
value of the securities sold relative to
 
the amounts due under the repurchase agreements,
 
and when necessary,
transfers additional collateral or may require
 
counterparties
 
to return the collateral pledged. Certain
 
transactions that do not meet derecognition
 
criteria are also
included in obligations related to securities
 
sold under repurchase agreements. Refer to
 
Note 9 for further details.
Securities purchased under reverse repurchase
 
agreements and obligations related to
 
securities sold under repurchase agreements
 
are initially recorded on the
Consolidated Balance Sheet at the respective
 
prices at which the securities were originally
 
acquired or sold, plus accrued interest.
 
Subsequently, the agreements
are measured at amortized cost on the
 
Consolidated Balance Sheet, plus accrued
 
interest, except when they are held-for-trading
 
or are designated at FVTPL.
Interest earned on reverse repurchase agreements
 
and interest incurred on repurchase agreements
 
is determined using EIRM for agreements
 
measured at
amortized cost and recognized on an accrual
 
basis for agreements measured at fair value,
 
and is included in Interest income and Interest
 
expense, respectively,
on the Consolidated Statement of Income.
 
Changes in fair value on reverse repurchase
 
agreements and repurchase agreements
 
that are held-for-trading or are
designated at FVTPL are included in Trading income
 
(loss) or in Other income (loss) on the Consolidated
 
Statement of Income.
In securities lending transactions,
 
the Bank lends securities to a counterparty
 
and receives collateral in the form of
 
cash or securities. If cash collateral is
received, the Bank records the cash along
 
with an obligation to return the cash as Obligations
 
related to securities sold under repurchase
 
agreements on the
Consolidated Balance Sheet.
 
Where securities are received as collateral,
 
the Bank does not record the collateral on
 
the Consolidated Balance Sheet.
In securities borrowing transactions,
 
the Bank borrows securities from a counterparty
 
and pledges either cash or securities as
 
collateral. If cash is pledged as
collateral, the Bank records the transaction
 
as Securities purchased under reverse repurchase
 
agreements on the Consolidated Balance
 
Sheet. If securities are
pledged as collateral,
 
the securities remain on the Bank’s Consolidated
 
Balance Sheet.
Where securities are pledged or received as
 
collateral, security borrowing fees and security
 
lending income are recorded in Non-interest
 
income on the
Consolidated Statement of Income over the
 
term of the transaction. Where cash is pledged
 
or received as collateral, interest received
 
or incurred is included in
Interest income and Interest expense, respectively, on the Consolidated
 
Statement of Income.
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 25
Physical commodities purchased or sold
 
with an agreement to sell or repurchase the physical
 
commodities at a later date at a fixed price,
 
are also included in
securities purchased under reverse repurchase
 
agreements and obligations related to securities
 
sold under repurchase agreements, respectively, if the
derecognition criteria are not met. These
 
instruments are measured at fair value.
GOODWILL
Goodwill represents the excess purchase
 
price paid over the net fair value of identifiable
 
assets and liabilities acquired in a business
 
combination. Goodwill is
carried at its initial cost less accumulated impairment
 
losses.
Goodwill is allocated to a cash-generating
 
unit (CGU) or a group of CGUs that is
 
expected to benefit from the synergies of
 
the business combination, regardless
of whether any assets acquired and liabilities
 
assumed are assigned to the CGU or group
 
of CGUs. A CGU is the smallest identifiable
 
group of assets that
generates cash flows largely independent of
 
the cash inflows from other assets or groups
 
of assets. Each CGU or group of CGUs,
 
to which goodwill is allocated,
represents the lowest level within the Bank
 
at which the goodwill is monitored
 
for internal management purposes and is
 
not larger than an operating segment. If
the composition of a CGU or group of CGUs
 
to which goodwill has been allocated
 
changes as a result of the sale of a business,
 
restructuring or other changes, the
goodwill is reallocated to the units affected using a
 
relative value approach, unless the Bank
 
can demonstrate that some other method better
 
reflects the goodwill
associated with the units affected.
Goodwill is assessed for impairment at least
 
annually and when an event or change
 
in circumstances indicates that the carrying
 
amount may be impaired.
When impairment indicators are present,
 
the recoverable amount of the CGU or group
 
of CGUs, which is the higher of its
 
estimated fair value less costs of
disposal and its value-in-use, is determined.
 
If the carrying amount of the CGU or group
 
of CGUs is higher than its recoverable amount,
 
an impairment loss exists.
The impairment loss is recognized on the Consolidated
 
Statement of Income and cannot be reversed
 
in future periods.
INTANGIBLE ASSETS
Intangible assets represent identifiable non-monetary
 
assets and are acquired either separately
 
or through a business combination, or
 
internally generated
software. The Bank’s intangible assets consist primarily
 
of core deposit intangibles, credit
 
card related intangibles,
 
software intangibles,
 
and other intangibles.
Intangible assets are initially recognized at
 
cost, or at fair value if acquired through
 
a business combination, and are amortized
 
over their estimated useful lives (4
to 15 years) proportionate to their expected economic
 
benefits, except for software which is
 
amortized over its estimated useful life (3
 
to 7 years) on a straight-line
basis. In respect of internally generated
 
software, development costs are capitalized
 
only if the costs can be measured reliably, the asset is technically
 
feasible,
future economic benefits are probable, and the
 
Bank intends to and has sufficient resources
 
to complete development of the asset. Research
 
costs are expensed
as incurred.
The Bank assesses its intangible assets
 
for impairment indicators on a quarterly basis.
 
When impairment indicators are present, the recoverable
 
amount of the
asset, which is the higher of its estimated
 
fair value less costs of disposal and its value-in-use,
 
is determined. If the carrying amount
 
of the asset is higher than its
recoverable amount, the asset is written down
 
to its recoverable amount. Where it is not possible
 
to estimate the recoverable amount of an individual
 
asset, the
Bank estimates the recoverable amount
 
of the CGU to which the asset belongs.
 
If the CGU is not impaired, the useful
 
life of the intangible asset is assessed with
any changes applied on a prospective basis.
 
An impairment loss is recognized on
 
the Consolidated Statement of Income in
 
the period in which the impairment is
identified. Impairment losses recognized
 
previously are assessed and reversed if the
 
circumstances leading to the impairment
 
are no longer present. Reversal of
any impairment loss will not exceed the
 
carrying amount of the intangible asset
 
that would have been determined had no
 
impairment loss been recognized for the
asset in prior periods.
LAND, BUILDINGS, EQUIPMENT, AND OTHER DEPRECIABLE ASSETS
Land is recognized at cost. Buildings, computer
 
equipment, furniture and fixtures, other equipment,
 
and leasehold improvements are recognized
 
at cost less
accumulated depreciation and provisions
 
for impairment, if any. Gains or losses on disposal are included in
 
Non-interest income on the Consolidated
 
Statement of
Income.
The Bank records the obligation associated
 
with the retirement of a long-lived asset
 
at fair value in the period in which it is incurred
 
and can be reasonably
estimated, and records a corresponding increase
 
to the carrying amount of the asset. The asset
 
is depreciated on a straight-line
 
basis over its remaining useful life
while the liability is accreted to reflect the passage
 
of time until the eventual settlement of the
 
obligation.
Depreciation is recognized on a straight-line
 
basis over the useful lives of the assets
 
estimated by asset category, as follows:
Asset
Useful Life
Buildings
15 to 40 years
Computer equipment
2 to 8 years
Furniture and fixtures
3 to 15 years
Other equipment
5 to 15 years
Leasehold improvements
Lesser of the remaining lease term and
the remaining useful life of the asset
The Bank assesses its depreciable assets
 
for changes in useful life or impairment
 
on a quarterly basis. Where an impairment
 
indicator exists and the depreciable
asset does not generate separate cash flows
 
on a stand-alone basis, impairment is assessed
 
based on the recoverable amount of the
 
CGU to which the
depreciable asset belongs. If the CGU is not
 
impaired, the useful life of the depreciable
 
asset is assessed with any changes applied
 
on a prospective basis. Any
impairment loss is recognized on the Consolidated
 
Statement of Income in the period in which
 
the impairment is identified. Impairment
 
losses previously
recognized are assessed and reversed if the
 
circumstances leading to their impairment
 
are no longer present. Reversal of any impairment
 
loss will not exceed the
carrying amount of the depreciable asset
 
that would have been determined had no impairment
 
loss been recognized for the asset in prior periods.
NON-CURRENT ASSETS HELD-FOR-SALE
Individual non-current assets or disposal groups
 
are classified as held-for-sale if they are
 
available for immediate sale in their present
 
condition subject only to
terms that are usual and customary for
 
sales of such assets or disposal groups, and
 
their sale must be highly probable to occur
 
within one year. For a sale to be
highly probable, management must be committed
 
to a sales plan and initiate an active program
 
to market the sale of the non-current assets
 
or disposal groups.
Non-current assets or disposal groups classified
 
as held-for-sale are measured at the lower
 
of their carrying amount and fair value
 
less costs to sell on the
Consolidated Balance Sheet. Write-downs on premises
 
related non-current assets and write-downs
 
on equipment on initial classification
 
as held-for-sale are
included in Non-interest expenses on the Consolidated
 
Statement of Income. Subsequently, a non-current asset or disposal
 
group that is held-for-sale is no longer
depreciated or amortized, and any subsequent
 
write-downs in fair value less costs to sell or
 
such increases not in excess of cumulative
 
write-downs, are
recognized in Other income on the Consolidated
 
Statement of Income.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 26
SHARE-BASED COMPENSATION
The Bank grants share options to certain
 
key employees as compensation for services
 
provided to the Bank. The Bank uses
 
a binomial tree-based valuation
option pricing model to estimate fair value
 
for all share option compensation awards.
 
The cost of the share options is based on
 
the fair value estimated at the grant
date and is recognized as compensation expense
 
and contributed surplus over the service
 
period required for employees to become
 
fully entitled to the awards.
This period is generally equal to the vesting
 
period in addition to a period prior to the grant
 
date. For the Bank’s share options, this period
 
is generally equal to five
years. When options are exercised, the amount
 
initially recognized in the contributed
 
surplus balance is reduced,
 
with a corresponding increase in common
shares.
The Bank has various other share-based
 
compensation plans where certain employees
 
of the Bank are awarded share units equivalent
 
to the Bank’s common
shares as compensation for services provided
 
to the Bank. The obligation related to share
 
units is included in other liabilities on
 
the Consolidated Balance Sheet.
Compensation expense is recognized based on
 
the fair value of the share units at the grant
 
date adjusted for changes in fair value
 
between the grant date and the
vesting date, net of hedging activities,
 
over the service period required for
 
employees to become fully entitled
 
to the awards. This period is generally
 
equal to the
vesting period,
 
in addition to a period prior to the grant
 
date. For the Bank’s share units, this period is
 
generally equal to four years.
EMPLOYEE BENEFITS
Defined Benefit Plans
Actuarial valuations are prepared at least
 
every three years to determine the present
 
value of the projected benefit obligation
 
related to the Bank’s defined benefit
plans. In periods between actuarial valuations,
 
an extrapolation is performed based
 
on the most recent valuation completed. All
 
remeasurement gains and losses
are recognized immediately in other comprehensive
 
income, with cumulative gains and losses
 
reclassified to retained earnings. Pension
 
and post-retirement
defined benefit plan expenses are determined
 
based upon separate actuarial valuations
 
using the projected benefit method pro-rated
 
on service and
management’s best estimates of discount rate,
 
compensation increases, health care
 
cost trend rate, and mortality rates, which are
 
reviewed annually with the
Bank’s actuaries. The discount rate used to value liabilities
 
is determined by reference to market
 
yields on high-quality corporate bonds with terms
 
matching the
plans’ specific cash flows
.
The expense recognized includes the cost of
 
benefits for employee service provided in
 
the current year, net interest expense or income
on the net defined benefit liability or asset, past
 
service costs related to plan amendments,
 
curtailments or settlements, and administrative
 
costs. Plan amendment
costs are recognized in the period of a plan amendment,
 
irrespective of its vested status. Curtailments
 
and settlements are recognized by the
 
Bank when the
curtailment or settlement occurs. A curtailment
 
occurs when there is a significant reduction
 
in the number of employees covered by
 
the plan. A settlement occurs
when the Bank enters into a transaction that
 
eliminates all further legal or constructive
 
obligation for part or all of the benefits
 
provided under a defined benefit plan.
The fair value of plan assets and the present
 
value of the projected benefit obligation are
 
measured as at October 31. The net defined
 
benefit asset or liability
represents the difference between the cumulative remeasurement
 
gains and losses, expenses,
 
and recognized contributions and is reported
 
in other assets or
other liabilities.
Net defined benefit assets recognized by
 
the Bank are subject to a ceiling which limits
 
the asset recognized on the Consolidated
 
Balance Sheet to the amount
that is recoverable through refunds of contributions
 
or future contribution holidays. In addition,
 
where a regulatory funding deficit exists related
 
to a defined benefit
plan, the Bank is required to record a liability
 
equal to the present value of all future
 
cash payments required to eliminate that
 
deficit.
Defined Contribution Plans
For defined contribution plans, annual pension
 
expense is equal to the Bank’s contributions
 
to those plans.
INSURANCE
Insurance contracts are aggregated into groups
 
which are measured at the risk-adjusted present
 
value of cash flows in fulfilling the contracts.
 
Insurance revenue is
recognized on the Consolidated Statement of
 
Income as insurance services are provided
 
over the coverage period of the contracts
 
within the groups. Insurance
service expenses are reported on the
 
Consolidated Statement of Income as insurance
 
claims and related expenses are recognized and
 
when contract groups are
expected to be onerous.
Contract groups are onerous if their fulfilment
 
cash flows are expected to result in a net outflow. The liabilities
 
from insurance groups are
comprised of the liability for remaining
 
coverage (LRC) and the liability for incurred
 
claims (LIC) and are reported as Insurance
 
contract liabilities on the
Consolidated Balance Sheet. The LRC is
 
the obligation to investigate and pay claims
 
that have not yet occurred and includes a loss
 
component related to onerous
contract groups. The LIC is the estimate
 
of claims incurred, including claims that
 
have occurred but have not been reported,
 
and related insurance costs.
The Bank measures its insurance contract
 
groups using one of two measurement models,
 
the premium allocation approach (PAA) or the general measurement
model (GMM). The majority of insurance
 
contract groups are measured using the PAA, which includes
 
the Bank’s property and casualty insurance contracts
 
and
short-term life and health insurance contracts.
 
The PAA is a simplified model applied to insurance contracts
 
that are either one year or less or where the PAA
approximates the GMM. Contracts using
 
the GMM are longer-term life and health
 
contracts. The LRC for insurance contract
 
groups using the PAA is measured as
the premiums received less insurance acquisition
 
cash flows paid. The LRC is adjusted for the
 
recognition of insurance revenue and amortization
 
of acquisition
cash flows reported in insurance service expenses
 
on a straight-line basis over the contractual
 
terms of the underlying insurance contracts,
 
usually twelve months.
The LRC for longer term contracts using
 
the GMM model is measured using estimates
 
and assumptions that reflect the timing and
 
uncertainty of insurance cash
flows. Under both the PAA and GMM, when a group of contracts
 
is expected to be onerous, a loss
 
component (expected loss related to
 
fulfilling the group’s
insurance contracts) is established which
 
increases the LRC and insurance
 
service expenses. The loss component of the LRC
 
is subsequently recognized as a
reduction to insurance service expenses
 
over the contractual term of the underlying
 
insurance contracts to offset claims incurred
 
and related expenses.
The Bank measures the LIC at the present
 
value of current estimates of claims and related
 
costs for insurable events occurring at or before
 
the Consolidated
Balance Sheet date. The LIC includes a risk
 
adjustment, which represents the compensation
 
the Bank requires for bearing the uncertainty
 
related to non-financial
risks in its fulfilment of insurance contracts.
 
Expenses related to claims incurred, including
 
claims arising from catastrophes, and related
 
costs are reported in
insurance service expenses while changes
 
related to discounting the liability are recorded
 
as insurance finance income or expenses in
 
other income (loss).
Estimates used in the measurement of insurance
 
contract liabilities are determined in accordance
 
with accepted actuarial practices. Current estimates
 
of claims
and related expenses are determined on a
 
case-by-case basis and consider such
 
variables as past loss experience, current
 
claims trends and changes in the
prevailing social, economic, and legal environment.
 
These estimates are continually reviewed,
 
and as experience develops and new information
 
becomes known,
the estimates are adjusted as necessary. In addition to reported
 
claims information, the Bank’s insurance
 
contract liabilities include a provision to
 
account for the
future development of insurance claims, including
 
insurance claims incurred but not reported
 
by policyholders (IBNR). IBNR liabilities
 
are evaluated based on
historical development trends and actuarial
 
methodologies for groups of claims
 
with similar attributes.
Reinsurance contracts held are recognized
 
and measured using the same principles
 
as insurance contracts. Reinsurance contract assets
 
are presented in
Other assets on the Consolidated Balance
 
Sheet and the net results from reinsurance
 
contracts held are presented in Other income
 
(loss) on the Consolidated
Statement of Income. Refer to Note 21 for further
 
detail on the balances and results of insurance
 
and reinsurance contracts.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 27
PROVISIONS & CONTINGENT LIABILITIES
Provisions are recognized when the Bank has
 
a present obligation (legal or constructive)
 
as a result of a past event, the amount of
 
which can be reliably estimated,
and it is probable that an outflow of resources
 
will be required to settle the obligation.
Provisions are measured based on management’s
 
best estimate of the consideration required
 
to settle the obligation at the end of the reporting
 
period, taking
into account the risks and uncertainties surrounding
 
the obligation. If the effect of the time value of
 
money is material, provisions are measured
 
at the present value
of the expenditure expected to be required
 
to settle the obligation, using a discount rate
 
that reflects
 
the current market assessment of the time
 
value of money and
the risks specific to the obligation.
Contingent liabilities exist when there is a possible
 
obligation which is yet to be confirmed
 
or a present obligation which has been confirmed
 
but the outflow of
future resources is not probable or is not
 
reliably measurable. Contingent liabilities
 
are not recorded in the Bank’s Consolidated
 
Financial Statements and are
disclosed if material unless there is a remote
 
chance that it will result in a future outflow
 
of resources to settle.
INCOME TAXES
Income tax is comprised of current and deferred
 
tax. Income tax is recognized in the Provision
 
for (recovery of) income taxes on the
 
Consolidated Statement of
Income, except to the extent that it relates to items
 
recognized in other comprehensive income or
 
directly in equity, in which case the related taxes are also
recognized in other comprehensive income
 
or directly in equity, respectively.
Deferred tax is recognized on temporary differences
 
between the carrying amounts of assets
 
and liabilities on the Consolidated Balance Sheet
 
and the amounts
attributed to such assets and liabilities for
 
tax purposes. Deferred tax assets and liabilities
 
are determined based on the tax rates
 
that are expected to apply when
the assets or liabilities are reported for
 
tax purposes. Deferred tax assets are recognized
 
only when it is probable that sufficient taxable
 
profit will be available in
future periods against which deductible
 
temporary differences may be utilized. Deferred
 
tax liabilities are not recognized on temporary
 
differences arising on
investments in subsidiaries, branches,
 
and associates, and interests in joint
 
ventures if the Bank controls the timing of
 
the reversal of the temporary difference and
it is probable that the temporary difference will not
 
reverse in the foreseeable future.
The Bank records a provision for uncertain
 
tax positions if it is probable that the Bank
 
will have to make a payment to tax authorities
 
upon their examination of a
tax position. This provision is measured
 
at the Bank’s best estimate of the amount expected
 
to be paid. Provisions are reversed in provision
 
for (recovery of)
income taxes in the period in which management
 
determines they are no longer required or
 
as determined by statute.
LEASES
An arrangement contains a lease if there is an
 
identified asset and the Bank has a right
 
to control that asset for a period of time in
 
exchange for consideration. A
right-of-use (ROU) asset and lease liability
 
is recognized for all leases except for
 
short-term leases and low value leases, as
 
described below. At the lease
commencement date, the lease liability is initially
 
recognized at the present value of the
 
future lease payments over the remaining lease
 
term and is discounted
using the Bank’s incremental borrowing rate.
 
The right-of-use asset is recognized
 
at cost, comprising an amount equal
 
to the lease liability, subject to certain
adjustments. Subsequently, the right-of-use asset is measured at
 
cost less accumulated depreciation and impairment
 
and adjusted for any remeasurement
 
of
lease liabilities, while the lease liability is accreted
 
using the Bank’s incremental borrowing rate.
 
The lease liability is remeasured when there is a
 
modification, a
change in the lease term, a change in the lease
 
payments (e.g., changes to future payments
 
resulting from a change in an index or rate
 
used to determine such
lease payments) or changes in the Bank’s assumptions
 
or strategies relating to the exercise
 
of purchase, extension, or termination options.
The Bank’s leases consist primarily of real estate,
 
equipment and other asset leases. Right-of-use
 
assets are recorded in Land, buildings,
 
equipment, other
depreciable assets and right-of-use assets
 
on the Consolidated Balance Sheet and
 
lease liabilities are included in Other liabilities
 
on the Consolidated Balance
Sheet. Interest expense on lease liabilities is
 
included in Net interest income and depreciation
 
expense on the right-of-use assets
 
is recognized in Non-interest
expenses on the Consolidated Statement
 
of Income.
Short-term leases, which have a lease term of
 
twelve months or less, and leases of low-value
 
assets are exempt, and their payments are
 
recognized in Non-
interest expenses on a straight-line basis
 
within the Bank’s Consolidated Statement of
 
Income.
NOTE 3: SIGNIFICANT ACCOUNTING
 
JUDGMENTS, ESTIMATES, AND ASSUMPTIONS
The estimates used in the Bank’s accounting policies
 
are essential to understanding its results
 
of operations and financial condition. Some
 
of the Bank’s policies
require subjective, complex judgments and
 
estimates as they relate to matters
 
that are inherently uncertain. Changes in these
 
judgments or estimates and
changes to accounting standards and policies
 
could have a materially adverse impact
 
on the Bank’s Consolidated Financial Statements.
 
The Bank has established
procedures to ensure that accounting policies
 
are applied consistently and that the processes
 
for changing methodologies, determining
 
estimates,
 
and adopting
new accounting standards are well-controlled
 
and occur in an appropriate and systematic
 
manner.
CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS
Business Model Assessment
The Bank determines its business models
 
based on the objective under which its
 
portfolios of financial assets are managed.
 
Refer to Note 2 for details on the
Bank’s business models. In determining its
 
business models, the Bank considers
 
the following:
●
 
Management’s intent and strategic objectives
 
and the operation of the stated policies in practice;
●
 
The primary risks that affect the performance
 
of the portfolio
 
of assets and how these risks are
 
managed;
 
●
 
How the performance of the portfolio is evaluated
 
and reported to management; and
●
 
The frequency and significance of financial
 
asset sales in prior periods, the reasons
 
for such sales and the expected future sales activities.
Sales in themselves do not determine the business
 
model and are not considered in isolation.
 
Instead, sales provide evidence about
 
how cash flows are realized.
A held-to-collect business model will be reassessed
 
by the Bank to determine whether
 
any sales are consistent with an objective
 
of collecting contractual cash
flows if the sales are more than insignificant
 
in value or more than infrequent.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 28
Solely Payments of Principal and Interest
 
Test
In assessing whether contractual cash flows
 
represent SPPI, the Bank considers the
 
contractual terms of the instrument. This
 
includes assessing whether the
financial asset contains contractual terms
 
that could change the timing or amount
 
of contractual cash flows such that
 
they would not be consistent with a basic
lending arrangement. In making the assessment,
 
the Bank considers the primary terms
 
as follows and assesses if the contractual
 
cash flows of the instrument
continue to meet the SPPI test:
●
 
Performance-linked features;
●
 
Terms that limit the Bank’s claim to cash flows
 
from specified assets (non-recourse terms);
●
 
Prepayment and extension terms;
●
 
Leverage features;
 
●
 
Features that modify elements of the time
 
value of money; and
●
 
Sustainability-linked features.
IMPAIRMENT OF FINANCIAL ASSETS
Significant Increase in Credit Risk
For retail exposures, criteria for assessing
 
significant increase in credit risk are
 
defined at the appropriate product or
 
portfolio level and vary based on the
exposure’s credit risk at origination. The criteria
 
include relative changes in PD, absolute
 
PD backstop, and delinquency backstop
 
when contractual payments are
more than 30 days past due. Significant increase
 
in credit risk since initial recognition
 
has occurred when one of the criteria is
 
met.
For non-retail exposures, BRR is determined
 
on an individual borrower basis using industry
 
and sector specific credit risk models that are
 
based on historical
data. Current and forward-looking information
 
that is specific to the borrower, industry, and sector is considered based on expert
 
credit judgment. Criteria for
assessing significant increase in credit risk
 
are defined at the appropriate segmentation
 
level and vary based on the BRR of the exposure
 
at origination. Criteria
include relative changes in BRR, absolute
 
BRR backstop, and delinquency backstop
 
when contractual payments are more than 30
 
days past due. Significant
increase in credit risk since initial recognition
 
has occurred when one of the criteria is
 
met.
Measurement of Expected Credit Loss
ECLs are recognized on the initial recognition
 
of financial assets. Allowance for credit losses
 
represents management’s unbiased estimate
 
of the risk of default and
ECLs on the financial assets, including any off-balance
 
sheet exposures, at the balance sheet date.
For retail exposures, ECLs are calculated as
 
the product of PD, loss given default (LGD),
 
and exposure at default (EAD) at each
 
time step over the remaining
expected life of the financial asset and discounted
 
to the reporting date based on the EIR. PD
 
estimates represent the forward-looking
 
PD, updated quarterly
based on the Bank’s historical experience, current
 
conditions, and relevant forward-looking expectations
 
over the expected life of the exposure
 
to determine the
lifetime PD curve. LGD estimates are determined
 
based on historical charge-off events and recovery
 
payments, current information about attributes
 
specific to the
borrower, and direct costs. Expected cash flows from
 
collateral, guarantees, and other credit enhancements
 
are incorporated in LGD if integral to the contractual
terms. Relevant macroeconomic variables
 
are incorporated in determining expected
 
LGD. EAD represents the expected balance
 
at default across the remaining
expected life of the exposure. EAD incorporates
 
forward-looking expectations about repayments
 
of drawn balances and future draws
 
where applicable.
For non-retail exposures, ECLs are calculated
 
based on the present value of cash shortfalls
 
determined as the difference between contractual
 
cash flows and
expected cash flows over the remaining expected
 
life of the financial instrument. Lifetime
 
PD is determined by mapping the exposure’s
 
BRR to forward-looking PD
over the expected life. LGD estimates are
 
determined by mapping the exposure’s facility
 
risk rating (FRR) to expected LGD which
 
takes into account facility-
specific characteristics such as collateral,
 
seniority ranking of debt, and loan structure.
 
Relevant macroeconomic variables are incorporated
 
in determining
expected PD and LGD. Expected cash flows
 
are determined by applying the PD and LGD
 
estimates to the contractual cash flows
 
to calculate cash shortfalls over
the expected life of the exposure.
Forward-Looking Information
In calculating ECLs, the Bank employs internally
 
developed models that utilize parameters
 
for PD, LGD, and EAD. Forward-looking
 
macroeconomic factors
including at the regional level are incorporated
 
in the risk parameters as relevant.
 
Additional risk factors that are industry or
 
segment specific are also incorporated,
where relevant. Forward-looking macroeconomic
 
forecasts are generated by TD Economics
 
as part of the ECL process: A base economic
 
forecast is accompanied
with upside and downside estimates of realistically
 
possible economic conditions by considering
 
the sources of uncertainty around the base
 
forecast. All
macroeconomic forecasts are updated quarterly
 
for each variable on a regional basis where
 
applicable and incorporated as relevant
 
into the quarterly modelling of
base, upside and downside risk parameters
 
used in the calculation of ECL scenarios and
 
probability-weighted ECLs. TD Economics
 
will apply judgment to
recommend probability weights to each forecast
 
on a quarterly basis. The proposed
 
macroeconomic forecasts and probability
 
weightings are subject to robust
management review and challenge process
 
by a cross-functional committee that
 
includes representation from TD Economics,
 
Risk, Finance, and Business. ECLs
calculated under each of the three forecasts are
 
applied against the respective probability
 
weightings to determine the probability-weighted
 
ECLs. Refer to Note 8
for further details on the macroeconomic
 
variables and ECL sensitivity.
Expert Credit Judgment
Management’s expert credit judgment is used
 
to determine the best estimate for the qualitative
 
component contributing to ECLs, based on an assessment
 
of
business and economic conditions, historical
 
loss experience, loan portfolio composition,
 
and other relevant indicators and forward-looking
 
information that are not
fully incorporated into the model calculation.
There remains elevated economic uncertainty,
 
and management continues to exercise expert
 
credit judgment in assessing if an exposure
 
has experienced
significant increase in credit risk since initial
 
recognition and in determining the amount
 
of ECLs at each reporting date. To the extent that certain effects are not
fully incorporated into the model calculations,
 
temporary quantitative and qualitative adjustments
 
have been applied.
LEASES
The Bank applies judgment in determining
 
the appropriate lease term on a lease-by-lease
 
basis. All facts and circumstances that
 
create an economic incentive to
exercise a renewal option or not to exercise
 
a termination option including investments
 
in major leaseholds, branch performance
 
and past business practice are
considered. The periods covered by renewal
 
or termination options are only included
 
in the lease term if it is reasonably certain
 
that the Bank will exercise the
options; management considers “reasonably
 
certain”
 
to be a high threshold. Changes in the economic
 
environment or changes in the industry
 
may impact the
Bank’s assessment of lease term, and any changes
 
in the Bank’s estimate of lease terms
 
may have a material impact on the Bank’s
 
Consolidated Balance Sheet
and Consolidated Statement of Income.
In determining the carrying amount of right-of-use
 
(ROU) assets and lease liabilities,
 
the Bank is required to estimate the incremental
 
borrowing rate specific to
each leased asset or portfolio of leased assets
 
if the interest rate implicit in the lease
 
is not readily determinable. The Bank
 
determines the incremental borrowing
rate of each leased asset or portfolio of leased
 
assets by incorporating the Bank’s creditworthiness,
 
the security, term, and value of the ROU asset, and the
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 29
economic environment in which the leased
 
asset operates. The incremental borrowing
 
rates are subject to change mainly due
 
to changes in the macroeconomic
environment.
FAIR VALUE MEASUREMENTS
The fair value of financial instruments traded
 
in active markets at the balance
 
sheet date is based on their quoted market
 
prices. For all other financial instruments
not traded in an active market, fair value may
 
be based on other observable current
 
market transactions involving the same or
 
similar instruments, without
modification or repackaging, or is based on
 
a valuation technique which maximizes
 
the use of observable market inputs. Observable
 
market inputs may include
interest rate yield curves, foreign exchange
 
rates, and option volatilities. Valuation techniques include comparisons
 
with similar instruments where observable
market prices exist, discounted cash flow
 
analysis, option pricing models, and
 
other valuation techniques commonly
 
used by market participants.
For certain complex or illiquid financial instruments,
 
fair value is determined using valuation
 
techniques in which current market transactions
 
or observable
market inputs are not available. Judgment is used
 
when determining which valuation techniques
 
to apply, liquidity considerations, and model inputs such as
volatilities, correlations, spreads, discount rates,
 
pre-payment rates, and prices of underlying
 
instruments. Any imprecision in these estimates
 
can affect the
resulting fair value.
Judgment is also used in recording valuation
 
adjustments to model fair values to account
 
for system limitations or measurement uncertainty, such as
 
when
valuing complex and less actively traded
 
financial instruments. If the market for a
 
complex financial instrument develops,
 
the pricing for this instrument may
become more transparent, resulting in refinement
 
of valuation models.
An analysis of the fair value of financial instruments
 
and further details as to how they are
 
measured are provided in Note 5.
DERECOGNITION OF FINANCIAL ASSETS
Certain financial assets transferred may
 
qualify for derecognition from the Bank’s
 
Consolidated Balance Sheet. To qualify for derecognition, certain key
determinations must be made, including
 
whether the Bank’s rights to receive cash flows
 
from the financial asset have been retained
 
or transferred and the extent
to which the risks and rewards of ownership
 
of the financial assets have been retained
 
or transferred. If the Bank neither transfers nor
 
retains substantially all of
the risks and rewards of ownership of the
 
financial asset, a decision must be made
 
as to whether the Bank has retained control
 
of the financial asset.
Upon derecognition, the Bank will record a gain
 
or loss on sale of those assets which is calculated
 
as the difference between the carrying amount
 
of the asset
transferred and the sum of any cash proceeds
 
received, including any financial assets received
 
or financial liabilities assumed, and
 
any cumulative gains or losses
allocated to the transferred asset that had been
 
recognized in AOCI. In determining the
 
fair value of any financial assets received, the
 
Bank estimates future cash
flows by relying on estimates of the amount
 
of interest that will be collected on the
 
securitized assets, the yield to be paid to investors,
 
the portion of the securitized
assets that will be prepaid before their
 
scheduled maturity, ECLs, the cost of servicing the assets, and the
 
rate at which to discount these expected
 
future cash
flows. Actual cash flows may differ significantly
 
from those estimated by the Bank.
Retained interests are financial interests in
 
transferred assets retained by the Bank.
 
They are classified as trading securities and
 
are initially recognized at
relative fair value on the Bank’s Consolidated Balance
 
Sheet. Subsequently, the fair value of retained interests is
 
determined by estimating the present value
 
of
future expected cash flows. Differences between
 
the actual cash flows and the Bank’s estimated
 
future cash flows are recognized in trading
 
income (loss). These
assumptions are subject to periodic reviews
 
and may change due to significant changes
 
in the economic environment.
GOODWILL
The recoverable amount of the Bank’s CGUs
 
or groups of CGUs is determined from
 
internally developed valuation models
 
that consider various factors and
assumptions such as forecasted earnings, growth
 
rates, discount rates, and terminal growth
 
rates. Management is required to use judgment
 
in estimating the
recoverable amount of the CGUs or groups
 
of CGUs, and the use of different assumptions and
 
estimates in the calculations could influence
 
the determination of
the existence of impairment and the valuation
 
of goodwill. Management believes that the assumptions
 
and estimates used are reasonable
 
and supportable. Where
possible, assumptions generated internally
 
are compared to relevant market information.
 
The carrying amounts of the Bank’s CGUs or groups
 
of CGUs are
determined by management using risk-based
 
capital models to adjust net assets and liabilities
 
by CGU. These models consider various
 
factors including market
risk, credit risk, and operational risk,
 
including investment capital (comprised of
 
goodwill and other intangibles). Any capital
 
not directly attributable to the CGUs is
held within the Corporate segment. The Bank’s
 
capital oversight committees provide oversight
 
to the Bank’s capital allocation methodologies.
EMPLOYEE BENEFITS
The projected benefit obligation and expense
 
related to the Bank’s pension and post-retirement
 
defined benefit plans are determined using
 
multiple assumptions
that may significantly influence the value of
 
these amounts. Actuarial assumptions including
 
discount rates, compensation increases,
 
health care cost trend rates,
and mortality rates are management’s best estimates
 
and are reviewed annually with the Bank’s actuaries.
 
The Bank develops each assumption using
 
relevant
historical experience of the Bank in conjunction
 
with market-related data and considers
 
if the market-related data indicates
 
there is any prolonged or significant
impact on the assumptions. The discount
 
rate used to value the projected benefit
 
obligation is determined by reference
 
to market yields on high-quality corporate
bonds with terms matching the plans’ specific
 
cash flows. The other assumptions are also long-term
 
estimates. All assumptions are subject to
 
a degree of
uncertainty. Differences between actual experiences and the assumptions,
 
as well as changes in the assumptions
 
resulting from changes in future expectations,
result in remeasurement gains and losses
 
which are recognized in other comprehensive
 
income (OCI)
 
during the year and also impact expenses
 
in future periods.
INCOME TAXES
The Bank is subject to taxation in numerous
 
jurisdictions. There are many transactions
 
and calculations in the ordinary course
 
of business for which the ultimate
tax determination is uncertain. The Bank
 
maintains provisions for uncertain tax positions
 
that it believes appropriately reflect the risk of
 
tax positions under
discussion, audit, dispute, or appeal with
 
tax authorities, or which are otherwise
 
considered to involve uncertainty. These provisions are made using
 
the Bank’s
best estimate of the amount expected to be paid
 
based on an assessment of all relevant
 
factors, which are reviewed at the end of
 
each reporting period. However,
it is possible that at some future date, changes
 
in these liabilities could result from audits by
 
the relevant taxing authorities.
Deferred tax assets are recognized only
 
when it is probable that sufficient taxable profit
 
will be available in future periods against
 
which deductible temporary
differences may be utilized. The amount of
 
the deferred tax asset recognized and considered
 
realizable could, however, be reduced if projected income is
 
not
achieved due to various factors, such as
 
unfavourable business conditions. If projected
 
income is not expected to be achieved, the
 
Bank would decrease its
deferred tax assets to the amount that it believes
 
can be realized. The magnitude of the decrease
 
is significantly influenced by the Bank’s forecast
 
of future profit
generation, which determines the extent to
 
which it will be able to utilize the deferred
 
tax assets.
PROVISIONS
Provisions arise when there is some uncertainty
 
in the timing or amount of a loss in the
 
future. Provisions are based on the Bank’s best estimate
 
of all
expenditures required to settle its present obligations,
 
considering all relevant risks and uncertainties,
 
as well as, when material, the effect of
 
the time value of
money.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 30
Many of the Bank’s provisions relate to various
 
legal and regulatory actions that the Bank
 
is involved in during the ordinary course
 
of business. Legal and
regulatory provisions require the involvement
 
of both the Bank’s management and legal counsel
 
when assessing the probability of a loss and estimating
 
any
monetary impact. Throughout the life of a provision,
 
the Bank’s management or legal counsel
 
may learn of additional information that may impact
 
its assessments
about the probability of loss or about the estimates
 
of amounts involved. Changes in these assessments
 
may lead to changes in the amount recorded
 
for
provisions. In addition, the actual costs of resolving
 
these claims may be substantially higher
 
or lower than the amounts recognized.
 
The Bank reviews its legal and
regulatory provisions on a case-by-case basis
 
after considering, among other factors, the
 
progress of each case, the Bank’s experience,
 
the experience of others
in similar cases, and the opinions and views of
 
legal counsel.
Certain of the Bank’s provisions relate to restructuring
 
initiatives initiated by the Bank. Restructuring
 
provisions require management’s best estimate,
 
including
forecasts of economic conditions. Throughout
 
the life of a provision, the Bank may become
 
aware of additional information that may impact
 
the assessment of
amounts to be incurred. Changes in these assessments
 
may lead to changes in the amount recorded
 
for restructuring provisions.
INSURANCE
The assumptions used in establishing the Bank’s
 
insurance contract liabilities are based on best
 
estimates of possible outcomes.
For property and casualty insurance
 
contracts, the ultimate cost of LIC is estimated
 
using a range of standard actuarial claims
 
projection techniques by the
appointed actuary in accordance with
 
Canadian accepted actuarial practices. Additional
 
qualitative judgment is used to assess
 
the extent to which past trends may
or may not apply in the future, in order to arrive
 
at the estimated ultimate claims cost
 
amounts that present the most likely outcome
 
taking into account all the
uncertainties involved.
For life and health insurance contracts, insurance
 
contract liabilities consider all future policy
 
cash flows, including premiums, claims, and
 
expenses required to
administer the policies. Critical assumptions
 
used in the measurement of life and health
 
insurance contract liabilities are determined
 
by the appointed actuary.
Further information on insurance risk assumptions
 
is provided in Note 21.
CONSOLIDATION OF STRUCTURED ENTITIES
Management judgment is required when
 
assessing whether the Bank should consolidate
 
an entity. For instance, it may not be feasible to determine if the Bank
controls an entity solely through an assessment
 
of voting rights for certain structured entities.
 
In these cases, judgment is required
 
to establish whether the Bank
has decision-making power over the key
 
relevant activities of the entity and
 
whether the Bank has the ability to use that power
 
to absorb significant variable returns
from the entity. If it is determined that the Bank has both decision-making
 
power and significant variable returns
 
from the entity, judgment is also used to determine
whether any such power is exercised by
 
the Bank as principal, on its own behalf,
 
or as agent, on behalf of another counterparty.
Assessing whether the Bank has decision-making
 
power includes understanding the purpose
 
and design of the entity in order to determine
 
its key economic
activities. In this context, an entity’s key economic
 
activities are those which predominantly
 
impact the economic performance of the
 
entity. When the Bank has the
current ability to direct the entity’s key economic
 
activities, it is considered to have decision-making
 
power over the entity.
The Bank also evaluates its exposure
 
to the variable returns of a structured entity in
 
order to determine if it absorbs a significant
 
proportion of the variable
returns the entity is designed to create. As part
 
of this evaluation, the Bank considers the purpose
 
and design of the entity in order to determine
 
whether it absorbs
variable returns from the structured entity
 
through its contractual holdings, which
 
may take the form of securities issued by
 
the entity, derivatives with the entity, or
other arrangements such as guarantees, liquidity
 
facilities, or lending commitments.
If the Bank has decision-making power over
 
the entity and absorbs significant variable returns
 
from the entity, it then determines if it is acting as principal or
agent when exercising its decision-making power. Key factors
 
considered include the scope of its decision-making
 
power; the rights of other parties involved
 
with
the entity, including any rights to remove the Bank as decision-maker
 
or rights to participate in key decisions;
 
whether the rights of other parties are exercisable
 
in
practice; and the variable returns absorbed
 
by the Bank and by other parties involved
 
with the entity. When assessing consolidation, a presumption exists
 
that the
Bank exercises decision-making power as principal
 
if it is also exposed to significant variable
 
returns, unless an analysis of the
 
factors above indicates otherwise.
The decisions above are made with reference
 
to the specific facts and circumstances relevant
 
for the structured entity and related transaction(s)
 
under
consideration.
REVENUE FROM CONTRACTS WITH
 
CUSTOMERS
The Bank applies judgment to determine
 
the timing of satisfaction of performance
 
obligations which affects the timing of revenue recognition,
 
by evaluating the
pattern in which the Bank transfers control
 
of services promised to the customer. A performance obligation
 
is satisfied over time when the customer
 
simultaneously
receives and consumes the benefits as the
 
Bank performs the service. For performance
 
obligations satisfied over time, revenue is generally
 
recognized using the
time-elapsed method which is based on time
 
elapsed in proportion to the period over
 
which the service is provided, for example,
 
personal deposit account bundle
fees. The time-elapsed method is a faithful
 
depiction of the transfer of control
 
for these services as control is transferred
 
evenly to the customer when the Bank
provides a stand-ready service or effort is expended
 
evenly by the Bank to provide a service
 
over the contract period. In contracts
 
where the Bank has a right to
consideration from a customer in an amount
 
that corresponds directly with the value to the
 
customer of the Bank’s performance completed
 
to date, the Bank
recognizes revenue in the amount to which
 
it has a right to invoice.
The Bank satisfies a performance obligation
 
at a point in time if the customer obtains
 
control of the promised services at that
 
date. Determining when control is
transferred requires the use of judgment.
 
For transaction-based services, the Bank determines
 
that control is transferred to the customer
 
at a point in time when
the customer obtains substantially all of
 
the benefits from the service rendered
 
and the Bank has a present right to payment,
 
which generally coincides with the
moment the transaction is executed.
The Bank exercises judgment in determining
 
whether costs incurred in connection with acquiring
 
new revenue contracts would meet the requirement
 
to be
capitalized as incremental costs to obtain or
 
fulfil a contract with customers.
INTEREST RATE BENCHMARK REFORM PHASE 2
Effective November 1, 2020, the Bank was an early adopter
 
of the Interest Rate Benchmark Reform Phase
 
2 and no transitional adjustment was required.
Interest Rate Benchmark Reform Phase 2 addresses
 
issues affecting financial reporting when
 
changes are made to contractual cash
 
flows of financial
instruments or hedging relationships
 
as a result of IBOR reform. The amendments
 
permit modification to financial assets,
 
financial liabilities and lease
liabilities required as a direct consequence of IBOR
 
reform and made on an economically equivalent
 
basis to be accounted for by updating
 
the EIR
prospectively. If the modification does not meet the practical expedient
 
requirements, existing IFRS requirements
 
are applied. Relief is also provided
 
for an
entity’s hedge accounting relationships in circumstances
 
where changes to hedged items and hedging
 
instruments arise as a result of IBOR reform.
 
The
amendments
 
enable entities to reflect these changes without
 
discontinuing, or resulting in a new formal
 
designation of, the existing hedging relationship.
 
Permitted
changes include redefining the hedged risk
 
to reference an ARR (contractually or non-contractually
 
specified), amending the description of
 
the hedged item and
hedging instrument to reflect the ARR, and
 
amending the description of how the entity
 
will assess hedge effectiveness. Hedging relationships
 
within the scope of
Interest Rate Benchmark Reform Phase 2
 
are the same as those within the scope of
 
Interest Rate Benchmark Reform Phase 1.
 
Interest Rate Benchmark Reform
Phase 2 also amended IFRS 7, introducing expanded
 
qualitative and quantitative disclosures about
 
the risks arising from IBOR reform, how
 
an entity is managing
those risks, its progress in completing
 
the transition to ARRs, and how it is managing
 
the transition.
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 31
Interest rate benchmarks (such as the London
 
Interbank Offered Rate (LIBOR) and the Canadian
 
Dollar Offered Rate (CDOR)) have been reformed
 
and
replaced by ARRs. From June 30, 2023, all remaining
 
USD LIBOR settings (overnight, one-month,
 
three-month, six-month and twelve-month)
 
have either ceased
or were published only on a synthetic basis
 
for the use in legacy contracts that had no other
 
fallback solution. The remaining settings
 
of CDOR (one-month, two-
month, and three-month) ceased following
 
a final publication on June 28, 2024. The Bank’s
 
exposure to non-derivative financial assets,
 
non-derivative financial
liabilities, derivative notional amounts and off-balance
 
sheet commitments referencing CDOR is no
 
longer significant to its financial statements
 
as at
October 31, 2024 (October 31, 2023 – $17 billion,
 
$12 billion, $2,645 billion and $64 billion,
 
respectively).
NOTE 4: CURRENT AND FUTURE
 
CHANGES IN ACCOUNTING POLICIES
CURRENT CHANGES IN ACCOUNTING
 
POLICIES
The following new standard was adopted by
 
the Bank on November 1, 2023.
Insurance Contracts
The IASB issued IFRS 17 which replaced
 
the guidance in IFRS 4 and became effective
 
for annual reporting periods beginning on or
 
after January 1, 2023, which
was November 1, 2023 for the Bank. IFRS 17 establishes
 
principles for recognition, measurement,
 
presentation and disclosure of insurance
 
contracts.
The Bank initially applied IFRS 17 on
 
November 1, 2023 and restated the comparative
 
period. The Bank transitioned by primarily
 
applying the full retrospective
approach which resulted in the measurement
 
of insurance contracts as if IFRS 17
 
had always applied to them. The following
 
table sets out adjustments to the
Bank’s insurance-related balances reported under
 
IFRS 4 as at October 31, 2022 used to derive
 
the insurance contract liabilities and reinsurance
 
contract assets
recognized by the Bank as at November
 
1, 2022 under IFRS 17.
 
(millions of Canadian dollars)
Amount
Insurance-related liabilities
$
7,468
Other liabilities
131
Other assets
(2,361)
Net insurance-related balances as at October
 
31, 2022
$
5,238
Changes in actuarial assumptions, including
 
risk adjustment and discount factor
 
(192)
Recognition of losses on onerous contracts
113
Other adjustments
(93)
Net insurance-related balances as at
 
November 1, 2022
$
5,066
Insurance contract liabilities
$
5,761
Reinsurance contract assets
(695)
Net insurance-related balances as at
 
November 1, 2022
$
5,066
On November 1, 2022, IFRS 17 transition
 
adjustments resulted in a decrease
 
to the Bank’s deferred tax assets of $60 million
 
and an after-tax increase to retained
earnings of $112 million.
Upon the initial application of IFRS 17 on
 
November 1, 2023, the Bank applied transitional
 
guidance and reclassified certain securities
 
supporting insurance
operations to minimize accounting mismatches
 
arising from the application of the new discount
 
factor under IFRS 17. The transitional guidance
 
for such securities
is applicable for entities that previously used
 
IFRS 9 and was applied without a restatement
 
of comparatives. The reclassification resulted
 
in a decrease to retained
earnings and an increase in AOCI of $10
 
million.
FUTURE CHANGES IN ACCOUNTING
 
POLICIES
The following standard and amendments
 
have been issued but are not yet effective
 
on the date of issuance of the Bank’s Consolidated
 
Financial Statements.
Presentation and Disclosure in Financial
 
Statements
In April 2024, the IASB issued IFRS 18,
Presentation and Disclosure in Financial
 
Statements
 
(IFRS 18), which replaces the guidance
 
in IAS 1,
Presentation of
Financial Statements
 
and sets out requirements for presentation
 
and disclosure of information, focusing
 
on providing relevant information to users
 
of the financial
statements. IFRS 18 introduces changes
 
to the structure of the statement of profit
 
or loss, aggregation and disaggregation of
 
financial information, and
management-defined performance
 
measures to be disclosed in the notes to
 
the financial statements. It will be effective for the Bank’s annual
 
period beginning
November 1, 2027. Early application is permitted.
 
The standard will be applied retrospectively
 
with restatement of comparatives.
 
The Bank is currently assessing
the impact of adopting this standard.
Amendments to the Classification and Measurement
 
of Financial Instruments
In May 2024, the IASB issued
Amendments to the Classification
 
and Measurement of Financial Instruments,
which amended IFRS 9 and IFRS 7
.
The
amendments address matters identified during
 
the post-implementation review of the
 
classification and measurement requirements
 
of IFRS 9. The amendments
clarify how to assess the contractual
 
cash flow characteristics of financial assets
 
that include environmental, social, and governance
 
linked features and other
similar contingent features. The amendments
 
also clarify the treatment of non-recourse
 
assets and contractually linked instruments.
 
Furthermore, the amendments
clarify that a financial liability is derecognized
 
on the settlement date and provide an accounting
 
policy choice to derecognize a financial liability
 
settled using an
electronic payment system before the
 
settlement date if certain conditions are
 
met. Finally, the amendments introduce additional disclosure requirements
 
for
financial instruments with contingent
 
features and equity instruments classified at
 
FVOCI.
The amendments will be effective for the Bank’s annual
 
period beginning November 1, 2026. Early
 
adoption is permitted, with an option to early
 
adopt the
amendments related to the classification
 
of financial assets and associated disclosures
 
only.
 
The Bank is required to apply the amendments
 
retrospectively, but is
not required to restate prior periods. The Bank
 
is currently assessing the impact of adopting
 
these amendments.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 32
NOTE 5: FAIR VALUE MEASUREMENTS
Certain assets and liabilities, primarily
 
financial instruments, are carried on
 
the balance sheet at their fair value on a recurring
 
basis. These financial instruments
include trading loans and securities, non-trading
 
financial assets at FVTPL, financial assets
 
and liabilities designated at FVTPL, financial
 
assets at FVOCI,
derivatives, certain securities purchased under
 
reverse repurchase agreements, trading
 
deposits, securitization liabilities at fair value,
 
obligations related to
securities sold short, and certain obligations
 
related to securities sold under repurchase
 
agreements. All other financial assets
 
and financial liabilities are carried at
amortized cost.
(a)
VALUATION GOVERNANCE
Valuation processes are guided by policies and procedures
 
that are approved by senior management
 
and subject matter experts. Senior Executive
 
oversight over
the valuation process is provided through various
 
valuation committees. Further, the Bank has a number of
 
additional controls in place, including
 
an independent
price verification process to ensure the accuracy
 
of fair value measurements reported in
 
the financial statements. The sources used
 
for independent pricing comply
with the standards set out in the approved
 
valuation-related policies, which include
 
consideration of the reliability, relevancy, and timeliness of data.
(b)
 
METHODS AND ASSUMPTIONS
The Bank calculates fair value for measurement
 
and disclosure purposes based on the following
 
methods of valuation and assumptions:
Government and Government-Related Securities
The fair value of Canadian government debt
 
securities is determined by quoted prices in
 
active markets, reference to recent transaction
 
prices, or third-party
vendor prices. In cases where external and
 
independent prices are not readily available,
 
alternate
 
techniques based on the risk metrics and unique
 
characteristics
of the security are utilized.
The fair value of Canadian residential mortgage-backed
 
securities (MBS) is based on third-party vendor
 
prices, reference to recent transaction prices,
 
or
valuation techniques that utilize observable
 
inputs such as benchmark government bond
 
prices, government bond yield curves, quoted
 
yield spreads and
prepayment rate assumptions related
 
to the underlying collateral.
The fair value of U.S. government and agency
 
debt securities is determined by reference
 
to recent transaction prices, broker quotes,
 
or third-party vendor
prices. For U.S. agency MBS pricing, brokers
 
or third-party vendors may use a pool-specific
 
valuation model to value these securities, using
 
observable market
inputs.
The fair value of other Organisation for Economic
 
Co-operation and Development (OECD)
 
government-guaranteed debt is based
 
on broker quotes and third-
party vendor prices, or where external and independent
 
prices are not readily available, alternate
 
techniques based on the risk metrics and unique
 
characteristics
of the security are utilized.
Other Debt Securities
The fair value of corporate and other debt
 
securities is based on broker quotes, third-party
 
vendor prices, or alternate techniques
 
utilizing the risk metrics and
unique characteristics of the security. Asset-backed securities are
 
primarily fair valued using third-party
 
vendor prices, including those generated by issue-specific
valuation models using observable market
 
inputs.
Equity Securities
The fair value of equity securities is based
 
on quoted prices in active markets, where available.
 
Where quoted prices in active markets are
 
not readily available,
such as for private equity securities, or
 
where there is a wide bid-ask spread, fair
 
value is determined based on quoted
 
market prices for similar securities or
through valuation techniques, including discounted
 
cash flow analysis, multiples of earnings
 
before taxes, depreciation and amortization,
 
and other relevant
valuation techniques.
If there are trading restrictions on the equity
 
security held, a valuation adjustment is
 
recognized against available prices to reflect
 
the nature of the restriction.
However, restrictions that are not part of the security held
 
and represent a separate contractual arrangement
 
that has been entered into by the Bank and a
 
third
party do not impact the fair value of the original
 
instrument.
The cost of Federal Reserve stock and
 
Federal Home Loan Bank (FHLB) stock
 
approximates fair value.
Retained Interests
Retained interests are classified as trading
 
securities and are initially recognized at their relative
 
fair market value. Subsequently, the fair value of retained interests
recognized by the Bank is determined by
 
estimating the present value of future expected
 
cash flows.
 
Differences between the actual cash flows and
 
the Bank’s
estimate of future cash flows are recognized
 
in income. These assumptions are subject
 
to periodic review and may change due
 
to significant changes in the
economic environment.
Loans
The estimated fair value of loans carried at amortized
 
cost reflects changes in market price that have
 
occurred since the loans were originated
 
or purchased. For
fixed-rate performing loans, estimated
 
fair value is determined by discounting the expected
 
future cash flows related to these loans at
 
current market interest rates
for loans with similar credit risks. For floating-rate
 
performing loans, changes in interest
 
rates have minimal impact on fair value
 
since loans reprice to market
frequently. On that basis, fair value is assumed to approximate
 
carrying value. The fair value of loans is not
 
adjusted for the value of any credit protection
 
the Bank
has purchased to mitigate credit risk.
The fair value of loans carried at FVTPL,
 
which includes trading loans and non-trading
 
loans at FVTPL, is determined using observable
 
market prices, where
available. Where the Bank is a market maker
 
for loans traded in the secondary market,
 
fair value is determined using executed prices,
 
or prices for comparable
trades. For those loans where the Bank is
 
not a market maker, the Bank obtains broker quotes from other
 
reputable dealers, or uses valuation techniques
 
to
determine fair value.
The fair value of loans carried at FVOCI is assumed
 
to approximate amortized cost as they are generally
 
floating rate performing loans that are
 
short term in
nature.
Commodities
The fair value of commodities is based on quoted
 
prices in active markets, where available.
 
The Bank also transacts commodity derivative
 
contracts which can be
traded on an exchange or in OTC markets.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 33
Derivative Financial Instruments
The fair value of exchange-traded derivative financial
 
instruments is based on quoted market prices.
 
The fair value of OTC derivative financial
 
instruments is
estimated using well established valuation
 
techniques, such as discounted cash flow
 
techniques, the Black-Scholes model,
 
and Monte Carlo simulation. The
valuation models incorporate inputs that are
 
observable in the market or can be derived
 
from observable market data.
Prices derived by using models are recognized
 
net of valuation adjustments. The inputs
 
used in the valuation models depend on
 
the type of derivative and the
nature of the underlying instrument and are
 
specific to the instrument being valued.
 
Inputs can include, but are not limited to, interest
 
rate yield curves, foreign
exchange rates, dividend yield projections,
 
commodity spot and forward prices, recovery
 
rates, volatilities, spot prices, and correlation.
A credit valuation adjustment (CVA) is recognized against the
 
model value of OTC derivatives to account
 
for the uncertainty that the counterparty in a derivative
transaction may not be able to fulfil its obligations
 
under the transaction to the Bank. In determining
 
CVA, the Bank takes into account master netting agreements
and collateral, and considers the creditworthiness
 
of the counterparty, using market observed or proxy credit
 
spreads, in assessing potential future
 
amounts owed
to the Bank.
The fair value of a derivative is partly a function
 
of collateralization. The Bank uses relevant
 
overnight
 
borrowing curves to discount the
 
cash flows for
collateralized derivatives as most collateral
 
is posted in cash and can be funded at the
 
overnight rate.
A funding valuation adjustment (FVA) is recognized against the model
 
value of OTC derivatives to recognize the
 
market implied unsecured funding costs and
benefits considered in the pricing and fair value
 
determination. Some of the key drivers
 
of FVA include the market implied funding spread and the expected
average exposure by counterparty.
The Bank will continue to monitor industry
 
practice on valuation adjustments and
 
may refine the methodology as market practices
 
evolve.
Deposits
The estimated fair value of term deposits is
 
determined by discounting the contractual
 
cash flows using interest rates currently offered for
 
deposits with similar
terms.
For deposits with no defined maturities,
 
the Bank considers fair value to equal carrying
 
value, which is equivalent to the amount payable
 
on the balance sheet
date.
For trading deposits and deposits designated
 
at FVTPL, which is included in financial liabilities
 
designated at FVTPL, fair value is determined
 
using discounted
cash flow valuation techniques which
 
maximize the use of observable market inputs
 
such as benchmark yield curves and foreign
 
exchange rates. The Bank
considers the impact of its own creditworthiness
 
in the valuation of these deposits by reference
 
to observable market inputs.
Securitization Liabilities
The fair value of securitization liabilities is based
 
on quoted market prices or quoted market
 
prices for similar financial instruments,
 
where available. Where quoted
prices are not available, fair value is determined
 
using valuation techniques, which maximize
 
the use of observable inputs, such
 
as Canada Mortgage Bond (CMB)
curves and MBS curves.
Obligations Related to Securities Sold
 
Short
The fair value of these obligations is based
 
on the fair value of the underlying securities,
 
which can include equity or debt securities.
 
As these obligations are fully
collateralized, the method used to determine
 
fair value would be the same as that of
 
the relevant underlying equity or debt securities.
Securities Purchased Under Reverse
 
Repurchase Agreements and Obligations
 
Related to Securities Sold Under Repurchase
 
Agreements
Commodities and certain bonds and equities
 
purchased or sold with an agreement
 
to sell or repurchase them at a later
 
date at a fixed price are carried at fair
value. The fair value of these agreements
 
is based on valuation techniques such as discounted
 
cash flow models which maximize the use
 
of observable market
inputs such as interest rate swap curves
 
and commodity forward prices.
Subordinated Notes and Debentures
The fair value of subordinated notes and debentures
 
are based on quoted market prices.
Portfolio Exception
IFRS 13,
Fair Value Measurement
 
provides a measurement exception
 
that allows an entity to determine the fair value of
 
a group of financial assets and liabilities
with offsetting risks based on the sale or transfer
 
of its net exposure to a particular risk or
 
risks. The Bank manages certain financial
 
assets and financial liabilities,
such as derivative assets and derivative liabilities,
 
on the basis of net exposure to a particular risk,
 
or risks; and uses mid-market prices as a basis
 
for establishing
fair values for the offsetting risk positions and
 
applies the most representative price
 
within the bid-ask spread to the net open position,
 
as appropriate. Refer to
Note 2 for further details on the use of the portfolio
 
exception to establish fair value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 34
(c)
 
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES NOT CARRIED AT FAIR VALUE
The carrying value and fair value of financial
 
assets and liabilities not carried at fair
 
value are disclosed in the table below. For these instruments,
 
fair values are
calculated for disclosure purposes only, using the valuation techniques
 
used by the Bank. In addition, the Bank
 
has determined that the carrying value of
 
certain
financial assets and liabilities approximates
 
their fair value, which include: cash and
 
due from banks, interest-bearing deposits
 
with banks, customers’ liability
under acceptances, amounts receivable from
 
brokers, dealers, and clients, other assets,
 
acceptances, amounts payable to brokers,
 
dealers, and clients, and other
liabilities. Substantially all securities purchased
 
under reverse repurchase agreements
 
and obligations related to securities sold under
 
repurchase agreements are
measured at amortized cost where the carrying
 
value approximates their fair value.
Financial Assets and Liabilities not carried
 
at Fair Value
1
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Carrying
Fair
Carrying
Fair
value
value
value
value
FINANCIAL ASSETS
Debt securities at amortized cost, net of allowance
 
for credit losses
Government and government-related
 
securities
$
206,815
$
202,667
$
232,093
$
222,699
Other debt securities
64,800
63,509
75,923
72,511
Total debt securities at amortized cost, net of allowance for credit losses
271,615
266,176
308,016
295,210
Total loans, net of allowance for loan losses
949,549
949,227
895,947
877,763
Total financial assets not carried at fair value
$
1,221,164
$
1,215,403
$
1,203,963
$
1,172,973
FINANCIAL LIABILITIES
Deposits
$
1,268,680
$
1,266,562
$
1,198,190
$
1,188,585
Securitization liabilities at amortized
 
cost
 
12,365
12,123
12,710
12,035
Subordinated notes and debentures
 
11,473
11,628
9,620
9,389
Total financial liabilities not carried at fair value
$
1,292,518
$
1,290,313
$
1,220,520
$
1,210,009
1
This table excludes financial assets and liabilities where the carrying value approximates their fair value.
(d)
 
FAIR VALUE HIERARCHY
IFRS requires disclosure of a three-level hierarchy
 
for fair value measurements based upon
 
the observability of inputs to the valuation of
 
an asset or liability as of
the measurement date. The three levels are
 
defined as follows:
Level 1
: Fair value is based on quoted market prices
 
for identical assets or liabilities that are
 
traded in an active exchange market
 
or highly liquid and actively
traded in OTC markets.
Level 2
: Fair value is based on observable inputs other
 
than Level 1 prices, such as quoted
 
market prices for similar (but not identical)
 
assets or liabilities in active
markets, quoted market prices for identical
 
assets or liabilities in markets that are
 
not active, and other inputs that are observable
 
or can be corroborated by
observable market data for substantially the
 
full term of the assets or liabilities. Level
 
2 assets and liabilities include debt securities
 
with quoted prices that are
traded less frequently than exchange-traded
 
instruments and derivative contracts
 
whose value is determined using valuation
 
techniques with inputs that are
observable in the market or can be derived
 
principally from or corroborated by observable
 
market data.
Level 3
: Fair value is based on non-observable inputs
 
that are supported by little or no market
 
activity and that are significant to the
 
fair value of the assets or
liabilities. Financial instruments classified
 
within Level 3 of the fair value hierarchy are
 
initially recognized at their transaction price,
 
which is considered the best
estimate of fair value. After initial measurement,
 
the fair value of Level 3 assets and liabilities
 
is determined using valuation models, discounted
 
cash flow
methodologies, or similar techniques.
Fair Value Hierarchy for Assets and Liabilities not carried
 
at Fair Value
The following table presents the levels within
 
the fair value hierarchy for each of the
 
financial assets and liabilities not carried at fair
 
value as at October 31, 2024
and October 31, 2023, but for which fair
 
value is disclosed.
Fair Value Hierarchy for Assets and
 
Liabilities not carried at Fair Value
1
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
 
Level 3
Total
ASSETS
Debt securities at amortized cost, net of allowance for
credit losses
Government and government-related securities
$
–
$
202,667
$
–
$
202,667
$
–
$
222,699
$
–
$
222,699
Other debt securities
 
–
63,509
–
63,509
–
72,510
1
72,511
Total debt securities
 
at amortized cost, net of allowance
for credit losses
–
266,176
–
266,176
–
295,209
1
295,210
Total loans, net
 
of allowance for loan losses
–
285,070
664,157
949,227
–
284,280
593,483
877,763
Total assets with
 
fair value disclosures
$
–
$
551,246
$
664,157
$
1,215,403
$
–
$
579,489
$
593,484
$
1,172,973
LIABILITIES
Deposits
$
–
$
1,266,562
$
–
$
1,266,562
$
–
$
1,188,585
$
–
$
1,188,585
Securitization liabilities at amortized cost
 
–
12,123
–
12,123
–
12,035
–
12,035
Subordinated notes and debentures
 
–
11,628
–
11,628
–
9,389
–
9,389
Total liabilities with
 
fair value disclosures
$
–
$
1,290,313
$
–
$
1,290,313
$
–
$
1,210,009
$
–
$
1,210,009
1
This table excludes financial assets and liabilities where the carrying value approximates their fair value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 35
The following table presents
 
the levels
 
within the fair value hierarchy for each
 
of the assets and liabilities measured
 
at fair value on a recurring basis as at
October 31, 2024
 
and October 31, 2023.
Fair Value Hierarchy for Assets and
 
Liabilities Measured at Fair Value
 
on a Recurring Basis
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
FINANCIAL ASSETS AND COMMODITIES
Trading loans, securities, and other
1
Government and government-related securities
Canadian government debt
Federal
$
691
$
9,551
$
–
$
10,242
$
72
$
9,073
$
–
$
9,145
Provinces
 
–
6,398
–
6,398
–
7,445
–
7,445
U.S. federal, state, municipal governments,
 
and agencies debt
–
18,861
–
18,861
2
24,325
67
24,394
Other OECD government-guaranteed debt
–
9,722
–
9,722
–
8,811
–
8,811
Mortgage-backed securities
–
1,352
–
1,352
–
1,698
–
1,698
Other debt securities
Canadian issuers
 
–
6,611
12
6,623
–
6,067
5
6,072
Other issuers
–
15,845
14
15,859
–
14,553
60
14,613
Equity securities
68,682
34
12
68,728
54,186
41
10
54,237
Trading loans
 
–
23,518
–
23,518
–
17,261
–
17,261
Commodities
13,504
962
–
14,466
7,620
791
–
8,411
Retained interests
–
1
–
1
–
3
–
3
 
 
82,877
92,855
38
175,770
 
61,880
90,068
142
152,090
Non-trading financial assets at fair value through
profit or loss
Securities
 
391
 
1,188
1,233
2,812
 
269
 
2,596
980
3,845
Loans
–
3,057
–
3,057
–
3,495
–
3,495
 
391
4,245
1,233
5,869
 
269
6,091
980
7,340
Derivatives
 
Interest rate contracts
 
 
2
 
15,440
–
15,442
 
17
 
22,893
–
22,910
Foreign exchange contracts
 
47
51,001
13
51,061
26
57,380
7
57,413
Credit contracts
 
–
6
–
6
–
54
–
54
Equity contracts
 
64
6,167
–
6,231
58
4,839
–
4,897
Commodity contracts
 
548
4,756
17
5,321
306
1,787
15
2,108
 
661
77,370
30
78,061
 
407
86,953
22
87,382
Financial assets designated at
fair value through profit or loss
Securities
1
 
–
 
6,417
–
6,417
 
–
 
5,818
–
5,818
 
–
6,417
–
6,417
 
–
5,818
–
5,818
Financial assets at fair value through other
comprehensive income
Government and government-related securities
Canadian government debt
Federal
–
18,139
–
18,139
–
18,210
–
18,210
Provinces
 
–
21,270
–
21,270
–
19,940
–
19,940
U.S. federal, state, municipal governments,
 
and agencies debt
–
35,197
–
35,197
–
11,002
–
11,002
Other OECD government-guaranteed debt
–
1,679
–
1,679
–
1,498
–
1,498
Mortgage-backed securities
–
2,137
–
2,137
–
2,277
–
2,277
Other debt securities
Asset-backed securities
–
1,384
–
1,384
–
4,114
–
4,114
Corporate and other debt
–
9,439
7
9,446
–
8,863
27
8,890
Equity securities
1,058
2
3,355
4,415
1,133
3
2,377
3,513
Loans
–
230
–
230
–
421
–
421
 
 
1,058
89,477
3,362
93,897
 
1,133
66,328
2,404
69,865
Securities purchased under reverse
repurchase agreements
–
10,488
–
10,488
–
9,649
–
9,649
FINANCIAL LIABILITIES
Trading deposits
–
29,907
505
30,412
–
29,995
985
30,980
Derivatives
 
Interest rate contracts
 
 
3
 
13,283
 
158
 
13,444
 
16
 
21,064
 
126
 
21,206
Foreign exchange contracts
 
30
40,936
12
40,978
19
44,841
13
44,873
Credit contracts
 
–
403
–
403
–
172
–
172
Equity contracts
 
–
7,974
24
7,998
7
3,251
21
3,279
Commodity contracts
 
673
4,845
27
5,545
248
1,846
16
2,110
 
706
67,441
221
 
68,368
 
290
71,174
176
 
71,640
Securitization liabilities at fair value
 
–
 
20,319
 
–
 
20,319
 
–
 
14,422
 
–
 
14,422
Financial liabilities designated
at fair value through profit or loss
 
–
 
207,890
 
24
 
207,914
 
–
 
192,108
 
22
 
192,130
Obligations related to securities sold short
1
 
1,783
 
37,732
 
–
 
39,515
 
1,329
 
43,332
 
–
 
44,661
Obligations related to securities sold
under repurchase agreements
–
9,736
–
9,736
–
12,641
–
12,641
1
 
Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but
 
not yet purchased (short positions).
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 36
(e)
 
TRANSFERS BETWEEN FAIR VALUE HIERARCHY LEVELS FOR ASSETS
 
AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
The Bank’s policy is to record transfers of assets
 
and liabilities between the different levels of
 
the fair value hierarchy using the fair values as
 
at the end of each
reporting period. Assets are transferred between
 
Level 1 and Level 2 depending on whether
 
there is sufficient frequency and volume in an
 
active market. There
were no significant transfers between Level
 
1 and Level 2 during the years ended
 
October 31, 2024 and October 31, 2023.
Movements of Level 3 instruments
Significant transfers into and out of Level 3 occur
 
mainly due to the following reasons:
●
 
Transfers from Level 3 to Level 2 occur when techniques
 
used for valuing the instrument incorporate
 
significant observable market inputs
 
or broker-dealer
quotes which were previously not observable.
 
●
 
Transfers from Level 2 to Level 3 occur when an instrument’s
 
fair value, which was previously determined
 
using valuation techniques with significant
 
observable
market inputs, is now determined using
 
valuation techniques with significant unobservable
 
inputs.
Due to the unobservable nature of the inputs
 
used to value Level 3 financial instruments,
 
there may be uncertainty about the valuation
 
of these instruments. The
fair value of Level 3 instruments may be drawn
 
from a range of reasonably possible alternatives.
 
In determining the appropriate levels for these
 
unobservable
inputs, parameters are chosen so that they
 
are consistent with prevailing market evidence
 
and management judgment.
There were no significant transfers between
 
Level 2 and Level 3 during the years ended
 
October 31, 2024 and October 31, 2023.
There were no other significant changes to
 
the unobservable inputs and sensitivities
 
for assets and liabilities classified as
 
Level 3 during the years ended
October 31, 2024 and October 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 37
(f)
 
RECONCILIATION OF CHANGES IN FAIR VALUE FOR LEVEL 3 ASSETS AND LIABILITIES
The following tables set out changes in fair
 
value of all assets and liabilities measured
 
at fair value using significant Level 3 unobservable
 
inputs for the years
ended October 31, 2024
 
and October 31, 2023.
Reconciliation of Changes in Fair Value for Level 3 Assets and Liabilities
(millions of Canadian dollars)
Change in
unrealized
Fair
Total realized and
Fair
gains
value as at
unrealized gains (losses)
Movements
1
Transfers
value as at
(losses) on
November 1
Included
Included
Purchases/
Sales/
Into
Out of
October 31
instruments
2023
in income
2
in OCI
3,4
Issuances
Settlements
Level 3
Level 3
2024
still held
5
FINANCIAL ASSETS
 
Trading loans, securities,
 
and other
Government and government-related
securities
$
67
$
–
$
–
$
–
$
(67)
$
–
$
–
$
–
$
–
Other debt securities
65
1
–
91
(88)
33
(76)
26
–
Equity securities
10
(1)
–
11
(8)
–
–
12
–
 
142
–
–
102
(163)
33
(76)
38
–
Non-trading financial assets at
fair value through profit or loss
Securities
980
98
–
232
(76)
–
(1)
1,233
80
 
980
98
–
232
(76)
–
(1)
1,233
80
Financial assets at fair value
through other comprehensive
income
Other debt securities
27
–
(3)
3
(20)
–
–
7
–
Equity securities
 
2,377
–
(7)
1,171
(205)
19
–
3,355
3
 
$
2,404
$
–
$
(10)
$
1,174
$
(225)
$
19
$
–
$
3,362
$
3
FINANCIAL LIABILITIES
Trading deposits
6
$
(985)
$
(13)
$
–
$
(122)
$
540
$
–
$
75
$
(505)
$
(6)
Derivatives
7
Interest rate contracts
(126)
(70)
–
–
38
–
–
(158)
(34)
Foreign exchange contracts
(6)
14
–
–
2
(14)
5
1
4
Equity contracts
(21)
(5)
–
–
(2)
3
1
(24)
(6)
Commodity contracts
(1)
(5)
–
–
(4)
–
–
(10)
(9)
(154)
(66)
–
–
34
(11)
6
(191)
(45)
Financial liabilities designated
at fair value through profit or loss
(22)
127
–
(260)
131
–
–
(24)
127
Change in
unrealized
Fair
Total realized and
Fair
gains
value as at
unrealized gains (losses)
Movements
1
Transfers
value as at
(losses) on
November 1
Included
Included
Purchases/
Sales/
Into
Out of
October 31
instruments
2022
in income
2
in OCI
3,4
Issuances
Settlements
Level 3
Level 3
2023
still held
5
FINANCIAL ASSETS
 
Trading loans, securities,
 
and other
Government and government-related
securities
$
–
$
–
$
–
$
33
$
–
$
34
$
–
$
67
$
–
Other debt securities
49
7
–
111
(145)
95
(52)
65
1
Equity securities
–
(2)
–
41
(29)
–
–
10
2
 
49
5
–
185
(174)
129
(52)
142
3
Non-trading financial assets at
fair value through profit or loss
Securities
845
4
–
187
(56)
–
–
980
(17)
 
845
4
–
187
(56)
–
–
980
(17)
Financial assets at fair value
through other comprehensive
income
Other debt securities
60
–
(6)
22
(28)
–
(21)
27
–
Equity securities
 
2,477
–
(565)
2,473
(2,008)
–
–
2,377
(382)
 
$
2,537
$
–
$
(571)
$
2,495
$
(2,036)
$
–
$
(21)
$
2,404
$
(382)
FINANCIAL LIABILITIES
Trading deposits
6
$
(416)
$
(57)
$
–
$
(539)
$
30
$
(15)
$
12
$
(985)
$
(43)
Derivatives
7
Interest rate contracts
(156)
(47)
–
–
77
–
–
(126)
25
Foreign exchange contracts
4
(2)
–
–
(1)
(8)
1
(6)
2
Equity contracts
(59)
35
–
26
(17)
(1)
(5)
(21)
24
Commodity contracts
27
24
–
–
(52)
–
–
(1)
(1)
(184)
10
–
26
7
(9)
(4)
(154)
50
Financial liabilities designated
at fair value through profit or loss
(44)
(89)
–
(486)
597
–
–
(22)
(89)
1
 
Includes foreign exchange.
2
 
Gains/losses on financial assets and liabilities are recognized within Non-interest income on the Consolidated Statement
 
of Income.
3
 
Other comprehensive income.
4
 
Includes realized gains/losses transferred to retained earnings on disposal of equities designated at FVOCI. Refer
 
to Note 7 for further details.
5
 
Changes in unrealized gains/losses on financial assets at FVOCI are recognized in AOCI.
6
 
Issuances and repurchases of trading deposits are reported on a gross basis.
7
Consists of derivative assets of $30 million (October 31, 2023/November 1, 2023 – $22 million; November 1, 2022
 
– $50 million)
 
and derivative liabilities of $221 million
(October 31, 2023/November 1, 2023 – $176 million; November 1, 2022 – $234 million), which have been netted
 
in this table for presentation purposes only.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 38
(g)
 
VALUATION OF ASSETS AND LIABILITIES CLASSIFIED AS LEVEL 3
Significant unobservable inputs in Level
 
3 positions
The following section discusses the significant
 
unobservable inputs for Level 3 positions
 
and assesses the potential effect that a change
 
in each unobservable
input may have on the fair value measurement.
Price Equivalent
Certain financial instruments, mainly
 
debt and equity securities, are valued using price
 
equivalents when market prices are
 
not available,
 
with fair value measured
by comparison with observable pricing data
 
from instruments with similar characteristics.
 
For debt securities, the price equivalent is
 
expressed in ‘points’, and
represents a percentage of the par amount.
 
For equity securities, the price equivalent
 
is based on a percentage of a proxy price.
 
There may be wide ranges
depending on the liquidity of the securities.
 
New issuances of debt and equity securities
 
are priced at 100% of the issue price.
Correlation
The movements of inputs are not necessarily
 
independent from other inputs. Such relationships,
 
where material to the fair value of a given instrument,
 
are
captured via correlation inputs into the pricing
 
models. The Bank includes correlation between
 
the asset class,
 
as well as across asset classes. For
 
example, price
correlation is the relationship between prices
 
of equity securities in equity basket
 
derivatives, and quanto correlation is the relationship
 
between instruments which
settle in one currency and the underlying
 
securities which are denominated in another
 
currency.
Implied Volatility
Implied volatility is the value of the volatility
 
of the underlying instrument which, when
 
input in an option pricing
 
model, such as Black-Scholes,
 
will return a
theoretical value equal to the current
 
market price of the option. Implied volatility
 
is a forward-looking and subjective measure,
 
and differs from historical volatility
because the latter is calculated from known
 
past returns of a security.
Funding Ratio
The funding ratio is a significant unobservable
 
input required to value loan commitments
 
issued by the Bank. The funding ratio represents
 
an estimate of the
percentage of commitments that are ultimately
 
funded by the Bank. The funding ratio is
 
based on a number of factors such as observed
 
historical funding
percentages within the various lending channels
 
and the future economic outlook, considering
 
factors including, but not limited to, competitive
 
pricing and
fixed/variable mortgage rate gap. An increase/decrease
 
in the funding ratio will increase/decrease
 
loan commitment liability values in relationship
 
to prevailing
interest rates.
Earnings Multiple, Discount Rate, and Liquidity
 
Discount
Earnings multiple, discount rate, and liquidity
 
discount are significant inputs used when
 
valuing certain equity securities. Earnings multiples
 
are selected based on
comparable entities and a higher multiple
 
will result in a higher fair value. Discount
 
rates are applied to cash flow forecasts
 
to reflect time value of money and the
risks associated with the cash flows.
 
A higher discount rate will result in a lower
 
fair value. Liquidity discounts may be applied
 
as a result of the difference in
liquidity between the comparable entity and
 
the equity securities being valued.
Inflation Rate Swap Curve
Inflation rate swap contracts valuation reflects
 
spread between interest rate curves and
 
the inflation rates. The inflation rates are
 
not observable and are
determined using proxy inputs such as inflation
 
indices (e.g., Consumer Price Index).
Net Asset Value
The fair value of certain private funds is based
 
on the net asset value determined by the
 
fund managers based on valuation methodologies,
 
as there are no
observable prices for these instruments.
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 39
Valuation techniques and inputs used in the fair value measurement
 
of Level 3 assets and liabilities
The following table presents
 
the Bank’s assets and liabilities recognized
 
at fair value and classified as Level 3, together
 
with the valuation techniques used to
measure fair value, the significant inputs
 
used in the valuation technique that are considered
 
unobservable,
 
and a range of values for those unobservable
 
inputs.
The range of values represents
 
the highest and lowest inputs
 
used in calculating the fair value.
Valuation Techniques and Inputs
 
Used in the Fair Value Measurement of Level 3 Assets and Liabilit
 
ies
 
 
 
 
As at
 
 
October 31, 2024
October 31, 2023
Significant
Valuation
unobservable
Lower
Upper
Lower
Upper
technique
inputs (Level 3)
range
range
range
range
Unit
Government and government-
 
 
 
 
related securities
Market comparable
Bond price equivalent
n/a
1
n/a
99
100
points
Other debt securities
Market comparable
Bond price equivalent
–
102
–
103
points
Equity securities
2
Market comparable
New issue price
100
100
100
100
%
Non-trading financial assets
at fair value through profit or loss
Market comparable
New issue price
100
100
100
100
%
Discounted cash flow
Discount rates
9
9
9
9
%
EBITDA multiple
Earnings multiple
–
20.0
–
20.0
times
Price-based
Net Asset Value
3
n/a
n/a
n/a
n/a
Derivatives
 
Interest rate contracts
 
Discounted cash flow
Inflation rate swap curve
2
2
1
2
%
Option model
Funding ratio
75
75
75
75
%
Swaption Model
Currency-specific volatility
56
319
n/a
n/a
%
Foreign exchange contracts
 
Option model
Currency-specific volatility
5
26
5
14
%
Equity contracts
 
Option model
Price correlation
16
67
55
86
%
 
Quanto correlation
n/a
n/a
–
68
%
 
Dividend yield
2
7
–
7
%
 
Equity volatility
13
27
14
41
%
Commodity contracts
 
Option model
Quanto correlation
(67)
(47)
(67)
(47)
%
Trading deposits
Option model
Quanto correlation
n/a
n/a
–
68
%
 
Dividend yield
n/a
n/a
–
4
%
 
Equity volatility
n/a
n/a
14
20
%
Swaption model
Currency-specific volatility
53
319
50
503
%
Financial liabilities designated
at fair value through profit or loss
Option model
Funding ratio
2
70
4
70
%
1
 
Not applicable.
2
 
Equity securities exclude the fair value of Federal Reserve stock and FHLB stock of $3.2 billion (October
 
31, 2023 – $2.2 billion) which are redeemable by the issuer at cost which
approximates fair value. These securities cannot be traded in the market, hence, these securities have not been
 
subjected to the sensitivity analysis.
3
 
Net asset value information for private funds has not been disclosed due to the wide range in prices for these instruments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 40
The following table summarizes the potential
 
effect of using reasonably possible alternative
 
assumptions for financial assets and
 
financial liabilities held, that are
classified in Level 3 of the fair value hierarchy
 
as at October 31, 2024 and October 31, 2023.
 
For trading securities, non-trading securities
 
at FVTPL and equity
securities at FVOCI, the sensitivity was
 
calculated based on an upward and downward
 
shock of the fair value reported. For trading deposits,
 
the sensitivity was
calculated by varying unobservable inputs
 
which may include volatility, credit spreads, and correlation. For
 
interest rate derivatives, the Bank performed
 
a
sensitivity analysis on the mortgage spreads
 
and unobservable inflation curve. For equity
 
derivatives, the sensitivity was calculated
 
by using reasonably possible
alternative
 
assumptions by shocking correlation,
 
or the price and volatility of the underlying
 
equity instrument. For financial liabilities
 
designated at FVTPL, the
sensitivity was calculated based on an upward
 
and downward shock of the funding ratio.
Sensitivity Analysis of Level 3 Financial
 
Assets and Liabilities
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Impact to net assets
Impact to net assets
Decrease in
Increase in
Decrease in
Increase in
fair value
fair value
fair value
fair value
FINANCIAL ASSETS
Trading loans, securities, and other
Securities
$
3
$
1
$
10
$
2
Non-trading financial assets at fair
 
value through profit or loss
Securities
155
39
133
49
Financial assets at fair value through other
 
comprehensive income
Equity securities
30
12
25
13
FINANCIAL LIABILITIES
Trading deposits
–
–
–
–
Derivatives
Interest rate contracts
28
17
25
16
Equity contracts
1
–
2
1
29
17
27
17
Financial liabilities designated at fair value
 
through profit or loss
2
4
5
5
Total
$
219
$
73
$
200
$
86
For the years ended October 31, 2024
 
and 2023, the aggregate difference yet
 
to be recognized in net income due to the difference
 
between the transaction price
and the amount determined using valuation
 
techniques with significant non-observable inputs
 
at initial recognition were immaterial.
(h)
 
FINANCIAL INSTRUMENTS DESIGNATED AT FAIR VALUE
Securities Designated at Fair Value through Profit
 
or Loss
Certain securities supporting insurance
 
contract liabilities within the Bank’s insurance
 
underwriting subsidiaries have been designated
 
at FVTPL to eliminate or
significantly reduce an accounting mismatch.
 
Insurance contract liabilities are measured
 
using a discount factor and changes in the discount
 
factor are recognized
on the Consolidated Statement of Income.
 
The unrealized gains or losses on securities
 
designated at FVTPL are recognized on
 
the Consolidated Statement of
Income in the same period as gains or losses
 
resulting from changes to the discount rate
 
used to value the insurance contract liabilities.
In addition, certain debt securities have been designated
 
at FVTPL as they are economically hedged
 
with derivatives and the designation eliminates
 
or
significantly reduces an accounting mismatch.
Financial Liabilities Designated at Fair Value through
 
Profit or Loss
Certain deposits have been designated at FVTPL
 
to reduce an accounting mismatch from
 
related economic hedges, and are included
 
in Financial liabilities
designated at FVTPL on the Consolidated
 
Balance Sheet. In addition, certain obligations
 
related to securities sold under repurchase
 
agreements have been
designated at FVTPL as the instruments
 
are part of a portfolio that is managed on a
 
fair value basis and have been included in Obligations
 
related to securities
sold under repurchase agreements on the Consolidated
 
Balance Sheet. The fair value of obligations
 
related to securities sold under repurchase
 
agreements
designated at FVTPL was $9,736 million
 
as at October 31, 2024 (October 31, 2023
 
– $7,974 million).
For financial liabilities designated at FVTPL,
 
the estimated amount that the Bank
 
would be contractually required to pay at
 
maturity, which is based on notional
amounts, was $2,744 million less than its
 
fair value as at October 31, 2024
 
(October 31, 2023
 
– $2,897 million).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 41
NOTE 6: OFFSETTING FINANCIAL ASSETS
 
AND FINANCIAL LIABILITIES
The Bank enters into netting agreements
 
with counterparties (such as clearing houses)
 
to manage the credit risks associated primarily
 
with repurchase and
reverse repurchase transactions, securities
 
borrowing and lending transactions, and
 
OTC and exchange-traded derivatives.
 
These netting agreements and similar
arrangements generally allow the counterparties
 
to set-off liabilities against available assets received.
 
The right to set-off is a legal right to settle or otherwise
eliminate all or a portion of an amount due by
 
applying against that amount an amount receivable
 
from the other party. These agreements effectively reduce the
Bank’s credit exposure by what it would have
 
been if those same counterparties were liable
 
for the gross exposure on the same underlying
 
contracts.
Netting arrangements are typically constituted
 
by a master netting agreement which
 
specifies the general terms of the agreement
 
between the counterparties,
including information on the basis of the netting
 
calculation, types of collateral, and the definition
 
of default and other termination events
 
for transactions executed
under the agreement. The master netting
 
agreements contain the terms and conditions
 
by which all (or as many as possible) relevant
 
transactions between the
counterparties are governed. Multiple individual
 
transactions are subsumed under this general
 
master netting agreement, forming a single legal
 
contract under
which the counterparties conduct their relevant
 
mutual business. In addition to the mitigation
 
of credit risk, placing individual transactions
 
under a single master
netting agreement that provides for netting of
 
transactions in scope also helps to mitigate
 
settlement risks associated with transacting
 
in multiple jurisdictions or
across multiple contracts. These arrangements
 
include clearing agreements, global
 
master repurchase agreements, and global
 
master securities lending
agreements.
In the normal course of business, the Bank
 
enters into contracts to buy and sell goods
 
and services from various suppliers. Some
 
of these contracts may have
netting provisions that allow for the offset of various
 
trade payables and receivables in the event
 
of default of one of the parties. While these
 
are not disclosed in
the following table, the gross amount of all payables
 
and receivables to and from the Bank’s vendors
 
is disclosed in Note 16 in accounts receivable
 
and other
items, and in Note 18 in accounts payable,
 
accrued expenses, and other items.
The Bank also enters into regular way purchases
 
and sales of stocks and bonds. Some of
 
these transactions may have netting provisions
 
that allow for the
offset of broker payables and broker receivables
 
related to these purchases and sales.
 
While these are not disclosed in the following
 
table, the amount of
receivables are presented in amounts receivable
 
from brokers, dealers, and clients, and payables
 
are disclosed in amounts payable to brokers,
 
dealers, and
clients.
The following table provides a summary
 
of the financial assets and liabilities which
 
are subject to enforceable master netting
 
agreements and similar
arrangements, including amounts not otherwise
 
set-off on the Consolidated Balance Sheet, as
 
well as financial collateral received to mitigate
 
credit exposures for
these financial assets and liabilities. The gross
 
financial assets and liabilities are reconciled
 
to net amounts and are presented within the
 
associated line on the
Consolidated Balance Sheet, after transactions
 
with the same counterparties have been offset. Related
 
amounts and collateral received that are not
 
offset on the
Consolidated Balance Sheet, but are otherwise
 
subject to the same enforceable netting agreements
 
and similar arrangements, are then presented
 
to arrive at a
net amount.
 
Offsetting Financial Assets and Financial Liabilities
(millions of Canadian dollars)
As at
October 31, 2024
Amounts subject to an enforceable
master netting agreement or similar
arrangement that are not offset in
the Consolidated Balance Sheet
1,2
Gross amounts
Gross amounts
of recognized
of recognized
Net amount
financial
financial
of financial
Amounts
instruments
instruments
instruments
subject to an
before
offset in the
presented in the
enforceable
balance sheet
Consolidated
Consolidated
master netting
 
netting
Balance Sheet
Balance Sheet
agreement
Collateral
Net Amount
Financial Assets
Derivatives
$
79,949
$
1,888
$
78,061
$
42,849
$
14,214
$
20,998
Securities purchased under
reverse repurchase agreements
225,475
17,258
208,217
20,904
184,116
3,197
Total
305,424
19,146
286,278
63,753
198,330
24,195
Financial Liabilities
Derivatives
70,256
1,888
68,368
42,849
19,903
5,616
Obligations related to securities sold
under repurchase agreements
219,158
17,258
201,900
20,904
179,318
1,678
Total
$
289,414
$
19,146
$
270,268
$
63,753
$
199,221
$
7,294
October 31, 2023
Financial Assets
Derivatives
$
93,867
$
6,485
$
87,382
$
47,300
$
13,526
$
26,556
Securities purchased under
reverse repurchase agreements
232,211
27,878
204,333
12,291
188,510
3,532
Total
326,078
34,363
291,715
59,591
202,036
30,088
Financial Liabilities
Derivatives
78,125
6,485
71,640
47,300
14,279
10,061
Obligations related to securities sold
under repurchase agreements
194,732
27,878
166,854
12,291
153,090
1,473
Total
$
272,857
$
34,363
$
238,494
$
59,591
$
167,369
$
11,534
1
 
Excess collateral as a result of overcollateralization has not been reflected in the table.
2
 
Includes amounts where the contractual set-off rights are subject to uncertainty under the laws of the
 
relevant jurisdiction.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 42
NOTE 7: SECURITIES
Securities are held by the Bank for both trading
 
and non-trading activities. Trading securities are included
 
in Trading loans, securities, and other on the
Consolidated Balance Sheet. Non-trading
 
securities are included in Non-trading financial
 
assets at FVTPL, Financial assets designated
 
at FVTPL, Financial assets
at FVOCI, or Debt securities at amortized
 
cost, net of allowance for credit losses on
 
the Consolidated Balance Sheet.
(a)
 
REMAINING TERMS TO MATURITIES OF SECURITIES
The remaining terms to contractual maturities
 
of the securities held by the Bank are
 
shown on the following table.
Securities Maturity Schedule
(millions of Canadian dollars)
As at
October 31
October 31
 
2024
2023
Remaining terms to maturities
1
Over 1
Over 3
Over 5
With no
Within
year to
years to
years to
Over 10
 
specific
1 year
3 years
5 years
10 years
years
maturity
Total
Total
Trading securities
Government and government-related securities
Canadian government debt
Federal
$
4,765
$
1,228
$
1,876
$
1,238
$
1,135
$
–
$
10,242
$
9,145
Provinces
 
872
1,023
669
1,558
2,276
–
6,398
7,445
U.S. federal, state, municipal governments, and
 
agencies debt
 
4,308
2,215
1,580
2,686
8,072
–
18,861
24,394
Other OECD government-guaranteed debt
7,790
861
354
497
220
–
9,722
8,811
Mortgage-backed securities
Residential
459
480
97
4
–
–
1,040
1,484
Commercial
110
49
74
79
–
–
312
214
18,304
5,856
4,650
6,062
11,703
–
46,575
51,493
Other debt securities
Canadian issuers
 
900
2,722
1,037
1,194
770
–
6,623
6,072
Other issuers
3,547
7,409
2,788
1,428
686
1
15,859
14,613
4,447
10,131
3,825
2,622
1,456
1
22,482
20,685
Equity securities
Common shares
–
–
–
–
–
68,670
68,670
54,204
Preferred shares
–
–
–
–
–
58
58
33
–
–
–
–
–
68,728
68,728
54,237
Retained interests
–
–
1
–
–
–
1
3
Total trading securities
$
22,751
$
15,987
$
8,476
$
8,684
$
13,159
$
68,729
$
137,786
$
126,418
Non-trading financial assets at fair value through
 
profit or loss
Government and government-related securities
U.S. federal, state, municipal governments, and
 
agencies debt
 
$
–
$
–
$
–
$
–
$
271
$
–
$
271
$
288
–
–
–
–
271
–
271
288
Other debt securities
Canadian issuers
 
20
82
161
31
–
618
912
750
Asset-backed securities
2
13
373
11
15
–
414
1,885
Other issuers
–
–
–
–
–
50
50
48
22
95
534
42
15
668
1,376
2,683
Equity securities
Common shares
–
–
–
–
–
1,105
1,105
816
Preferred shares
–
–
–
–
–
60
60
58
–
–
–
–
–
1,165
1,165
874
Total non-trading financial
 
assets at fair value
 
through profit or loss
$
22
$
95
$
534
$
42
$
286
$
1,833
$
2,812
$
3,845
Financial assets designated at fair value through profit
 
or loss
Government and government-related securities
Canadian government debt
Federal
$
251
$
30
$
10
$
–
$
3
$
–
$
294
$
484
Provinces
 
511
424
247
1,202
47
12
2,443
1,817
U.S. federal, state, municipal governments, and
 
agencies debt
 
–
9
–
–
–
–
9
8
Other OECD government-guaranteed debt
188
104
18
–
–
–
310
411
950
567
275
1,202
50
12
3,056
2,720
Other debt securities
Canadian issuers
 
988
882
395
58
66
6
2,395
2,577
Other issuers
71
817
73
5
–
–
966
521
1,059
1,699
468
63
66
6
3,361
3,098
Total financial assets designated
 
at fair value
 
through profit or loss
$
2,009
$
2,266
$
743
$
1,265
$
116
$
18
$
6,417
$
5,818
1
 
Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable
 
contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 43
Securities Maturity Schedule
(Continued)
(millions of Canadian dollars)
As at
October 31
October 31
 
2024
2023
Remaining terms to maturities
1
Over 1
Over 3
Over 5
With no
Within
year to
years to
years to
Over 10
 
specific
1 year
3 years
5 years
10 years
years
maturity
Total
Total
Securities at fair value through other comprehensive
 
income
Government and government-related securities
Canadian government debt
Federal
$
4,587
$
1,070
$
3,447
$
8,651
$
384
$
–
$
18,139
$
18,210
Provinces
2,807
2,376
6,346
9,609
132
–
21,270
19,940
U.S. federal, state, municipal governments, and
 
agencies debt
 
19,837
3,333
1,780
8,179
2,068
–
35,197
11,002
Other OECD government-guaranteed debt
863
521
173
122
–
–
1,679
1,498
Mortgage-backed securities
5
1,539
593
–
–
–
2,137
2,277
28,099
8,839
12,339
26,561
2,584
–
78,422
52,927
Other debt securities
Asset-backed securities
–
–
38
94
1,252
–
1,384
4,114
Corporate and other debt
1,391
2,600
1,679
2,097
1,679
–
9,446
8,890
1,391
2,600
1,717
2,191
2,931
–
10,830
13,004
Equity securities
Common shares
–
–
–
–
–
3,914
3,914
3,170
Preferred shares
–
–
–
–
–
501
501
343
–
–
–
–
–
4,415
4,415
3,513
Total securities at fair value
 
through other
 
comprehensive income
$
29,490
$
11,439
$
14,056
$
28,752
$
5,515
$
4,415
$
93,667
$
69,444
Debt securities at amortized cost, net of allowance for
 
credit losses
Government and government-related securities
Canadian government debt
Federal
 
$
1,858
$
12,431
$
5,222
$
2,095
$
1,385
$
–
$
22,991
$
25,344
Provinces
1,587
2,496
5,192
9,339
–
–
18,614
17,474
U.S. federal, state, municipal governments, and
 
agencies debt
 
3,565
19,028
28,157
28,363
44,986
–
124,099
146,217
Other OECD government-guaranteed debt
11,134
18,391
7,133
2,736
–
–
39,394
41,269
18,144
52,346
45,704
42,533
46,371
–
205,098
230,304
Other debt securities
Asset-backed securities
49
6,653
3,821
6,734
12,451
–
29,708
39,888
Non-agency collateralized mortgage obligation
portfolio
–
–
–
209
15,153
–
15,362
16,791
Canadian issuers
309
2,899
392
1,122
–
–
4,722
4,552
Other issuers
2,547
6,099
6,044
2,035
–
–
16,725
16,481
2,905
15,651
10,257
10,100
27,604
–
66,517
77,712
Total debt securities at amortized
 
cost, net of
 
allowance for credit losses
21,049
67,997
55,961
52,633
73,975
–
271,615
308,016
Total securities
$
75,321
$
97,784
$
79,770
$
91,376
$
93,051
$
74,995
$
512,297
$
513,541
1
 
Represents contractual maturities. Actual maturities may differ due to prepayment privileges in the applicable
 
contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 44
(b)
 
UNREALIZED SECURITIES GAINS (LOSSES)
The following table summarizes the unrealized
 
gains and losses as at October 31, 2024
 
and October 31, 2023.
Unrealized Securities Gains (Losses) for
 
Securities at Fair Value Through Other Comprehensive
 
Income
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Cost/
Gross
Gross
Cost/
Gross
Gross
amortized
unrealized
unrealized
Fair
amortized
unrealized
unrealized
Fair
cost
1
gains
(losses)
value
cost
1
gains
(losses)
value
Government and government-related
securities
Canadian government debt
Federal
 
$
18,281
$
17
$
(159)
$
18,139
$
18,335
$
45
$
(170)
$
18,210
Provinces
21,263
77
(70)
21,270
19,953
105
(118)
19,940
U.S. federal, state, municipal governments, and
 
 
 
 
 
 
 
 
 
agencies debt
 
35,371
22
(196)
35,197
11,260
17
(275)
11,002
Other OECD government-guaranteed debt
1,687
1
(9)
1,679
1,521
1
(24)
1,498
Mortgage-backed securities
2,125
17
(5)
2,137
2,313
–
(36)
2,277
78,727
134
(439)
78,422
53,382
168
(623)
52,927
Other debt securities
 
 
 
 
 
 
 
 
Asset-backed securities
1,397
1
(14)
1,384
4,146
–
(32)
4,114
Corporate and other debt
9,419
77
(50)
9,446
8,946
43
(99)
8,890
10,816
78
(64)
10,830
13,092
43
(131)
13,004
Total debt securities
89,543
212
(503)
89,252
66,474
211
(754)
65,931
Equity securities
 
 
 
 
 
 
 
 
Common shares
3,810
176
(72)
3,914
3,191
95
(116)
3,170
Preferred shares
632
29
(160)
501
566
1
(224)
343
4,442
205
(232)
4,415
3,757
96
(340)
3,513
Total securities at fair value through other
 
 
 
 
 
 
 
 
comprehensive income
$
93,985
$
417
$
(735)
$
93,667
$
70,231
$
307
$
(1,094)
$
69,444
1
 
Includes the foreign exchange translation of amortized cost balances at the period-end spot rate.
(c)
 
EQUITY SECURITIES DESIGNATED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
The Bank designated certain equity securities
 
at FVOCI. The following table summarizes
 
the fair value of equity securities designated
 
at FVOCI as at
October 31, 2024 and October 31, 2023, and
 
dividend income recognized on these securities
 
for the years ended October 31, 2024 and
 
October
 
31, 2023.
Equity Securities Designated at Fair Value Through
 
Other Comprehensive Income
 
(millions of Canadian dollars)
As at
For the years ended
October 31, 2024
October 31, 2023
October 31, 2024
October 31, 2023
Fair value
Dividend income recognized
Common shares
$
3,914
$
3,170
$
153
$
476
 
Preferred shares
501
343
155
136
Total
$
4,415
$
3,513
$
308
$
612
The Bank disposed of certain equity securities
 
in line with the Bank’s investment strategy
 
and disposed of FHLB stocks in accordance
 
with FHLB member
stockholding requirements, as follows:
Equity Securities Net Realized Gains
 
(Losses)
(millions of Canadian dollars)
For the years ended
October 31
October 31
 
2024
2023
Equity Securities
1
Fair value
$
 
643
$
 
230
Cumulative realized gain/(loss)
 
121
(18)
FHLB Stock
Fair value
 
187
 
1,575
 
Cumulative realized gain/(loss)
–
–
1
 
Includes disposal of the Bank’s holdings in First Horizon Corporation (“First Horizon”) common shares
 
in the third quarter of fiscal 2024.
(d)
 
DEBT SECURITIES NET REALIZED GAINS
 
(LOSSES)
The Bank disposed of certain debt securities
 
measured at amortized cost and FVOCI
 
during the year. The following table summarizes the net realized
 
gains and
losses on securities disposed of during
 
the years ended October 31, 2024 and October
 
31, 2023, which are included in Other income
 
(loss) on the Consolidated
Statement of Income.
Debt Securities Net Realized Gains (Losses)
(millions of Canadian dollars)
For the years ended
October 31
October 31
 
2024
2023
Debt securities at amortized cost
1
$
(381)
$
(57)
Debt securities at fair value through other
 
comprehensive income
 
23
 
9
Total
$
(358)
$
(48)
1
 
Includes $311 million (US$226 million) (October 31, 2023 – nil) of pre
 
-tax losses on debt securities at amortized cost related to the balance sheet restructuring initiative
 
undertaken in the
U.S. Retail segment. Refer to Note 26 for additional information regarding the asset limitation on TD’s two
 
U.S. bank subsidiaries. As of December 4, 2024, the Bank has sold additional
debt securities during the first quarter of fiscal 2025, resulting in approximately an additional $330 million (US$236
 
million) of pre-tax losses on debt securities at amortized cost.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 45
(e)
 
CREDIT QUALITY OF DEBT SECURITIES
The Bank evaluates non-retail credit risk
 
on an individual borrower basis, using both
 
a BRR and FRR, as detailed in the
 
shaded area of the “Managing Risk”
section of the 2024
 
MD&A. This system is used to assess all
 
non-retail exposures, including debt securities.
The following table provides the gross carrying
 
amounts of debt securities measured
 
at amortized cost and debt securities at
 
FVOCI by internal risk rating for credit
risk management purposes, presenting
 
separately those debt securities that are
 
subject to Stage 1, Stage 2, and Stage 3
 
allowances. Refer to the “Allowance
 
for
Credit Losses” table in Note 8 for details regarding
 
the allowance and provision for credit losses
 
on debt securities.
Debt Securities by Risk Rating
 
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Debt securities
1
Investment grade
$
360,272
$
–
$
n/a
$
360,272
$
373,317
$
–
$
n/a
$
373,317
Non-investment grade
439
91
n/a
530
519
–
n/a
519
Watch and classified
n/a
68
n/a
68
n/a
113
n/a
113
Default
n/a
n/a
–
–
n/a
n/a
–
–
Total debt securities
360,711
159
–
360,870
373,836
113
–
373,949
Allowance for credit losses on debt
securities at amortized cost
3
–
–
3
2
–
–
2
Total debt securities, net of allowance
$
360,708
$
159
$
–
$
360,867
$
373,834
$
113
$
–
$
373,947
1
 
Includes debt securities backed by government-guaranteed loans of $113
 
million (October 31, 2023 – $104 million), which are reported in Non-investment grade or a lower
 
risk rating
based on the issuer’s credit risk.
As at October 31, 2024, total debt securities,
 
net of allowance, in the table above, include
 
debt securities measured at amortized cost,
 
net of allowance, of
$271,615 million (October 31, 2023 – $308,016
 
million), and debt securities measured at
 
FVOCI of $89,252 million (October 31, 2023
 
– $65,931 million).
The difference between probability-weighted ECLs
 
and base ECLs on debt securities at FVOCI
 
and at amortized cost as at both October 31, 2024
 
and
October 31, 2023, was insignificant. Refer to
 
Note 3 for further details.
NOTE 8: LOANS, IMPAIRED LOANS, AND ALLOWANCE
 
FOR CREDIT LOSSES
(a)
 
LOANS AND ACCEPTANCES
The following table provides details regarding
 
the Bank’s loans and acceptances as at October
 
31, 2024
 
and October 31, 2023.
Loans and Acceptances
(millions of Canadian dollars)
As at October 31
2024
2023
Residential mortgages
$
331,649
$
320,341
Consumer instalment and other personal
228,382
217,554
Credit card
40,639
38,660
Business and government
356,973
326,528
 
957,643
903,083
Customers’ liability under acceptances
–
17,569
Loans at FVOCI
(Note 5)
230
421
Total loans
 
and acceptances
957,873
921,073
Total allowance for loan losses
8,094
7,136
Total loans and acceptances, net of allowance
$
949,779
$
913,937
Business and government loans (including
 
loans at FVOCI) and customers’ liability
 
under acceptances are grouped together
 
as reflected below for presentation in
the “Loans and Acceptances by Risk Rating”
 
table.
Loans and Acceptances – Business and
 
Government
(millions of Canadian dollars)
As at October 31
2024
2023
Loans at amortized cost
$
356,973
$
326,528
Customers’ liability under acceptances
–
17,569
Loans at FVOCI
(Note 5)
230
421
Loans and acceptances
357,203
344,518
Allowance for loan losses
3,583
2,990
Loans and acceptances, net of allowance
$
353,620
$
341,528
(b)
 
CREDIT QUALITY OF LOANS
In the retail portfolio, including individuals and
 
small businesses, the Bank manages exposures
 
on a pooled basis, using predictive credit
 
scoring techniques. For
non-retail exposures, each borrower is assigned
 
a BRR that reflects the PD of the borrower
 
using proprietary industry and sector
 
specific risk models and expert
judgment. Refer to the shaded areas of the “Managing
 
Risk”
 
section of the 2024 MD&A for further details,
 
including the mapping of PD ranges
 
to risk levels for
retail exposures as well as the Bank’s 21-point
 
BRR scale to risk levels and external
 
ratings for non-retail exposures.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 46
The following tables provide the gross carrying
 
amounts of loans, acceptances, and credit
 
risk exposures on loan commitments and
 
financial guarantee contracts
by internal risk rating for credit risk management
 
purposes,
 
presenting separately those that are
 
subject to Stage 1, Stage 2, and Stage 3
 
allowances.
Loans and Acceptances by Risk Rating
 
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Residential mortgages
1,2,3
Low Risk
$
238,101
$
655
$
n/a
$
238,756
$
225,596
$
46
$
n/a
$
225,642
Normal Risk
65,318
13,620
n/a
78,938
70,423
11,324
n/a
81,747
Medium Risk
370
9,614
n/a
9,984
110
9,581
n/a
9,691
High Risk
5
3,201
347
3,553
10
2,573
325
2,908
Default
n/a
n/a
418
418
n/a
n/a
353
353
Total loans
303,794
27,090
765
331,649
296,139
23,524
678
320,341
Allowance for loan losses
116
189
60
365
154
192
57
403
Loans, net of allowance
303,678
26,901
705
331,284
295,985
23,332
621
319,938
Consumer instalment and other personal
4
 
 
 
 
Low Risk
101,171
2,624
n/a
103,795
100,102
2,278
n/a
102,380
Normal Risk
66,105
12,054
n/a
78,159
60,613
13,410
n/a
74,023
Medium Risk
27,188
6,352
n/a
33,540
24,705
5,816
n/a
30,521
High Risk
4,017
7,881
412
12,310
4,122
5,700
323
10,145
Default
n/a
n/a
578
578
n/a
n/a
485
485
Total loans
198,481
28,911
990
228,382
189,542
27,204
808
217,554
Allowance for loan losses
667
1,120
262
2,049
653
959
197
1,809
Loans, net of allowance
197,814
27,791
728
226,333
188,889
26,245
611
215,745
Credit card
 
 
 
 
 
 
Low Risk
6,902
16
n/a
6,918
6,499
12
n/a
6,511
Normal Risk
11,714
188
n/a
11,902
11,171
134
n/a
11,305
Medium Risk
12,908
1,122
n/a
14,030
12,311
1,163
n/a
13,474
High Risk
2,832
4,382
437
7,651
2,567
4,289
401
7,257
Default
n/a
n/a
138
138
n/a
n/a
113
113
Total loans
34,356
5,708
575
40,639
32,548
5,598
514
38,660
Allowance for loan losses
704
1,015
378
2,097
709
913
312
1,934
Loans, net of allowance
33,652
4,693
197
38,542
31,839
4,685
202
36,726
Business and government
1,2,3,5
 
 
 
 
 
 
Investment grade or Low/Normal Risk
158,425
102
n/a
158,527
159,477
101
n/a
159,578
Non-investment grade or Medium Risk
166,892
11,851
n/a
178,743
161,651
10,278
n/a
171,929
Watch and classified or High Risk
704
16,610
89
17,403
604
11,017
75
11,696
Default
n/a
n/a
2,530
2,530
n/a
n/a
1,315
1,315
Total loans and acceptances
326,021
28,563
2,619
357,203
321,732
21,396
1,390
344,518
Allowance for loan losses
983
1,758
842
3,583
1,157
1,371
462
2,990
Loans and acceptances, net of allowance
325,038
26,805
1,777
353,620
320,575
20,025
928
341,528
Total loans and acceptances
6
862,652
90,272
4,949
957,873
839,961
77,722
3,390
921,073
Total allowance for loan losses
6
2,470
4,082
1,542
8,094
2,673
3,435
1,028
7,136
Total loans and acceptances,
net of allowance
6
$
860,182
$
86,190
$
3,407
$
949,779
$
837,288
$
74,287
$
2,362
$
913,937
1
Includes impaired loans with a balance of $259 million (October 31, 2023 – $271 million)
 
which did not have a related allowance for loan losses as the realizable value of the collateral
exceeded the loan amount.
2
Excludes trading loans and non-trading loans at FVTPL with a fair value of $24 billion (October 31, 2023 – $17
 
billion) and $3 billion (October 31, 2023 – $3 billion), respectively.
3
Includes insured mortgages of $71 billion (October 31, 2023 – $74 billion).
4
Includes Canadian government-insured real estate personal loans of $6 billion (October 31, 2023 – $7 billion).
5
Includes loans guaranteed by government agencies of $24 billion (October 31, 2023 – $26 billion), which are primarily
 
reported in non-investment grade or a lower risk rating based on the
borrowers’ credit risk.
6
 
Stage 3 includes ACI loans of nil (October 31, 2023 – $91 million) and a related allowance for loan losses of nil (October
 
31, 2023
 
– $6 million), which have been included in the “Default”
risk rating category as they were impaired at acquisition.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 47
Loans and Acceptances by Risk Rating
(Continued)
 
– Off-Balance Sheet Credit Instruments
1
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail Exposures
2
 
 
 
 
 
 
Low Risk
$
268,234
$
1,365
$
n/a
$
269,599
$
254,231
$
1,093
$
n/a
$
255,324
Normal Risk
93,576
1,332
n/a
94,908
91,474
1,112
n/a
92,586
Medium Risk
18,562
1,247
n/a
19,809
19,774
1,079
n/a
20,853
High Risk
1,126
1,181
–
2,307
1,209
1,198
–
2,407
Default
n/a
n/a
–
–
n/a
n/a
–
–
Non-Retail Exposures
3
Investment grade
287,830
–
n/a
287,830
264,029
–
n/a
264,029
Non-investment grade
99,866
6,968
n/a
106,834
98,068
4,396
n/a
102,464
Watch and classified
328
5,418
–
5,746
218
4,158
–
4,376
Default
n/a
n/a
252
252
n/a
n/a
107
107
Total off-balance sheet credit
 
instruments
769,522
17,511
252
787,285
729,003
13,036
107
742,146
Allowance for off-balance sheet credit
instruments
439
593
11
1,043
476
565
8
1,049
Total off-balance sheet credit
instruments, net of allowance
$
769,083
$
16,918
$
241
$
786,242
$
728,527
$
12,471
$
99
$
741,097
1
Exclude mortgage commitments.
2
 
Includes
$384 billion (October 31, 2023 – $369 billion) of personal lines of credit and credit card lines, which are
 
unconditionally cancellable at the Bank’s discretion at any time.
3
 
Includes $66 billion (October 31, 2023 – $62 billion) of the undrawn component of uncommitted credit and liquidity
 
facilities.
(c)
 
IMPAIRED LOANS
The following table presents information related
 
to the Bank’s impaired loans as at October 31, 2024
 
and October 31, 2023.
Impaired Loans
1
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Related
Average
Related
Average
Unpaid
allowance
gross
Unpaid
allowance
gross
principal
Carrying
for credit
impaired
principal
Carrying
for credit
impaired
balance
2
value
losses
loans
balance
2
value
losses
loans
 
Residential mortgages
$
827
$
765
$
60
$
685
$
665
$
618
$
57
$
618
Consumer instalment and
other personal
1,045
990
262
894
849
795
197
735
Credit card
575
575
378
544
514
514
312
425
Business and government
 
2,812
2,619
842
1,875
1,473
1,372
456
1,034
Total
$
5,259
$
4,949
$
1,542
$
3,998
$
3,501
$
3,299
$
1,022
$
2,812
1
Balances exclude ACI loans.
2
Represents contractual amount of principal owed.
(d)
 
ALLOWANCE FOR CREDIT LOSSES
The following table provides details on
 
the Bank’s allowance for credit losses as at and
 
for the years ended October 31, 2024
 
and October 31, 2023, including
allowance for off-balance sheet instruments
 
in the applicable categories.
Allowance for Credit Losses
(millions of Canadian dollars)
Foreign
Foreign
 
 
 
exchange,
 
 
 
 
exchange,
 
Balance at
Provision
 
Write-offs,
disposals,
Balance
Balance at
Provision
 
Write-offs,
disposals,
Balance
beginning
for credit
net of
and other
at end of
beginning
for credit
net of
and other
at end of
of year
losses
recoveries
adjustments
year
of year
losses
recoveries
adjustments
year
 
For the years ended
October 31, 2024
October 31, 2023
Residential mortgages
$
403
$
(34)
$
(7)
$
3
$
365
$
323
$
85
$
(7)
$
2
$
403
Consumer instalment and other
personal
1,895
1,407
(1,173)
4
2,133
1,704
988
(806)
9
1,895
Credit card
2,577
1,676
(1,561)
7
2,699
2,352
1,327
(1,137)
35
2,577
Business and government
3,310
1,204
(536)
(38)
3,940
2,984
533
(261)
54
3,310
Total allowance for loan losses,
including off-balance sheet
instruments
8,185
4,253
(3,277)
(24)
9,137
7,363
2,933
(2,211)
100
8,185
Debt securities at amortized cost
2
1
–
–
3
1
–
–
1
2
Debt securities at FVOCI
2
(1)
–
–
1
2
–
–
–
2
Total allowance for credit
losses on debt securities
4
–
–
–
4
3
–
–
1
4
Total allowance for credit losses
$
8,189
$
4,253
$
(3,277)
$
(24)
$
9,141
$
7,366
$
2,933
$
(2,211)
$
101
$
8,189
Comprising:
Allowance for credit losses on
loans at amortized cost
$
7,136
 
 
 
$
8,094
$
6,432
 
 
 
$
7,136
Allowance for credit losses on
loans at FVOCI
–
–
–
–
Allowance for loan losses
7,136
8,094
6,432
7,136
Allowance for off-balance sheet
instruments
1,049
1,043
931
1,049
 
 
Allowance for credit losses on
 
debt securities
4
4
3
4
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 48
(e)
 
ALLOWANCE FOR LOAN LOSSES BY STAGE
The following table provides details on
 
the Bank’s allowance for loan losses by stage
 
as at and for the years ended October 31,
 
2024
 
and October 31, 2023.
Allowance for Loan Losses by Stage
(millions of Canadian dollars)
For the years ended
October 31, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
1
Total
Stage 1
Stage 2
Stage 3
1
Total
Residential Mortgages
Balance at beginning of period
$
154
$
192
$
57
$
403
$
127
$
140
$
56
$
323
Provision for credit losses
Transfer to Stage 1
2
137
(133)
(4)
–
123
(120)
(3)
–
Transfer to Stage 2
(30)
52
(22)
–
(30)
47
(17)
–
Transfer to Stage 3
–
(32)
32
–
(2)
(23)
25
–
Net remeasurement due to transfers into stage
3
(30)
22
–
(8)
(23)
18
–
(5)
New originations or purchases
4
32
n/a
n/a
32
49
n/a
n/a
49
Net repayments
5
(4)
–
–
(4)
(4)
(3)
–
(7)
Derecognition of financial assets (excluding
disposals and write-offs)
6
(7)
(27)
(35)
(69)
(9)
(23)
(14)
(46)
Changes to risk, parameters, and models
7
(135)
114
36
15
(78)
156
16
94
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(8)
(8)
–
–
(10)
(10)
Recoveries
–
–
1
1
–
–
3
3
Foreign exchange and other adjustments
(1)
1
3
3
1
–
1
2
Balance at end of period
$
116
$
189
$
60
$
365
$
154
$
192
$
57
$
403
Consumer Instalment and Other Personal
Balance, including off-balance sheet instruments,
at beginning of period
$
688
$
1,010
$
197
$
1,895
$
654
$
896
$
154
$
1,704
Provision for credit losses
Transfer to Stage 1
2
607
(603)
(4)
–
594
(589)
(5)
–
Transfer to Stage 2
(246)
329
(83)
–
(207)
276
(69)
–
Transfer to Stage 3
(11)
(254)
265
–
(9)
(197)
206
–
Net remeasurement due to transfers into stage
3
(267)
300
9
42
(208)
223
9
24
New originations or purchases
4
359
n/a
n/a
359
415
n/a
n/a
415
Net repayments
5
(76)
(95)
(16)
(187)
(63)
(81)
(12)
(156)
Derecognition of financial assets (excluding
disposals and write-offs)
6
(74)
(104)
(50)
(228)
(76)
(97)
(51)
(224)
Changes to risk, parameters, and models
7
(286)
590
1,117
1,421
(416)
575
770
929
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(1,496)
(1,496)
–
–
(1,104)
(1,104)
Recoveries
–
–
323
323
–
–
298
298
Foreign exchange and other adjustments
2
2
–
4
4
4
1
9
Balance, including off-balance sheet instruments,
at end of period
696
1,175
262
2,133
688
1,010
197
1,895
Less: Allowance for off-balance sheet instruments
8
29
55
–
84
35
51
–
86
Balance at end of period
$
667
$
1,120
$
262
$
2,049
$
653
$
959
$
197
$
1,809
Credit Card
9
Balance, including off-balance sheet instruments,
at beginning of period
$
988
$
1,277
$
312
$
2,577
$
954
$
1,191
$
207
$
2,352
Provision for credit losses
Transfer to Stage 1
2
1,087
(1,051)
(36)
–
1,134
(1,108)
(26)
–
Transfer to Stage 2
(323)
404
(81)
–
(317)
375
(58)
–
Transfer to Stage 3
(21)
(881)
902
–
(19)
(715)
734
–
Net remeasurement due to transfers into stage
3
(476)
477
25
26
(513)
476
21
(16)
New originations or purchases
4
153
n/a
n/a
153
194
n/a
n/a
194
Net repayments
5
25
11
65
101
74
7
57
138
Derecognition of financial assets (excluding
disposals and write-offs)
6
(55)
(71)
(367)
(493)
(43)
(75)
(264)
(382)
Changes to risk, parameters, and models
7
(432)
1,204
1,117
1,889
(489)
1,111
771
1,393
Disposals
–
–
–
–
–
–
–
–
Write-offs
–
–
(1,880)
(1,880)
–
–
(1,425)
(1,425)
Recoveries
–
–
319
319
–
–
288
288
Foreign exchange and other adjustments
1
4
2
7
13
15
7
35
Balance, including off-balance sheet instruments,
at end of period
947
1,374
378
2,699
988
1,277
312
2,577
Less: Allowance for off-balance sheet instruments
8
243
359
–
602
279
364
–
643
Balance at end of period
$
704
$
1,015
$
378
$
2,097
$
709
$
913
$
312
$
1,934
1
 
Includes allowance for loan losses related to ACI loans.
2
 
Transfers represent stage transfer movements prior to ECL remeasurement.
 
3
 
Represents the mechanical remeasurement between twelve-month (i.e., Stage 1) and lifetime ECLs (i.e., Stage 2
 
or 3) due to stage transfers necessitated by credit risk migration, as
described in the “Significant Increase in Credit Risk” section of Note 2 and Note 3, holding all other factors impacting
 
the change in ECLs constant.
 
4
 
Represents the increase in the allowance resulting from loans that were newly originated, purchased, or renewed.
5
 
Represents the changes in the allowance related to cash flow changes associated with new draws or repayments
 
on loans outstanding.
 
6
 
Represents the decrease in the allowance resulting from loans that were fully repaid and excludes the decrease
 
associated with loans that were disposed or fully written off.
7
 
Represents the changes in the allowance related to current period changes in risk (e.g., PD) caused by changes
 
to macroeconomic factors, level of risk, parameters, and/or models,
subsequent to stage migration. Refer to the “Measurement of Expected Credit Losses”, “Forward-Looking
 
Information” and “Expert Credit Judgment” sections of Note 2 and Note 3 for
further details.
 
8
 
The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities
 
on the Consolidated Balance Sheet.
9
 
Credit cards are considered impaired and migrate to Stage 3 when they are 90 days past due and written off
 
at 180 days past due. Refer to Note 2 for further details.
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 49
Allowance for Loan Losses by Stage
(Continued)
(millions of Canadian dollars)
For the years ended
October 31, 2024
October 31, 2023
Stage 1
Stage 2
Stage 3
1
Total
Stage 1
Stage 2
Stage 3
1
Total
Business and Government
2
Balance, including off-balance sheet instruments,
at beginning of period
$
1,319
$
1,521
$
470
$
3,310
$
1,220
$
1,417
$
347
$
2,984
Provision for credit losses
Transfer to Stage 1
3
266
(265)
(1)
–
346
(344)
(2)
–
Transfer to Stage 2
(568)
584
(16)
–
(570)
583
(13)
–
Transfer to Stage 3
(19)
(350)
369
–
(11)
(208)
219
–
Net remeasurement due to transfers into stage
3
(86)
158
13
85
(102)
115
2
15
New originations or purchases
3
1,165
n/a
n/a
1,165
1,258
n/a
n/a
1,258
Net repayments
3
20
(60)
(77)
(117)
41
(76)
(100)
(135)
Derecognition of financial assets (excluding
disposals and write-offs)
3
(683)
(611)
(297)
(1,591)
(715)
(587)
(398)
(1,700)
Changes to risk, parameters, and models
3
(271)
917
1,016
1,662
(178)
585
688
1,095
Disposals
–
–
(39)
(39)
–
–
–
–
Write-offs
–
–
(600)
(600)
–
–
(307)
(307)
Recoveries
–
–
64
64
–
–
46
46
Foreign exchange and other adjustments
7
43
(49)
1
30
36
(12)
54
Balance, including off-balance sheet instruments,
at end of period
1,150
1,937
853
3,940
1,319
1,521
470
3,310
Less: Allowance for off-balance sheet instruments
4
167
179
11
357
162
150
8
320
Balance at end of period
983
1,758
842
3,583
1,157
1,371
462
2,990
Total Allowance, including
 
off-balance sheet
instruments, at end of period
2,909
4,675
1,553
9,137
3,149
4,000
1,036
8,185
Less: Total Allowance for
 
off-balance sheet
instruments
4
439
593
11
1,043
476
565
8
1,049
Total Allowance for Loan Losses
 
at end of period
$
2,470
$
4,082
$
1,542
$
8,094
$
2,673
$
3,435
$
1,028
$
7,136
1
 
Includes allowance for loan losses related to ACI loans.
2
 
Includes allowance for loan losses related to customers’ liability under acceptances.
3
 
For explanations regarding this line item, refer to the “Allowance for Loan Losses by Stage” table on the previous
 
page in this Note.
4
 
The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the
 
Consolidated Balance Sheet.
The allowance for credit losses on all remaining
 
financial assets is not significant.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 50
(f)
 
FORWARD-LOOKING INFORMATION
Relevant macroeconomic factors are incorporated
 
in risk parameters as appropriate. Additional
 
risk factors that are industry or segment
 
specific are also
incorporated, where relevant. The key macroeconomic
 
variables used in determining ECLs include
 
regional unemployment rates for all retail
 
exposures and
regional housing price indices for residential
 
mortgages and home equity lines of credit.
 
For business and government loans, the key
 
macroeconomic variables
include gross domestic product (GDP), unemployment
 
rates, interest rates, and credit spreads.
 
Refer to Note 3 for a discussion
 
of how forward-looking information
is generated and considered in determining
 
whether there has been a significant increase
 
in credit risk and in measuring ECLs.
Macroeconomic Variables
Select macroeconomic variables are projected
 
over the forecast period. The following
 
table sets out average values of the macroeconomic
 
variables over the four
calendar quarters starting with the current
 
quarter, and the remaining 4-year forecast period for the base
 
forecast and upside and downside scenarios
 
used in
determining the Bank’s ECLs as at October
 
31, 2024. As the forecast period increases, information
 
about the future becomes less readily available
 
and projections
are anchored on assumptions around structural
 
relationships between economic parameters
 
that are inherently much less certain.
 
Restrictive monetary policy
continues to contribute to elevated economic
 
uncertainty, particularly in Canada where household debt levels
 
remain elevated, and is likely to continue
 
to weigh on
near-term economic growth.
Macroeconomic Variables
As at
October 31, 2024
Base Forecast
Upside Scenario
Downside Scenario
Average
Remaining
Average
Remaining
Average
Remaining
Q4 2024-
4-year
Q4 2024-
4-year
Q4 2024-
4-year
Q3 2025
1
period
1
Q3 2025
1
period
1
Q3 2025
1
period
1
 
Unemployment rate
Canada
6.7
%
6.0
%
5.7
%
5.6
%
7.7
%
7.3
%
United States
4.3
4.0
3.8
3.7
5.4
5.4
Real GDP
Canada
1.7
2.0
2.1
2.2
(0.4)
2.3
United States
1.9
2.1
2.7
2.4
(0.2)
2.4
Home prices
Canada (average existing price)
2
6.0
3.0
8.2
3.4
(7.1)
3.7
United States (CoreLogic HPI)
3
1.3
3.0
4.2
3.8
(8.5)
4.1
Central bank policy interest rate
Canada
3.19
2.27
4.19
2.61
1.69
1.81
United States
3.69
3.00
5.00
3.39
2.81
2.06
U.S. 10-year treasury yield
3.52
3.45
4.49
3.81
3.40
3.34
U.S. 10-year BBB spread (%-pts)
1.75
1.80
1.59
1.76
2.51
2.10
Exchange rate (U.S. dollar/Canadian dollar)
$
0.74
$
0.75
$
0.75
$
0.76
$
0.71
$
0.71
Macroeconomic Variables
As at
October 31, 2023
Base Forecast
Upside Scenario
Downside Scenario
Average
Remaining
Average
Remaining
Average
Remaining
Q4 2023-
4-year
Q4 2023-
4-year
Q4 2023-
4-year
Q3 2024
1
period
1
Q3 2024
1
period
1
Q3 2024
1
period
1
 
Unemployment rate
Canada
6.2
%
6.2
%
5.6
%
5.8
%
7.0
%
7.1
%
United States
4.0
4.1
3.7
3.9
5.0
5.2
Real GDP
Canada
0.7
1.7
0.9
1.7
(0.8)
1.9
United States
1.5
1.7
2.2
1.8
(0.1)
2.0
Home prices
Canada (average existing price)
2
0.1
3.7
3.1
3.0
(9.7)
6.7
United States (CoreLogic HPI)
3
2.5
1.6
3.5
2.1
(8.1)
4.8
Central bank policy interest rate
Canada
4.63
2.39
5.00
2.45
3.75
1.88
United States
5.25
2.94
5.50
2.95
4.25
2.38
U.S. 10-year treasury yield
3.89
3.22
4.21
3.32
3.46
3.17
U.S. 10-year BBB spread (%-pts)
2.18
1.81
1.94
1.78
2.67
2.05
Exchange rate (U.S. dollar/Canadian dollar)
$
0.72
$
0.79
$
0.77
$
0.81
$
0.71
$
0.74
1
 
The numbers represent average values for the quoted periods, and average of year-on-year growth for real GDP
 
and home prices.
2
 
The average home price is the average transacted sale price of homes sold via the Multiple Listing Service; data
 
is collected by the Canadian Real Estate Association.
3
 
The CoreLogic home price index (HPI) is a repeat-sales index which tracks increases and decreases in the same
 
home’s sales price over time.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 51
(g)
 
SENSITIVITY OF ALLOWANCE FOR CREDIT LOSSES
ECLs are sensitive to the inputs used in internally
 
developed models, the macroeconomic variables
 
in the forward-looking forecasts and respective
 
probability
weightings in determining the probability-weighted
 
ECLs, and other factors considered when
 
applying expert credit judgment. Changes
 
in these inputs,
assumptions, models, and judgments would
 
affect the assessment of significant increase in
 
credit risk and the measurement of ECLs.
The following table presents the base ECL
 
scenario compared to the probability-weighted
 
ECLs,
 
with the latter derived from three ECL
 
scenarios for performing
loans and off-balance sheet instruments. The difference
 
reflects the impact of deriving multiple
 
scenarios around the base ECLs
 
and resultant change in ECLs due
to non-linearity and sensitivity to using
 
macroeconomic forecasts.
Change from Base to Probability-Weighted ECLs
(millions of Canadian dollars, except
 
as noted)
As at
October 31, 2024
October 31, 2023
Probability-weighted ECLs
$
7,584
$
7,149
Base ECLs
7,185
6,658
Difference – in amount
$
399
$
491
Difference – in percentage
5.6
%
7.4
%
ECLs for performing loans and off-balance sheet
 
instruments consist of an aggregate amount
 
of Stage 1 and Stage 2 probability-weighted
 
ECLs which are twelve-
month ECLs and lifetime ECLs,
 
respectively. Transfers from Stage 1 to Stage 2 ECLs result from a
 
significant increase in credit risk since initial
 
recognition of the
loan. The following table shows the estimated
 
impact of staging on ECLs by presenting
 
all performing loans and off-balance sheet instruments
 
calculated using
twelve-month ECLs compared to the current
 
aggregate probability-weighted ECLs,
 
holding all risk profiles constant.
Incremental Lifetime ECLs Impact
(millions of Canadian dollars)
 
As at
October 31, 2024
October 31, 2023
Probability-weighted ECLs
$
7,584
$
7,149
All performing loans and off-balance sheet instruments
 
using 12-month ECLs
5,631
5,295
Incremental lifetime ECLs impact
$
1,953
$
1,854
(h)
 
FORECLOSED ASSETS
Foreclosed assets are repossessed non-financial
 
assets where the Bank gains title, ownership,
 
or possession of individual properties,
 
such as real estate
properties, which are managed for sale in an
 
orderly manner with the proceeds used
 
to reduce or repay any outstanding debt. The Bank
 
does not generally occupy
foreclosed properties for its business use.
 
The Bank predominantly relies on third-party
 
appraisals to determine the carrying value of
 
foreclosed assets. Foreclosed
assets held for sale were $126 million as at October
 
31, 2024
 
(October 31, 2023 – $59 million) and were
 
recorded in Other assets on the Consolidated
 
Balance
Sheet.
(i)
 
LOANS PAST DUE BUT NOT IMPAIRED
A loan is classified as past due when a borrower
 
has failed to make a payment by the
 
contractual due date. The following table summarizes
 
loans that are past
due but not impaired. Loans less than 31 days
 
contractually past due are excluded as
 
they do not generally reflect a borrower’s ability
 
to meet their payment
obligations.
Loans Past Due but not Impaired
1
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
31-60
61-89
31-60
61-89
days
days
Total
days
days
Total
Residential mortgages
$
443
$
111
$
554
$
286
$
81
$
367
Consumer instalment and other personal
983
335
1,318
870
287
1,157
Credit card
375
269
644
359
242
601
Business and government
244
83
327
264
103
367
Total
$
2,045
$
798
$
2,843
$
1,779
$
713
$
2,492
1
 
Includes loans that are measured at FVOCI.
(j)
 
MODIFIED FINANCIAL ASSETS
The amortized cost of financial assets
 
with lifetime allowance that were modified
 
during the year ended October 31, 2024,
 
was $214 million (October 31, 2023
 
–
$389 million) before modification, with insignificant
 
modification gain or loss. The gross carrying
 
amount of modified financial assets
 
for which the loss allowance
changed from lifetime to twelve-month ECLs
 
during the year ended October 31, 2024
 
was insignificant (October 31, 2023
 
– $144 million).
(k)
 
COLLATERAL
As at October
 
31, 2024, the collateral held against total
 
gross impaired loans represents 82%
 
(October 31, 2023 – 77%) of total gross
 
impaired loans. The fair
value of non-financial collateral is determined
 
at the origination date of the loan. A revaluation
 
of non-financial collateral is performed if
 
there has been a significant
change in the terms and conditions of the loan
 
and/or the loan is considered impaired.
 
Management considers the nature of the collateral,
 
seniority ranking of the
debt, and loan structure in assessing the
 
value of collateral. These estimated cash
 
flows are reviewed at least annually, or more frequently when new
 
information
indicates a change in the timing or amount expected
 
to be received.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 52
NOTE 9: TRANSFERS OF FINANCIAL
 
ASSETS
LOAN SECURITIZATIONS
The Bank securitizes loans through structured
 
entity or non-structured entity third parties.
 
Most loan securitizations do not qualify for
 
derecognition since in most
circumstances, the Bank continues to be exposed
 
to substantially all of the prepayment, interest
 
rate, and/or credit risk associated with
 
the securitized financial
assets and has not transferred substantially
 
all of the risk and rewards of ownership
 
of the securitized assets. Where loans do
 
not qualify for derecognition, they
are not derecognized from the Bank’s Consolidated
 
Balance Sheet, retained interests are not
 
recognized, and a securitization liability is recognized
 
for the cash
proceeds received. Certain transaction costs
 
incurred are also capitalized and amortized
 
using EIRM.
The Bank securitizes insured residential
 
mortgages under the National Housing Act
 
Mortgage-Backed Securities (NHA
 
MBS) program sponsored by the
Canada Mortgage and Housing Corporation
 
(CMHC). The MBS that are created through
 
the NHA MBS program are sold to the
 
Canada Housing Trust (CHT) as
part of the CMB program,
 
sold to third-party investors,
 
or are held by the Bank. The CHT issues
 
CMB to third-party investors and uses resulting
 
proceeds to
purchase NHA MBS from the Bank and other
 
mortgage issuers in the Canadian market. Assets
 
purchased by the CHT are commingled
 
in a single trust from which
CMB are issued. The Bank continues to be exposed
 
to substantially all of the risks of the underlying
 
mortgages, through the retention of a seller
 
swap which
transfers principal and interest payment
 
risk on the NHA MBS back to the Bank
 
in return for coupon paid on the CMB
 
issuance and as such, the sales do not
qualify for derecognition.
The Bank securitizes U.S. originated residential
 
mortgages with U.S. government agencies
 
which qualify for derecognition from the Bank’s Consolidated
Balance Sheet. As part of the securitization,
 
the Bank retains the right to service the
 
transferred mortgage loans. The MBS that
 
are created through the
securitization are typically sold to third-party
 
investors.
The Bank also securitizes business and government
 
loans to entities which may be structured
 
entities. These securitizations may give
 
rise to derecognition of
the financial assets depending on the individual
 
arrangement of each transaction.
In addition, the Bank transfers credit card receivables
 
to structured entities that the Bank consolidates.
 
Refer to Note 10 for further details.
The following table summarizes the securitized
 
asset types that did not qualify for derecognition,
 
along with their associated
 
securitization liabilities as at
October 31, 2024
 
and October 31, 2023.
Financial Assets Not Qualifying for Derecognition
 
Treatment as Part of the Bank’s Securitization Programs
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Fair
Carrying
Fair
Carrying
value
amount
value
amount
Nature of transaction
Securitization of residential mortgage loans
$
30,543
$
30,787
$
23,835
$
24,433
Other financial assets transferred related
 
to securitization
1
2,623
2,619
3,554
3,571
Total
 
33,166
33,406
27,389
28,004
Associated liabilities
2
$
32,442
$
32,684
$
26,457
$
27,131
1
 
Includes asset-backed securities, asset-backed commercial paper (ABCP),
 
cash, repurchase agreements, and Government of Canada securities used to fulfil funding requirements
 
of the
Bank’s securitization structures after the initial securitization of mortgage loans.
2
 
Includes securitization liabilities carried at amortized cost of $12 billion as at October 31, 2024 (October
 
31, 2023 – $13 billion), and securitization liabilities carried at fair value of
$20 billion as at October 31, 2024 (October 31, 2023 – $14 billion).
Other Financial Assets Not Qualifying for
 
Derecognition
The Bank enters into certain transactions
 
where it transfers previously recognized commodities
 
and financial assets, such as debt and equity
 
securities, but retains
substantially all of the risks and rewards of
 
those assets. These transferred assets are
 
not derecognized and the transfers are accounted
 
for as financing
transactions. The most common transactions
 
of this nature are repurchase agreements
 
and securities lending agreements, in which
 
the Bank retains substantially
all of the associated credit, price, interest rate,
 
and foreign exchange risks and rewards
 
associated with the assets.
The following table summarizes the carrying
 
amount of financial assets and the associated
 
transactions that did not qualify for derecognition,
 
as well as their
associated financial liabilities as at October
 
31, 2024 and October 31, 2023.
Other Financial Assets Not Qualifying for
 
Derecognition
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Carrying amount of assets
Nature of transaction
Repurchase agreements
1,2
$
40,725
$
27,782
Securities lending agreements
52,781
40,333
Total
 
93,506
 
68,115
Carrying amount of associated liabilities
2
$
40,450
$
28,037
1
Includes $2.8 billion,
 
as at October 31, 2024
 
(October 31, 2023 – $3.6 billion) of assets related to repurchase agreements or swaps that are collateralized
 
by physical precious metals.
2
Associated liabilities are all related to repurchase agreements.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 53
TRANSFERS OF FINANCIAL ASSETS QUALIFYING
 
FOR DERECOGNITION
Transferred financial assets that are derecognized
 
in their entirety where the Bank has a
 
continuing involvement
Continuing involvement may arise if the Bank
 
retains any contractual rights or obligations
 
subsequent to the transfer of financial assets.
 
Certain business and
government loans securitized by the Bank are
 
derecognized from the Bank’s Consolidated Balance
 
Sheet. In instances where the Bank fully derecognizes
business and government loans, the Bank
 
may be exposed to the risks of transferred loans
 
through a retained interest. As at October
 
31, 2024, the fair value of
retained interests was $1 million (October
 
31, 2023
 
– $3 million). A gain or loss on sale of
 
the loans is recognized immediately in other income
 
(loss) after
considering the effect of hedge accounting on
 
the assets sold, if applicable. The amount
 
of the gain or loss recognized depends on
 
the previous carrying values of
the loans involved in the transfer, allocated between the assets
 
sold and the retained interests based on their
 
relative fair values at the date of transfer.
Certain portfolios of U.S. residential mortgages
 
originated by the Bank are sold and derecognized
 
from the Bank’s Consolidated Balance Sheet.
 
In certain
instances, the Bank has a continuing involvement
 
to service those loans. As at October 31, 2024,
 
the carrying value of these servicing
 
rights was $81 million
(October 31, 2023 – $92 million) and the fair
 
value was $133 million (October 31, 2023 –
 
$150 million). A gain or loss on sale of the
 
loans is recognized
immediately in other income (loss). The gain
 
(loss) on sale of the loans for the year ended
 
October 31, 2024 was ($3) million (October
 
31, 2023 – ($40) million).
NOTE 10: STRUCTURED ENTITIES
The Bank uses structured entities for a variety
 
of purposes including:
 
(1) to facilitate the transfer of specified risks
 
to clients; (2) as financing vehicles for itself or
 
for
clients; or (3)
 
to segregate assets on behalf of investors.
 
The Bank is typically restricted from accessing
 
the assets of the structured entity under the relevant
arrangements.
The Bank is involved with structured entities
 
that it sponsors,
 
as well as entities sponsored by third parties.
 
Factors assessed when determining if the Bank
 
is
the sponsor of a structured entity include
 
whether the Bank is the predominant user of
 
the entity; whether the entity’s branding or marketing
 
identity is linked with
the Bank; and whether the Bank provides
 
an implicit or explicit guarantee of
 
the entity’s performance to investors or other
 
third parties. The Bank is not considered
to be the sponsor of a structured entity if
 
it only provides arm’s-length services to the entity, for example, by acting
 
as administrator, distributor, custodian, asset
manager, or loan servicer. Sponsorship of a structured entity may indicate
 
that the Bank had power over the entity at
 
inception; however, this is not sufficient to
determine if the Bank consolidates the entity. Regardless of
 
whether or not the Bank sponsors an entity, consolidation is determined
 
on a case-by-case basis.
(a)
SPONSORED STRUCTURED ENTITIES
The following section outlines the Bank’s involvement
 
with key sponsored structured entities.
Securitizations
The Bank securitizes its own assets
 
and facilitates the securitization of client
 
assets through structured entities, such as
 
conduits, which issue ABCP or other
securitization entities which issue longer-dated
 
term securities. Securitizations are an important
 
source of liquidity for the Bank, allowing
 
it to diversify its funding
sources and to optimize its balance sheet
 
management approach.
The Bank sponsors both single-seller and
 
multi-seller securitization conduits. Depending
 
on the specifics of the entity, the variable returns absorbed through
ABCP may be significantly mitigated
 
by variable returns retained by the sellers.
 
The Bank provides liquidity facilities to certain
 
conduits for the benefit of ABCP
investors which are structured as loan
 
facilities between the Bank, as the sole liquidity
 
lender, and the Bank-sponsored entity.
 
If an entity experiences difficulty
issuing ABCP due to illiquidity in the commercial
 
market, the entity may draw on the loan facility, and use the proceeds
 
to pay maturing ABCP. The ABCP issued
by each multi-seller conduit is in the conduit’s own
 
name with recourse to the financial assets
 
owned by the multi-seller conduit, and is non-recourse
 
to the Bank
except through our participation in liquidity facilities.
 
The Bank’s exposure to the variable returns
 
of these conduits from its provision of liquidity
 
facilities and any
related commitments is mitigated by the sellers’
 
continued exposure to variable returns through
 
the provision of first loss protection, as described
 
below. The Bank
provides administration and securities
 
distribution services to its sponsored
 
securitization conduits, which may result
 
in it holding an investment in the ABCP issued
by these entities. In some cases, the Bank
 
may also provide credit enhancements or
 
may transact derivatives with securitization
 
conduits. The Bank earns fees
from the conduits which are recognized
 
when earned.
The Bank sells assets to single-seller
 
conduits which it controls and consolidates.
 
Control results from the Bank’s power over the entity’s
 
key economic
decisions, predominantly, the mix of assets sold into the conduit
 
and exposure to the variable returns of
 
the transferred assets, usually through a derivative
 
or the
provision of credit mitigation in the form
 
of cash reserves, over-collateralization,
 
or guarantees over the performance of
 
the entity’s portfolio of assets.
Multi-seller conduits provide sellers with
 
alternate sources of financing through the
 
securitization of their assets. These
 
conduits are similar to single-seller
conduits except that financial assets are
 
purchased from more than one seller and
 
commingled into a single portfolio of assets. Each
 
transaction is structured with
transaction-specific first loss protection provided
 
by the third-party seller. This enhancement can take
 
various forms, including but not limited
 
to
overcollateralization, excess spread, subordinated
 
classes of financial assets, guarantees or
 
letters of credit. The Bank is typically deemed
 
to have power over the
entity’s key economic decisions, namely,
 
the selection of sellers and related assets
 
sold as well as other decisions related
 
to the management of risk in the vehicle.
Where the Bank has power over multi-seller
 
conduits,
 
but is not exposed to significant variable
 
returns it does not consolidate such
 
entities. Where the Bank is
exposed to variable returns of a multi-seller
 
conduit from provision of certain types
 
of liquidity facilities, together with power over
 
the entity as well as the ability to
use its power to influence significant variable
 
returns, the Bank consolidates the conduit.
Investment Funds and Other Asset Management
 
Entities
As part of its asset management business,
 
the Bank creates investment funds and
 
trusts (including mutual funds), enabling it
 
to provide its clients with a broad
range of diversified exposure to different risk profiles,
 
in accordance with the client’s risk appetite.
 
Such entities may be actively managed or
 
may be passively
directed, for example, through the tracking
 
of a specified index, depending on
 
the entity’s investment strategy. Financing for these entities is obtained through
 
the
issuance of securities to investors, typically
 
in the form of fund units. Based on each
 
entity’s specific strategy and risk profile, the
 
proceeds from this issuance are
used by the entity to purchase a portfolio of
 
assets. An entity’s portfolio may contain investments
 
in securities, derivatives,
 
or other assets, including cash. At the
inception of a new investment fund or trust,
 
the Bank will typically invest an amount of
 
seed capital in the entity, allowing it to establish a performance
 
history in the
market. Over time, the Bank sells its seed
 
capital holdings to third-party investors, as the entity’s
 
AUM increases. As a result, the Bank’s holding
 
of seed capital
investment in its own sponsored investment
 
funds and trusts is typically not significant
 
to the Consolidated Financial Statements. Aside
 
from any seed capital
investments, the Bank’s interest in these entities
 
is generally limited to fees earned for
 
the provision of asset management services.
 
The Bank does not typically
provide guarantees over the performance of
 
these funds.
The Bank is typically considered to have
 
power over the key economic decisions
 
of sponsored asset management entities;
 
however, it does not consolidate an
entity unless it is also exposed to significant
 
variable returns of the entity. This determination is made on
 
a case-by-case basis, in accordance
 
with the Bank’s
consolidation policy.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 54
Financing Vehicles
The Bank may use structured entities to provide
 
a cost-effective means of financing its operations,
 
including raising capital or obtaining
 
funding. These structured
entities include TD Covered Bond (Legislative)
 
Guarantor Limited Partnership (the “Covered
 
Bond Entity”).
The Bank issues, or has issued, debt under its
 
covered bond program where the principal and
 
interest payments of the notes are guaranteed
 
by the Covered
Bond Entity. The Bank sold a portfolio of assets to the Covered Bond
 
Entity and provided a loan to the Covered
 
Bond Entity to facilitate the purchase. The Bank
 
is
restricted from accessing the Covered Bond
 
Entity’s assets under the relevant agreement.
 
Investors in the Bank’s covered bonds may have
 
recourse to the Bank
should the assets of the Covered Bond Entity
 
be insufficient to satisfy the covered bond liabilities.
 
The Bank consolidates the Covered Bond
 
Entity as it has power
over the key economic activities and
 
retains all the variable returns in this entity.
(b)
 
THIRD-PARTY SPONSORED STRUCTURED ENTITIES
In addition to structured entities sponsored
 
by the Bank, the Bank is also involved with
 
structured entities sponsored by third parties.
 
Key involvement with
third-party sponsored structured entities
 
is described in the following section.
Third-party Sponsored Securitization
 
Programs
The Bank participates in the securitization
 
programs
 
of government-sponsored structured
 
entities, including the CMHC, a Crown
 
corporation of the Government of
Canada, and similar U.S. government-sponsored
 
entities. CMHC guarantees both NHA
 
MBS and CMB which are issued through
 
the CHT.
The Bank is exposed to the variable returns
 
in the CHT, through its retention of seller swaps resulting from its
 
participation in the CHT program. The Bank does
not have power over the CHT as its key
 
economic activities are controlled by the Government
 
of Canada. The Bank’s exposure to the
 
CHT is included in the
balance of residential mortgage loans as noted
 
in Note 9, and is not disclosed in the
 
table accompanying this Note.
The Bank participates in the securitization
 
programs sponsored by U.S. government
 
agencies. The Bank is not exposed to significant
 
variable returns from
these agencies and does not have power over
 
the key economic activities of these agencies,
 
which are controlled by the U.S. government.
Investment Holdings and Derivatives
The Bank may hold interests in third-party
 
structured entities, predominantly in
 
the form of direct investments in securities
 
or partnership interests issued by those
structured entities,
 
or through derivatives transacted with
 
counterparties which are structured entities.
 
Investments in, and derivatives with, structured
 
entities are
recognized on the Bank’s Consolidated Balance Sheet.
 
The Bank does not typically consolidate third-party
 
structured entities where its involvement
 
is limited to
investment holdings and/or derivatives as the Bank
 
would not generally have power over the
 
key economic decisions of these entities.
Financing Transactions
In the normal course of business, the Bank
 
may enter into financing transactions with third-party
 
structured entities including commercial loans,
 
reverse repurchase
agreements, prime brokerage margin lending,
 
and similar collateralized lending transactions.
 
While such transactions expose the Bank
 
to the structured entities’
counterparty credit risk, this exposure is mitigated
 
by the collateral related to these transactions.
 
The Bank typically has neither power nor
 
significant variable
returns due to financing transactions with
 
structured entities and would not generally
 
consolidate such entities. Financing transactions
 
with third-party sponsored
structured entities are included on the Bank’s
 
Consolidated Financial Statements and have not
 
been included in the table accompanying
 
this Note.
Arm’s-length Servicing Relationships
In addition to the involvement outlined above,
 
the Bank may also provide services to
 
structured entities on an arm’s-length basis, for example
 
as sub-advisor to an
investment fund or asset servicer. Similarly, the Bank’s asset management services
 
provided to institutional investors
 
may include transactions with structured
entities. As a consequence of providing
 
these services, the Bank may be exposed
 
to variable returns from these structured entities,
 
for example, through the
receipt of fees or short-term exposure
 
to the structured entity’s securities. Any such exposure
 
is typically mitigated by collateral or
 
some other contractual
arrangement with the structured entity or
 
its sponsor. The Bank generally has neither power nor
 
significant variable returns from the provision
 
of arm’s-length
services to a structured entity and, consequently
 
does not consolidate such entities.
 
Fees and other exposures through servicing relationships
 
are included on the
Bank’s Consolidated Financial Statements and have
 
not been included in the table accompanying
 
this Note.
(c)
 
INVOLVEMENT WITH CONSOLIDATED STRUCTURED ENTITIES
Securitizations
The Bank securitizes credit card receivables
 
through securitization entities, predominantly
 
single-seller conduits. These conduits are
 
consolidated by the Bank
based on the factors described above. Aside
 
from the exposure resulting from its involvement
 
as seller and sponsor of consolidated
 
securitization conduits
described above, including the liquidity facilities
 
provided, the Bank has no contractual or
 
non-contractual arrangements to provide
 
financial support to
consolidated securitization conduits.
 
The Bank’s interests in securitization conduits
 
generally rank senior to interests held by
 
other parties, in accordance with the
Bank’s investment and risk policies. As a result,
 
the Bank has no significant obligations to absorb
 
losses before other holders of securitization issuances.
Other Consolidated Structured Entities
Depending on the specific facts and circumstances
 
of the Bank’s involvement with structured
 
entities, the Bank may consolidate asset
 
management entities,
financing vehicles,
 
or third-party sponsored structured entities,
 
based on the factors described above.
 
Aside from its exposure resulting from its
 
involvement as
sponsor or investor in the structured
 
entities as previously discussed,
 
the Bank does not typically have other
 
contractual or non-contractual arrangements
 
to
provide financial support to these consolidated
 
structured entities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 55
(d)
 
INVOLVEMENT WITH UNCONSOLIDATED STRUCTURED ENTITIES
The following table presents information related
 
to the Bank’s unconsolidated structured entities.
 
Unconsolidated structured entities include both
 
TD and third-party
sponsored entities. Securitizations include holdings
 
in TD-sponsored multi-seller conduits,
 
as well as third-party sponsored mortgage
 
and asset-backed
securitizations, including government-sponsored
 
agency securities such as CMBs, and
 
U.S. government agency issuances. Investment
 
Funds and Trusts include
holdings in third-party funds and trusts, as
 
well as holdings in TD-sponsored asset management
 
funds and trusts and commitments to certain
 
U.S. municipal
funds. Amounts in Other are mainly related
 
to investments in community-based
 
U.S. tax-advantage entities described in
 
Note 12. These holdings do not result in
the consolidation of these entities as TD does
 
not have power over these entities.
Carrying Amount and Maximum Exposure to Unconsolidated
 
Structured Entities
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Investment
Investment
funds and
funds and
Securitizations
trusts
Other
Total
Securitizations
trusts
Other
Total
FINANCIAL ASSETS
Trading loans, securities,
 
and other
$
7,559
$
992
$
–
$
8,551
$
7,190
$
930
$
–
$
8,120
Non-trading financial assets at
fair value through profit or loss
684
836
98
1,618
2,163
738
107
3,008
Derivatives
1
–
680
–
680
–
401
–
401
Financial assets designated at
fair value through profit or loss
–
298
–
298
–
268
–
268
Financial assets at fair value through
other comprehensive income
22,615
967
2
23,584
25,956
3,714
7
29,677
Debt securities at amortized cost,
net of allowance for credit losses
117,890
1,210
–
119,100
134,503
1,153
–
135,656
Loans
4,114
3
–
4,117
4,560
4
–
4,564
Other
2
88
5,762
5,852
5
107
4,657
4,769
Total assets
152,864
5,074
5,862
163,800
174,377
7,315
4,771
186,463
FINANCIAL LIABILITIES
Deposits
–
–
1,451
1,451
–
–
839
839
Derivatives
1
 
–
645
–
 
645
 
–
50
–
 
50
Obligations related to securities
sold short
2,324
331
–
2,655
4,126
333
–
4,459
Total liabilities
2,324
976
1,451
4,751
4,126
383
839
5,348
Off-balance sheet exposure
2
 
22,897
4,392
2,990
 
30,279
 
19,904
3,965
2,294
 
26,163
Maximum exposure to loss from
involvement with unconsolidated
structured entities
$
173,437
$
8,490
$
7,401
$
189,328
$
190,155
$
10,897
$
6,226
$
207,278
Size of sponsored unconsolidated
structured entities
3
$
15,850
$
45,272
$
12
$
61,134
$
14,032
$
33,744
$
39
$
47,815
1
 
Derivatives primarily subject to vanilla interest rate or foreign exchange risk are not included in these amounts
 
as those derivatives are designed to align the structured entity’s cash flows
with risks absorbed by investors and are not predominantly designed to expose the Bank to variable returns created
 
by the entity.
2
 
For the purposes of this disclosure, off-balance sheet exposure represents the notional value of liquidity
 
facilities, guarantees, or other off-balance sheet commitments without considering
the effect of collateral or other credit enhancements.
3
The size of sponsored unconsolidated structured entities is provided based on the most appropriate measure of
 
size for the type of entity: (1) The par value of notes issued by
securitization conduits and similar liability issuers; (2) the total AUM of investment funds and trusts; and (3) the total
 
fair value of partnership or equity shares in issue for partnerships and
similar equity issuers.
Sponsored Unconsolidated Structured Entities
 
in which the Bank has no Significant Investment
 
at the End of the Period
Sponsored unconsolidated structured entities
 
in which the Bank has no significant investment
 
at the end of the period are predominantly investment
 
funds and
trusts created for the asset management
 
business. The Bank would not typically
 
hold investments, with the exception of
 
seed capital, in these structured entities.
However, the Bank continues to earn fees from asset management
 
services provided to these entities, some of which
 
could be based on the performance of the
fund. Fees payable are generally senior in
 
the entity’s priority of payment and would also
 
be backed by collateral, limiting the Bank’s exposure
 
to loss from these
entities. The Bank earned non-interest income
 
of $2.3 billion (October 31, 2023 − $2.1
 
billion)
 
from its involvement with these asset
 
management entities for the
year ended October 31, 2024, of which $1.9
 
billion (October 31, 2023 − $1.9 billion)
 
was received directly from these entities. The
 
total AUM in these entities as at
October 31, 2024 was $302.9 billion (October
 
31, 2023 − $253.1 billion). Any assets
 
transferred by the Bank during the period
 
are commingled with assets
obtained from third parties in the market.
 
Except as previously disclosed, the Bank
 
has no contractual or non-contractual arrangements
 
to provide financial support
to unconsolidated structured entities.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 56
NOTE 11: DERIVATIVES
(a)
 
DERIVATIVE PRODUCT TYPES AND RISK EXPOSURES
The majority of the Bank’s derivative contracts
 
are OTC transactions that are bilaterally
 
negotiated between the Bank and the
 
counterparty to the contract. The
remainder are exchange-traded contracts transacted
 
through organized and regulated exchanges
 
and consist primarily of options and futures.
The Bank’s derivative transactions relate to trading
 
and non-trading activities. The purpose of
 
derivatives held for non-trading activities
 
is primarily for managing
interest rate, foreign exchange, and equity risk
 
related to the Bank’s funding, lending,
 
investment, and other structural market risk
 
management activities. The
Bank’s risk management strategy for these
 
risks is discussed in shaded sections of
 
the “Managing Risk” section of the MD&A.
Where hedge accounting is applied, only
 
specific or a combination of risk components
 
are hedged, including benchmark interest
 
rate, foreign exchange rate,
and equity price components. All these risk
 
components are observable in the relevant
 
market environment and the change in the fair
 
value or the variability in
cash flows attributable to these risk components
 
can be reliably measured for hedged items.
 
The Bank also enters into derivative transactions
 
to economically
hedge certain exposures that do not otherwise
 
qualify for hedge accounting, or
 
where hedge accounting is not considered
 
feasible.
Where the derivatives are in hedge relationships,
 
the main sources of ineffectiveness can be attributed
 
to differences between hedging instruments and hedged
items:
●
 
Differences in fixed rates, when contractual coupons
 
of the fixed rate hedged items are designated;
●
 
Differences in the discounting factors, when hedging
 
derivatives are collateralized;
●
 
CVA on the hedging derivatives; and
 
●
 
Mismatch in critical terms such as tenor and
 
timing of cash flows between hedging instruments
 
and hedged items.
To mitigate a portion of the ineffectiveness, the Bank designates the benchmark risk
 
component of contractual cash flows of
 
hedged items and executes hedging
derivatives with high-quality counterparties.
 
The majority of the Bank’s hedging derivatives
 
are collateralized.
Interest Rate Derivatives
Interest rate swaps are OTC contracts in
 
which two counterparties agree to exchange
 
cash flows over a period of time based
 
on rates applied to a specified
notional amount. This includes interest rate
 
swaps that are transacted and settled through
 
a clearing house which acts as a central
 
counterparty. A typical interest
rate swap would require one counterparty
 
to pay a fixed market interest rate in exchange
 
for a variable market interest rate determined
 
from time to time, with both
calculated on a specified notional amount.
 
No exchange of principal amount takes place.
Forward rate agreements are OTC contracts
 
that effectively fix a future interest rate for a
 
period of time. A typical forward rate agreement
 
provides that at a pre-
determined future date, a cash settlement
 
will be made between the counterparties based
 
upon the difference between a contracted rate and
 
a market rate to be
determined in the future, calculated on a
 
specified notional amount. No exchange of principal
 
amount takes place.
Interest rate options are contracts in
 
which one party (the purchaser of an option) acquires
 
from another party (the writer of an option),
 
in exchange for a
premium, the right, but not the obligation,
 
either to buy or sell, on a specified future date
 
or series of future dates or within a specified
 
time, a specified financial
instrument at a contracted price. The underlying
 
financial instrument will have a market
 
price which varies in response to changes
 
in interest rates. In managing
the Bank’s interest rate exposure, the Bank acts as
 
both a writer and purchaser of these options.
 
Options are transacted both OTC and through
 
exchanges.
Interest rate futures are standardized
 
contracts transacted on an exchange, with interest
 
bearing instruments as the underlying reference
 
assets. These
contracts differ from forward rate agreements in
 
that they are in standard amounts with standard
 
settlement dates and are transacted on an exchange.
The Bank uses interest rate swaps to hedge
 
its exposure to benchmark interest rate risk
 
by modifying the repricing or maturity
 
characteristics of existing and/or
forecast assets and liabilities, including funding
 
and investment activities. These swaps are
 
designated in either fair value hedges against
 
fixed rate
assets/liabilities or cash flow hedges against
 
floating rate assets/liabilities. For fair
 
value hedges, the Bank assesses and measures
 
the hedge effectiveness based
on the change in the fair value of the derivative
 
hedging instrument relative to the change
 
in the fair value of the hedged item.
 
For cash flow hedges, the Bank uses
a hypothetical derivative having terms that identically
 
match the critical terms of the hedged item
 
as the proxy for measuring
 
the change in cash flows of the
hedged item.
Foreign Exchange Derivatives
Foreign exchange forwards are OTC contracts
 
in which one counterparty contracts
 
with another to exchange a specified amount
 
of one currency for a specified
amount of a second currency, at a future date or range of dates.
Swap contracts comprise foreign exchange
 
swaps and cross-currency interest rate swaps.
 
Foreign exchange swaps are transactions
 
in which a foreign
currency is simultaneously purchased in
 
the spot market and sold in the forward
 
market, or vice-versa. Cross-currency interest
 
rate swaps are transactions in
which counterparties exchange principal and
 
interest cash flows in different currencies over
 
a period of time. These contracts are used
 
to manage currency and/or
interest rate exposures.
Foreign exchange futures contracts are
 
similar to foreign exchange forward contracts
 
but differ in that they are in standard currency amounts
 
with standard
settlement dates and are transacted on an exchange.
The Bank uses non-derivative instruments
 
such as foreign currency deposit liabilities
 
and derivative instruments such as
 
cross-currency swaps and foreign
exchange forwards to hedge its foreign currency
 
exposure. These hedging instruments
 
are designated in either net investment hedges
 
or cash flow hedges. For
net investment hedges, the Bank assesses and
 
measures the hedge effectiveness based on the
 
change in the fair value of the hedging
 
instrument relative to the
translation gains and losses on the net investment
 
in the foreign operation. For cash flow
 
hedges, the Bank assesses and measures
 
the hedge effectiveness
based on the change in the fair value of
 
the hedging instrument relative to the change
 
in the cash flows of the foreign currency
 
denominated asset/liability
attributable to foreign exchange risk, using the
 
hypothetical derivative method.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 57
Credit Derivatives
The Bank uses credit derivatives such as
 
credit default swaps (CDS) and total return
 
swaps to manage risks in the Bank’s corporate loan
 
portfolio and other cash
instruments, as well as managing counterparty
 
credit risk on derivatives. Credit risk is the
 
risk of loss if a borrower or counterparty in
 
a transaction fails to meet its
agreed payment obligations. The Bank uses
 
credit derivatives to mitigate industry
 
concentration and borrower-specific exposure as
 
part of the Bank’s portfolio risk
management techniques. The credit, legal, and
 
other risks associated with these transactions
 
are controlled through well established
 
procedures. The Bank’s
policy is to enter into these transactions
 
with investment grade financial institutions.
 
Credit risk to these counterparties is managed
 
through the same approval,
limit, and monitoring processes that is
 
used for all counterparties to which the
 
Bank has credit exposure.
Credit derivatives are OTC contracts designed
 
to transfer the credit risk in an underlying
 
financial instrument (usually termed as
 
a reference asset) from one
counterparty to another. The most common credit derivatives
 
are CDS, which include contracts transacted
 
through clearing houses, and total return swaps.
 
In
CDS contracts, the CDS purchaser acquires
 
credit protection on a reference asset or group
 
of assets from a writer of CDS in exchange
 
for a premium. The
purchaser may pay the agreed premium
 
at inception or over a period of time. The
 
credit protection compensates the purchaser
 
for deterioration in value of the
reference asset or group of assets upon the occurrence
 
of certain credit events such as bankruptcy, or changes in specified
 
credit rating or credit index. Settlement
may be cash based or physical, requiring
 
the delivery of the reference asset to the
 
CDS writer. In total return swap contracts, one counterparty
 
agrees to pay or
receive from the other cash amounts based
 
on changes in the value of a reference
 
asset or group of assets, including any returns
 
such as interest earned on
these assets in exchange for amounts that are
 
based on prevailing market funding rates.
 
These cash settlements are made regardless of
 
whether there is a credit
event.
Other Derivatives
The Bank also transacts in equity and commodity
 
derivatives in both exchange and OTC
 
markets.
Equity swaps are OTC contracts in which one
 
counterparty agrees to pay, or receive from the other, cash amounts based on
 
changes in the value of a stock
index, a basket of stocks or a single stock.
 
These contracts sometimes include a payment
 
in respect of dividends.
Equity options give the purchaser of the option,
 
for a premium, the right, but not the obligation,
 
to buy from or sell to the writer of an option,
 
an underlying stock
index, basket of stocks or a single stock
 
at a contracted price. Options are transacted
 
both OTC and through exchanges.
Equity index futures are standardized
 
contracts transacted on an exchange. They
 
are based on an agreement to pay or receive
 
a cash amount based on the
difference between the contracted price level of
 
an underlying stock index and its corresponding
 
market price level at a specified future date.
 
There is no actual
delivery of stocks that comprise the underlying
 
index. These contracts are in standard amounts
 
with standard settlement dates.
Equity forwards are OTC contracts in
 
which one counterparty contracts with another
 
to buy or sell a single stock or stock index, or
 
to settle the contract in cash
based on changes in the value of a reference
 
asset, at a future date.
Commodity contracts include commodity
 
forwards, futures, swaps, and options,
 
such as precious metals and energy-related
 
products in both OTC and
exchange markets.
The Bank applies hedge accounting on
 
certain equity forwards and/or total return
 
swaps to hedge exposure to equity price risk.
 
These derivatives are
designated as cash flow hedges. The Bank
 
assesses and measures the hedge effectiveness
 
based on the change in the fair value
 
of the hedging instrument
relative to the change in the cash flows of the
 
hedged item attributable to movement in
 
equity price, using the hypothetical derivative
 
method.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 58
Fair Value of Derivatives
(millions of Canadian dollars)
October 31, 2024
October 31, 2023
Fair value as at
Fair value as at
balance sheet date
balance sheet date
Positive
Negative
Positive
Negative
Derivatives held or issued for trading
 
purposes
Interest rate contracts
1
Forward rate agreements
$
232
$
48
$
464
$
88
Swaps
11,971
9,470
16,041
12,667
Options written
–
1,118
–
2,204
Options purchased
1,210
–
2,265
–
Total interest rate contracts
13,413
10,636
18,770
14,959
Foreign exchange contracts
1
Forward contracts
3,617
2,521
1,968
1,836
Swaps
15,456
14,304
20,123
17,806
Cross-currency interest rate swaps
 
24,366
22,496
28,902
22,990
Options written
–
619
–
619
Options purchased
507
–
503
–
Total foreign exchange contracts
43,946
39,940
51,496
43,251
Credit derivative contracts
Credit default swaps – protection purchased
–
294
11
122
Credit default swaps – protection sold
5
2
42
5
Total credit derivative contracts
5
296
53
127
Other contracts
Equity contracts
5,286
6,636
4,350
2,846
Commodity contracts
5,321
5,545
2,108
2,110
Total other contracts
10,607
12,181
6,458
4,956
Fair value – trading
67,971
63,053
76,777
63,293
Derivatives held or issued for non-trading
 
purposes
Interest rate contracts
Forward rate agreements
8
–
2
1
Swaps
2,005
2,807
4,131
6,246
Options written
–
1
–
–
Options purchased
16
–
7
–
Total interest rate contracts
2,029
2,808
4,140
6,247
Foreign exchange contracts
Forward contracts
386
494
821
503
Swaps
80
20
31
3
Cross-currency interest rate swaps
 
6,649
524
5,065
1,116
Total foreign exchange contracts
7,115
1,038
5,917
1,622
Credit derivative contracts
Credit default swaps – protection purchased
1
107
1
45
Total credit derivative contracts
1
107
1
45
Other contracts
Equity contracts
945
1,362
547
433
Total other contracts
945
1,362
547
433
Fair value – non-trading
10,090
5,315
10,605
8,347
Total fair value
$
78,061
$
68,368
$
87,382
$
71,640
1
 
The fair values of interest rate futures and foreign exchange futures are immaterial and therefore excluded from
 
this table.
The following table distinguishes derivatives held
 
or issued for non-trading purposes between
 
those that have been designated in qualifying
 
hedge accounting
relationships and those which have not been
 
designated in qualifying hedge accounting
 
relationships as at October 31, 2024 and
 
October 31, 2023.
Fair Value of Non-Trading
 
Derivatives
1
(millions of Canadian dollars)
As at
October 31, 2024
Derivative Assets
Derivative Liabilities
Derivatives
Derivatives
Derivatives in qualifying
not in
Derivatives in qualifying
not in
hedging relationships
qualifying
hedging relationships
qualifying
Fair
Cash
Net
hedging
Fair
Cash
Net
hedging
value
flow
investment
relationships
Total
value
flow
investment
relationships
Total
Derivatives held or issued for
non-trading purposes
Interest rate contracts
$
932
$
123
$
–
$
974
$
2,029
$
309
$
1,290
$
–
$
1,209
$
2,808
Foreign exchange contracts
–
6,945
–
170
7,115
–
846
–
192
1,038
Credit derivative contracts
–
–
–
1
1
–
–
–
107
107
Other contracts
–
337
–
608
945
–
132
–
1,230
1,362
Fair value – non-trading
$
932
$
7,405
$
–
$
1,753
$
10,090
$
309
$
2,268
$
–
$
2,738
$
5,315
October 31, 2023
Derivatives held or issued for
non-trading purposes
Interest rate contracts
$
2,049
$
33
$
–
$
2,058
$
4,140
$
1,195
$
2,629
$
–
$
2,423
$
6,247
Foreign exchange contracts
–
5,754
–
163
5,917
–
1,597
–
25
1,622
Credit derivative contracts
–
–
–
1
1
–
–
–
45
45
Other contracts
–
434
–
113
547
–
190
–
243
433
Fair value – non-trading
$
2,049
$
6,221
$
–
$
2,335
$
10,605
$
1,195
$
4,416
$
–
$
2,736
$
8,347
1
 
Certain derivative assets qualify to be offset with certain derivative liabilities on the Consolidated Balance
 
Sheet. Refer to Note 6 for further details.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 59
Fair Value Hedges
The following table presents the effects of fair
 
value hedges on the Consolidated Balance
 
Sheet and the Consolidated Statement of Income.
Fair Value Hedges
(millions of Canadian dollars)
 
For the years ended or as at
October 31, 2024
Accumulated
Accumulated
Change in
Change in fair
amount of fair
amount of fair
value of hedged
value of hedging
Carrying
value hedge
value hedge
items for
instruments for
amounts
adjustments
adjustments on
ineffectiveness
ineffectiveness
Hedge
for hedged
on hedged
de-designated
measurement
measurement
ineffectiveness
items
items
1,2
hedged items
Assets
Interest rate risk
Debt securities at amortized cost
$
6,856
$
(6,899)
$
(43)
$
113,323
$
(10,995)
$
(3,015)
Financial assets at fair value through
other comprehensive income
3,127
(3,146)
(19)
53,253
(1,086)
(71)
Loans
1,789
(1,798)
(9)
52,765
(328)
4
Total assets
11,772
(11,843)
(71)
219,341
(12,409)
(3,082)
Liabilities
Interest rate risk
Deposits
 
(2,291)
 
2,265
 
(26)
 
125,519
 
(3,543)
 
(136)
Securitization liabilities at amortized cost
(163)
163
–
6,865
68
–
Subordinated notes and debentures
(50)
50
–
3,158
27
(91)
Total liabilities
(2,504)
2,478
(26)
135,542
(3,448)
(227)
Total
$
9,268
$
(9,365)
$
(97)
October 31, 2023
Assets
Interest rate risk
Debt securities at amortized cost
$
(4,408)
$
4,381
$
(27)
$
105,672
$
(18,332)
$
(3,378)
Financial assets at fair value through
 
other comprehensive income
(785)
807
22
43,249
(4,230)
(68)
Loans
(798)
800
2
54,482
(2,322)
9
Total assets
(5,991)
5,988
(3)
203,403
(24,884)
(3,437)
Liabilities
Interest rate risk
Deposits
 
1,383
 
(1,417)
 
(34)
 
118,308
 
(8,641)
 
(102)
Securitization liabilities at amortized cost
76
(79)
(3)
2,124
(65)
–
Subordinated notes and debentures
7
(7)
–
1,026
(101)
(32)
Total liabilities
1,466
(1,503)
(37)
121,458
(8,807)
(134)
Total
$
(4,525)
$
4,485
$
(40)
1
 
The Bank has portfolios of fixed rate financial assets and liabilities whereby the principal amount changes frequently
 
due to originations, issuances, maturities and prepayments. The
interest rate risk hedges on these portfolios are rebalanced dynamically.
2
 
Reported balances represent adjustments to the carrying values of hedged items as included in the “Carrying amounts
 
for hedged items” column in this table.
Cash Flow Hedges and Net Investment
 
Hedges
The following table presents the effects of cash
 
flow hedges and net investment hedges on the
 
Bank’s Consolidated Statement of Income and
 
the Consolidated
Statement of Comprehensive Income.
Cash Flow and Net Investment Hedges
(millions of Canadian dollars)
For the years ended
October 31, 2024
 
Change in fair
 
Hedging
Amount reclassified
Change in value
value of hedging
 
gains (losses)
from accumulated
Net change
of hedged items
instruments for
 
recognized in other
other comprehensive
in other
for ineffectiveness
ineffectiveness
Hedge
comprehensive
income (loss)
comprehensive
 
measurement
measurement
ineffectiveness
income
1
to earnings
1
income (loss)
1
Cash flow hedges
2
Interest rate risk
3
$
(3,602)
$
3,606
$
4
$
2,128
$
(2,311)
$
4,439
Foreign exchange risk
4,5,6
(1,863)
1,867
4
1,287
2,204
(917)
Equity price risk
56
(59)
(3)
(59)
(66)
7
Total cash flow hedges
$
(5,409)
$
5,414
$
5
$
3,356
$
(173)
$
3,529
Net investment hedges
$
457
$
(457)
$
–
$
(457)
$
(41)
$
(416)
October 31, 2023
Cash flow hedges
2
Interest rate risk
3
$
1,260
$
(1,261)
$
(1)
$
(3,528)
$
(3,069)
$
(459)
Foreign exchange risk
4,5,6
(4,417)
4,414
(3)
3,824
3,168
656
Equity price risk
374
(374)
–
(374)
(337)
(37)
Total cash flow hedges
$
(2,783)
$
2,779
$
(4)
$
(78)
$
(238)
$
160
Net investment hedges
$
1,821
$
(1,821)
$
–
$
(1,821)
$
15
$
(1,836)
1
 
Effects on OCI are presented on a pre-tax basis.
2
 
During the years ended October 31, 2024 and October 31, 2023, there were no instances where forecast hedged
 
transactions failed to occur.
3
 
Hedged items include forecast interest cash flows on loans
,
deposits, and securitization liabilities.
4
 
For non-derivative instruments designated as hedging foreign exchange risk, fair value change is measured as
 
the gains and losses due to spot foreign exchange movements.
5
Cross-currency swaps may be used to hedge 1) foreign exchange risk, or 2) a combination of interest rate risk
 
and foreign exchange risk in a single hedge relationship. Cross-currency
swaps in both types of hedge
 
relationships are disclosed in the foreign exchange risk category.
6
Hedged items include principal and interest cash flows on foreign denominated securities, loans, deposits, other
 
liabilities, and subordinated notes and debentures.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 60
Reconciliation of Accumulated Other Comprehensive
 
Income (Loss)
1
(millions of Canadian dollars)
For the years ended
October 31, 2024
 
 
Accumulated other
Accumulated other
Accumulated other
Accumulated other
comprehensive
Net changes in other
comprehensive
comprehensive
comprehensive
income (loss)
comprehensive
income (loss)
income (loss) on
income (loss) on
 
at beginning of year
income (loss)
at end of year
designated hedges
de-designated hedges
Cash flow hedges
Interest rate risk
$
(6,441)
$
4,439
$
(2,002)
$
455
$
(2,457)
Foreign exchange risk
(1,091)
(917)
(2,008)
(2,008)
–
Equity price risk
(21)
7
(14)
(14)
–
Total cash flow hedges
$
(7,553)
$
3,529
$
(4,024)
$
(1,567)
$
(2,457)
Net investment hedges
Foreign translation risk
$
(6,352)
$
(416)
$
(6,768)
$
(6,768)
$
–
October 31, 2023
Cash flow hedges
Interest rate risk
$
(5,982)
$
(459)
$
(6,441)
$
(3,463)
$
(2,978)
Foreign exchange risk
(1,747)
656
(1,091)
(1,091)
–
Equity price risk
16
(37)
(21)
(21)
–
Total cash flow hedges
$
(7,713)
$
160
$
(7,553)
$
(4,575)
$
(2,978)
Net investment hedges
Foreign translation risk
$
(4,516)
$
(1,836)
$
(6,352)
$
(6,352)
$
–
1
 
Presented on a pre-tax basis.
(b)
 
NOTIONAL AMOUNTS
The notional amounts are not recorded as assets
 
or liabilities as they represent the face amount
 
of the contract to which a rate or price is applied
 
to determine the
amount of cash flows to be exchanged.
 
Notional amounts do not represent the potential
 
gain or loss associated with the market risk
 
nor are they indicative of the
credit risk associated with derivative
 
financial instruments.
The following table discloses the notional
 
amount of OTC and exchange-traded derivatives.
Over-the-Counter and Exchange-Traded Derivatives
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Trading
Over-the-Counter
1
Non
Clearing
clearing
Exchange-
Non-
house
2
house
traded
Total
trading
3
Total
Total
Notional
 
 
 
 
 
Interest rate contracts
Futures
$
–
$
–
$
761,112
$
761,112
$
–
$
761,112
$
1,377,932
Forward rate agreements
550,965
22,772
–
573,737
552
574,289
628,416
Swaps
17,656,335
474,381
–
18,130,716
1,708,529
19,839,245
16,974,557
Options written
–
93,559
5,806
99,365
125
99,490
111,734
Options purchased
–
112,098
5,550
117,648
1,863
119,511
140,437
Total interest rate contracts
18,207,300
702,810
772,468
19,682,578
1,711,069
21,393,647
19,233,076
Foreign exchange contracts
Forward contracts
39
355,932
–
355,971
24,644
380,615
231,601
Swaps
494
1,685,083
–
1,685,577
7,024
1,692,601
2,021,332
Cross-currency interest rate swaps
–
1,525,781
–
1,525,781
143,796
1,669,577
1,448,859
Options written
–
56,614
163
56,777
–
56,777
51,216
Options purchased
–
49,344
15
49,359
–
49,359
36,959
Total foreign exchange contracts
533
3,672,754
178
3,673,465
175,464
3,848,929
3,789,967
Credit derivative contracts
Credit default swaps – protection purchased
12,469
327
–
12,796
2,708
15,504
12,156
Credit default swaps – protection sold
1,651
242
–
1,893
–
1,893
2,535
Total credit derivative contracts
14,120
569
–
14,689
2,708
17,397
14,691
Other contracts
Equity contracts
–
123,991
117,988
241,979
36,049
278,028
221,265
Commodity contracts
118
103,714
141,763
245,595
–
245,595
164,170
Total other contracts
118
227,705
259,751
487,574
36,049
523,623
385,435
Total
$
18,222,071
$
4,603,838
$
1,032,397
$
23,858,306
$
1,925,290
$
25,783,596
$
23,423,169
1
Collateral held under a Credit Support Annex to help reduce counterparty credit risk is in the form of high-quality
 
and liquid assets such as cash and high-quality government securities.
Acceptable collateral is governed by the Collateralized Trading Policy.
2
 
Derivatives executed through a central clearing house reduce settlement risk due to the ability to net settle offsetting
 
positions for capital purposes and therefore receive preferential
capital treatment compared to those settled with non-central clearing house counterparties.
3
 
Includes $1,532 billion of OTC derivatives that are transacted with clearing houses (October 31, 2023 – $1,970
 
billion) and $394 billion of OTC derivatives that are transacted with non-
clearing houses (October 31, 2023 – $426 billion). There were no exchange-traded derivatives both as at October
 
31, 2024 and October 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 61
The following table distinguishes the notional amount
 
of derivatives held or issued for non-trading
 
purposes between those that have been
 
designated in qualifying
hedge accounting relationships and those
 
which have not been designated in qualifying
 
hedge accounting relationships.
Notional of Non-Trading Derivatives
(millions of Canadian dollars)
As at
October 31, 2024
Derivatives in qualifying hedging relationships
Derivatives not in
Derivatives held or issued for
Fair
Cash
Net
qualifying hedging
hedging (non-trading) purposes
value
flow
1
Investment
1
relationships
Total
Interest rate contracts
$
395,687
$
340,741
$
–
$
974,641
$
1,711,069
Foreign exchange contracts
–
159,693
–
15,771
175,464
Credit derivative contracts
–
–
–
2,708
2,708
Other contracts
–
2,409
–
33,640
36,049
Total notional non-trading
$
395,687
$
502,843
$
–
$
1,026,760
$
1,925,290
October 31, 2023
Interest rate contracts
$
372,214
$
298,328
$
–
$
1,529,603
$
2,200,145
Foreign exchange contracts
–
144,485
–
16,429
160,914
Credit derivative contracts
–
–
–
2,191
2,191
Other contracts
–
2,241
–
30,015
32,256
Total notional non-trading
$
372,214
$
445,054
$
–
$
1,578,238
$
2,395,506
1
Certain cross-currency swaps are executed using multiple derivatives, including interest rate swaps. These derivatives
 
are used to hedge foreign exchange rate risk in cash flow hedges
and net investment hedges.
The following table discloses the notional
 
principal amount of OTC derivatives and exchange-traded
 
derivatives based on their contractual terms
 
to maturity.
Derivatives by Remaining Term-to-Maturity
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Within
Over 1 year
Over
Notional Principal
1 year
to 5 years
5 years
Total
Total
Interest rate contracts
Futures
$
639,609
$
121,503
$
–
$
761,112
$
1,377,932
Forward rate agreements
550,518
18,386
5,385
574,289
628,416
Swaps
7,354,061
8,828,049
3,657,135
19,839,245
16,974,557
Options written
59,930
35,462
4,098
99,490
111,734
Options purchased
62,000
52,319
5,192
119,511
140,437
Total interest rate contracts
8,666,118
9,055,719
3,671,810
21,393,647
19,233,076
Foreign exchange contracts
Futures
–
–
–
–
–
Forward contracts
363,791
14,994
1,830
380,615
231,601
Swaps
1,649,432
40,989
2,180
1,692,601
2,021,332
Cross-currency interest rate swaps
419,447
863,763
386,367
1,669,577
1,448,859
Options written
52,418
4,354
5
56,777
51,216
Options purchased
44,184
5,153
22
49,359
36,959
Total foreign exchange contracts
2,529,272
929,253
390,404
3,848,929
3,789,967
Credit derivative contracts
Credit default swaps – protection purchased
1,675
7,406
6,423
15,504
12,156
Credit default swaps – protection sold
431
781
681
1,893
2,535
Total credit derivative contracts
2,106
8,187
7,104
17,397
14,691
Other contracts
Equity contracts
209,083
67,387
1,558
278,028
221,265
Commodity contracts
219,998
25,104
493
245,595
164,170
Total other contracts
429,081
92,491
2,051
523,623
385,435
Total
$
11,626,577
$
10,085,650
$
4,071,369
$
25,783,596
$
23,423,169
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 62
The following table discloses the notional amount
 
and average price of derivative instruments
 
designated in qualifying hedge accounting
 
relationships.
Hedging Instruments by Remaining Term-to-Maturity
(millions of Canadian dollars, except
 
as noted)
As at
October 31
October 31
2024
2023
Within
Over 1 year
Over 5
Notional
1 year
to 5 years
years
Total
Total
Interest rate risk
Interest rate swaps
Notional – pay fixed
$
18,647
$
106,879
$
105,214
$
230,740
$
238,472
Average fixed interest rate %
2.86
3.06
2.31
Notional – received fixed
112,428
178,069
26,652
317,149
253,798
Average fixed interest rate %
4.17
3.02
3.02
Total notional – interest rate risk
131,075
284,948
131,866
547,889
492,270
Foreign exchange risk
1
Forward contracts
Notional – USD/CAD
2,278
5,466
72
7,816
8,067
Average FX forward rate
1.31
1.30
1.31
Notional – EUR/CAD
2,623
11,180
1,338
15,141
14,664
Average FX forward rate
1.63
1.54
1.56
Notional – other
810
91
–
901
172
Cross-currency swaps
2,3
Notional – USD/CAD
9,345
28,810
8,789
46,944
51,497
Average FX rate
1.29
1.32
1.29
Notional – EUR/CAD
10,197
36,145
15,535
61,877
47,618
Average FX rate
1.41
1.46
1.44
Notional – GBP/CAD
1,792
7,860
108
9,760
5,723
Average FX rate
1.65
1.68
1.73
Notional – other currency pairs
4
5,019
11,537
698
17,254
16,744
Total notional – foreign exchange risk
32,064
101,089
26,540
159,693
144,485
Equity Price Risk
Notional – equity contracts
2,409
–
–
2,409
2,241
Total notional
$
165,548
$
386,037
$
158,406
$
709,991
$
638,996
1
Foreign currency denominated deposit liabilities are also used to hedge foreign exchange risk. Includes $77.4
 
billion (October 31, 2023 – $67.2 billion) of the carrying value of these non-
derivative hedging instruments
 
designated under net investment hedges.
2
 
Cross-currency swaps may be used to hedge 1) foreign exchange risk, or 2) a combination of interest rate risk and
 
foreign exchange risk in a single hedge relationship. Cross-currency
swaps in both types of hedge relationships are disclosed in the foreign exchange risk category.
3
 
Certain cross-currency swaps are executed using multiple derivatives, including interest rate swaps. The notional
 
amount of these interest rate swaps, excluded from the above, is
$188.5 billion as at October 31, 2024 (October 31, 2023 – $178.3 billion).
4
Includes derivatives executed to manage non-trading foreign currency exposures, when more than one currency
 
is involved prior to hedging to the Canadian dollar, or when
 
the currency
pair is not a significant exposure for the Bank.
Interest Rate Benchmark Reform
As at October 31, 2024, the Bank has transitioned
 
all derivative instruments designated in qualifying
 
hedge accounting relationships referencing
 
CDOR to an ARR
and it no longer has exposure to any residual
 
CDOR derivative notional amounts (October
 
31, 2023 – $284 billion).
(c)
 
DERIVATIVE-RELATED RISKS
Market Risk
Derivatives, in the absence of any compensating
 
upfront cash payments, generally have no
 
market value at inception. They obtain value,
 
positive or negative, as
relevant interest rates, foreign exchange
 
rates, equity, commodity or credit prices or indices change, such
 
that the previously contracted terms of the derivative
transactions have become more or less favourable
 
than what can be negotiated under current
 
market conditions for contracts with the same
 
terms and the same
remaining period to expiry. The potential for derivatives to increase
 
or decrease in value as a result of the foregoing
 
factors is generally referred to as market risk.
Credit Risk
Credit risk on derivatives, also known as counterparty
 
credit risk, is the risk of a financial loss
 
occurring as a result of the failure of a
 
counterparty to meet its
obligation to the Bank.
Derivative-related credit risks are subject
 
to the same credit approval, limit and
 
monitoring standards that are used for managing
 
other transactions that create
credit exposure. This includes evaluating
 
the creditworthiness of counterparties, and
 
managing the size, diversification and maturity
 
structure of the portfolios. The
Bank actively engages in risk mitigation
 
strategies through the use of multi-product
 
derivative master netting agreements,
 
collateral and other risk mitigation
techniques. Master netting agreements reduce
 
risk to the Bank by allowing the Bank
 
to close out and net transactions with counterparties
 
subject to such
agreements upon the occurrence of certain
 
events. The current replacement cost
 
and credit equivalent amount shown in
 
the following table are based on the
standardized approach for counterparty credit
 
risk. According to this approach, the
 
current replacement cost accounts for
 
the fair value of the positions, posted and
received collateral, and master netting agreement
 
clauses. The credit equivalent amount is the
 
sum of the current replacement cost
 
and the potential future
exposure, which is calculated by applying
 
factors determined by OSFI to the notional
 
principal amount of the derivatives. The risk-weighted
 
amount is determined
by applying the adequate risk weights to
 
the credit equivalent amount.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 63
Credit Exposure of Derivatives
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Current
Credit
Risk-
Current
Credit
Risk-
replacement
equivalent
weighted
replacement
equivalent
weighted
cost
amount
amount
cost
amount
amount
Interest rate contracts
Forward rate agreements
$
35
$
102
$
29
$
32
$
141
$
70
Swaps
4,215
11,037
964
6,436
13,423
1,142
Options written
7
140
26
3
92
27
Options purchased
17
123
23
27
140
39
Total interest rate contracts
4,274
11,402
1,042
6,498
13,796
1,278
Foreign exchange contracts
Forward contracts
1,746
5,643
1,022
1,514
4,732
968
Swaps
3,234
16,136
2,246
4,184
19,252
2,863
Cross-currency interest rate swaps
4,124
17,176
1,515
5,668
18,249
1,767
Options written
36
291
59
27
306
71
Options purchased
50
239
64
64
252
93
Total foreign exchange contracts
9,190
39,485
4,906
11,457
42,791
5,762
Other contracts
Credit derivatives
–
207
30
4
278
50
Equity contracts
669
8,964
2,348
762
8,147
2,577
Commodity contracts
1,115
5,752
848
829
4,980
1,102
Total other contracts
1,784
14,923
3,226
1,595
13,405
3,729
Total derivatives
15,248
65,810
9,174
19,550
69,992
10,769
Qualifying Central Counterparty Contracts
10,529
19,117
652
6,494
27,211
969
Total
$
25,777
$
84,927
$
9,826
$
26,044
$
97,203
$
11,738
Current Replacement Cost of Derivatives
(millions of Canadian dollars, except
 
as noted)
As at
Canada
1
United States
1
Other international
1
Total
October 31
October 31
October 31
October 31
October 31
October 31
October 31
October 31
By sector
2024
2023
2024
2023
2024
2023
2024
2023
Financial
$
4,647
$
5,132
$
38
$
23
$
272
$
234
$
4,957
$
5,389
Government
3,594
5,441
98
189
2,618
4,455
6,310
10,085
Other
1,670
1,508
639
654
1,671
1,913
3,980
4,075
Total current replacement cost
$
9,911
$
12,081
$
775
$
866
$
4,561
$
6,602
$
15,247
$
19,549
October 31
October 31
October 31
October 31
2024
2023
By location of risk
2024
2023
% mix
% mix
Canada
$
3,737
$
3,720
24.5
%
19.0
%
United States
4,937
7,108
32.4
36.4
Other international
United Kingdom
775
883
5.1
4.5
Europe – other
2,828
3,164
18.5
16.2
Other
2,970
4,674
19.5
23.9
Total Other international
6,573
8,721
43.1
44.6
Total current replacement cost
$
15,247
$
19,549
100.0
%
100.0
%
1
 
Based on geographic location of unit responsible for recording revenue.
Certain of the Bank’s derivative contracts are
 
governed by master derivative agreements
 
having provisions that may permit the
 
Bank’s counterparties to require,
upon the occurrence of a certain contingent event:
 
(1) the posting of collateral or other acceptable
 
remedy such as assignment of the affected
 
contracts to an
acceptable counterparty;
 
or (2)
 
settlement of outstanding derivative contracts.
 
Most often, these contingent events are in the
 
form of a downgrade of the senior
debt rating of the Bank, either as counterparty
 
or as guarantor of one of the Bank’s subsidiaries.
 
At October 31, 2024, the aggregate net liability
 
position of those
contracts would require:
 
(1) the posting of collateral or other
 
acceptable remedy totalling $511 million (October 31, 2023 – $407
 
million) in the event of a one-notch
or two-notch downgrade in the Bank’s senior debt rating;
 
and (2) funding totalling $134 million (October
 
31,
 
2023
 
– nil) following the termination and
 
settlement of
outstanding derivative contracts in the event
 
of a one-notch or two-notch downgrade in
 
the Bank’s senior debt rating.
Certain of the Bank’s derivative contracts are
 
governed by master derivative agreements
 
having credit support provisions
 
that permit the Bank’s counterparties
to call for collateral depending on the net mark-to-market
 
exposure position of all derivative contracts
 
governed by that master derivative agreement.
 
Some of
these agreements may permit the Bank’s counterparties
 
to require, upon the downgrade of the credit rating
 
of the Bank, to post additional collateral.
 
As at
October 31, 2024, the fair value of all derivative
 
instruments with credit risk related
 
contingent features in a net liability position
 
was $16 billion (October 31, 2023 –
$16 billion). The Bank has posted $17 billion
 
(October 31, 2023 – $16 billion)
 
of collateral for this exposure in the normal
 
course of business. As at
October 31, 2024, the impact of a one-notch downgrade
 
in the Bank’s credit rating would require the Bank
 
to post an additional $49 million (October 31,
 
2023 –
$147 million) of collateral to that posted in
 
the normal course of business. A two-notch
 
downgrade in the Bank’s credit rating would require
 
the Bank to post an
additional $1,228 million (October 31, 2023
 
– $223 million) of collateral to that posted in
 
the normal course of business.
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 64
NOTE 12: INVESTMENT IN ASSOCIATES AND JOINT VENTURES
INVESTMENT IN THE CHARLES SCHWAB CORPORATION
The Bank has significant influence over
 
The Charles Schwab Corporation (“Schwab”)
 
and the ability to participate in the financial
 
and operational policy-making
decisions of Schwab through a combination
 
of the Bank’s ownership, board representation
 
and the insured deposit account agreement
 
between the Bank and
Schwab. As such, the Bank accounts for its
 
investment in Schwab using the equity
 
method. The Bank’s share of Schwab’s earnings available
 
to common
shareholders is reported with a one-month
 
lag. The Bank takes into account changes
 
in the one-month lag period that would
 
significantly affect the results.
On August 21, 2024, the Bank sold 40.5
 
million shares of common stock of Schwab for
 
proceeds of approximately $3.4 billion (US$2.5
 
billion). The share sale
reduced the Bank’s ownership interest in Schwab
 
from 12.3% to 10.1%. The Bank recognized
 
approximately $1.0 billion (US$0.7 billion) as
 
other income (net of
$0.5 billion (US$0.4 billion) loss from AOCI
 
reclassified to earnings), in the fourth quarter
 
of fiscal 2024. The Bank continues to account
 
for its investment in
Schwab using the equity method.
As at October 31, 2024, the Bank’s reported investment
 
in Schwab was approximately 10.1%
 
(October 31, 2023 – 12.4%), consisting of
 
7.5% of the outstanding
voting common shares and the remainder
 
in non-voting common shares of Schwab
 
with an aggregate fair value of $18 billion (US$13
 
billion) (October 31, 2023 –
$16 billion (US$12 billion)) based on the closing
 
price of US$70.83 (October 31, 2023
 
– US$52.04) on the New York Stock Exchange.
The Bank and Schwab are party to a stockholder
 
agreement (the “Stockholder Agreement”)
 
under which the Bank has the right to designate
 
two members of
Schwab’s Board of Directors and has representation
 
on two Board Committees, subject to
 
the Bank meeting certain conditions. The Bank’s designated
 
directors
currently are the Bank’s Group President and
 
Chief Executive Officer and the Bank’s former Chair
 
of the Board. Under the Stockholder
 
Agreement, the Bank is not
permitted to own more than 9.9% voting
 
common shares of Schwab, and the Bank
 
is subject to customary standstill restrictions
 
and subject to certain exceptions,
transfer restrictions.
The carrying value of the Bank’s investment in
 
Schwab of $9.0 billion as at October 31, 2024
 
(October 31, 2023 – $8.9 billion) represents
 
the Bank’s share of
Schwab’s stockholders’ equity, adjusted for goodwill, other intangibles,
 
and cumulative translation adjustment.
 
The Bank’s share of net income from its investment
in Schwab of $703 million during the year ended
 
October 31, 2024 (October 31, 2023 – $864
 
million), reflects net income after adjustments
 
for amortization of
certain intangibles net of tax. The following
 
tables represent the gross amount of Schwab’s
 
total assets, liabilities, net revenues, net
 
income available to common
stockholders, other comprehensive income (loss),
 
and comprehensive income (loss).
Summarized Financial Information
(millions of Canadian dollars)
As at
September 30
September 30
2024
2023
Total assets
$
630,363
$
644,139
Total liabilities
566,502
592,923
(millions of Canadian dollars)
For the years ended September 30
2024
2023
Total net revenues
$
25,493
$
26,811
Total net income available to common stockholders
6,376
7,483
Total other comprehensive income (loss)
8,356
3,247
Total comprehensive income (loss)
 
14,732
 
10,730
Insured Deposit Account Agreement
On November 25, 2019, the Bank and Schwab
 
signed an insured deposit account agreement
 
(the “2019 Schwab IDA Agreement”), with an
 
initial expiration date of
July 1, 2031. Under the 2019 Schwab IDA
 
Agreement, starting July 1, 2021, Schwab
 
had the option to reduce the deposits by
 
up to US$10 billion per year (subject
to certain limitations and adjustments), with
 
a floor of US$50 billion. In addition, Schwab
 
requested some further operational flexibility
 
to allow for the sweep
deposit balances to fluctuate over time, under
 
certain conditions and subject to certain limitations.
On May 4, 2023, the Bank and Schwab entered
 
into an amended insured deposit account
 
agreement (the “2023 Schwab IDA Agreement”
 
or the “Schwab IDA
Agreement”), which replaced the 2019 Schwab
 
IDA Agreement. Pursuant to the 2023 Schwab
 
IDA Agreement, the Bank continues to make
 
sweep deposit
accounts available to clients of Schwab. Schwab
 
designates a portion of the deposits
 
with the Bank as fixed-rate obligation amounts
 
(FROA). Remaining deposits
are designated as floating-rate obligations.
 
In comparison to the 2019 Schwab IDA Agreement,
 
the 2023 Schwab IDA Agreement extends
 
the initial expiration date
by three years to July 1, 2034 and provides
 
for lower deposit balances in its first six
 
years, followed by higher balances in
 
the later years. Specifically, until
September 2025, the aggregate FROA
 
will serve as the floor. Thereafter, the floor will be set at US$60 billion. In addition,
 
Schwab had the option to buy down
 
up
to $6.8 billion (US$5 billion) of FROA by paying
 
the Bank certain fees in accordance with
 
the 2023 Schwab IDA Agreement, subject
 
to certain limits.
By the end of the first quarter of fiscal 2024,
 
Schwab had fully exercised its option to buy
 
down up to US$5 billion of FROA and
 
had paid a total of $337 million
(US$250 million) in termination fees to the
 
Bank in accordance with the 2023 Schwab
 
IDA Agreement. The fees were intended to
 
compensate the Bank for losses
incurred from discontinuing certain hedging relationships
 
and for lost revenues. The net impact
 
was recorded in net interest income.
Refer to Note 27 for further details on
 
the Schwab IDA Agreement.
INVESTMENT IN OTHER ASSOCIATES OR JOINT VENTURES
Except for Schwab as disclosed above,
 
the Bank did not have investments in associates
 
or joint ventures which were individually
 
material as of October 31, 2024,
or October 31, 2023. The carrying amount
 
of the Bank’s investment in other associates and
 
joint ventures as at October 31, 2024 was
 
$4.9 billion
(October 31, 2023 – $4.2 billion).
Other associates and joint ventures consisted
 
predominantly of investments in private
 
funds or partnerships that make equity investments,
 
provide debt
financing or support community-based tax-advantaged
 
investments. The investments in these
 
entities generate a return primarily through
 
the realization of U.S.
federal and state income tax credits,
 
including Low Income Housing Tax Credits, New Markets Tax Credits,
 
and Historic Tax Credits.
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 65
NOTE 13: SIGNIFICANT TRANSACTIONS
(a)
 
Acquisition of Cowen Inc.
On March 1, 2023, the Bank completed
 
the acquisition of Cowen Inc. (“Cowen”).
 
The acquisition advances the Wholesale Banking
 
segment’s long-term growth
strategy in the U.S. and adds complementary
 
products and services to the Bank’s existing
 
businesses. The results of the acquired
 
business have been
consolidated by the Bank from the closing date
 
and primarily reported in the Wholesale Banking
 
segment. Consideration included $1,500
 
million
(US$1,100 million) in cash for 100% of
 
Cowen’s common shares outstanding, $253
 
million (US$186 million) for the settlement of Cowen’s
 
Series A Preferred
Stock, and $205 million (US$151 million)
 
related to the replacement of share-based payment
 
awards.
The acquisition was accounted for as a business
 
combination under the purchase method.
 
The acquisition contributed $10,793 million
 
(US$7,928 million) of
assets and $10,005 million (US$7,351
 
million) of liabilities. The excess of accounting
 
consideration over the fair value of the
 
tangible net assets acquired was
allocated to intangible assets of $298 million
 
(US$219 million) net of taxes, and goodwill of
 
$872 million (US$641 million). Goodwill is not
 
deductible for tax
purposes.
For the year ended October 31, 2023, the
 
contribution of Cowen to the Bank’s revenue and
 
net income was not significant, nor would
 
it have been significant if
the acquisition had occurred as of November
 
1, 2022.
The Bank continues to dispose of certain non-core
 
businesses that were acquired in connection
 
with the Cowen acquisition. These non-core
 
businesses are
disposal groups which meet the criteria to be
 
classified as held for sale and are measured at
 
the lower of their carrying amount and
 
fair value less costs to sell. The
assets and liabilities of these disposal groups
 
are recorded in Other assets and Other liabilities,
 
respectively, on the Consolidated Balance Sheet. During the
 
year
ended October 31, 2023, the Bank disposed of
 
a reinsurance subsidiary that was classified
 
as held for sale. During the year ended
 
October 31, 2024, the Bank
disposed of Cowen’s legacy prime brokerage
 
and outsourced trading business that
 
was classified as held for sale. As at October
 
31, 2024, assets of $775 million
(October 31, 2023 – $1,958 million) and liabilities
 
of $337 million (October 31, 2023 – $1,291
 
million) were classified as held for sale.
(b)
Termination of the Merger Agreement with First Horizon Corporation
On May 4, 2023, the Bank and First Horizon
 
announced their mutual decision
 
to terminate the previously announced merger
 
agreement for the Bank to acquire
First Horizon. Under the terms of the termination
 
agreement, the Bank made a $306
 
million (US$225 million) cash payment to First
 
Horizon on May 5, 2023. The
termination payment was recognized in non-interest
 
expenses in the third quarter of fiscal 2023
 
and was reported in the Corporate segment.
In connection with the transaction, the Bank had
 
invested US$494 million in non-voting
 
First Horizon preferred stock. During the second
 
quarter of fiscal 2023,
the Bank recognized a valuation adjustment
 
loss of $199 million (US$147 million) on
 
this investment, recorded in OCI. On June
 
26, 2023, in accordance with the
terms of the preferred share purchase agreement,
 
the preferred stock converted into approximately
 
19.7 million common shares of First
 
Horizon, resulting in the
Bank recognizing a loss of $166 million (US$126
 
million) during the third quarter of fiscal 2023
 
in OCI based on First Horizon’s common
 
share price at the time of
conversion. Upon conversion, the losses recognized
 
to date, including the impact of foreign exchange,
 
were reclassified directly to retained earnings.
 
The Bank
elected to record subsequent fair value changes
 
on the common shares in OCI. On June
 
5, 2024, the Bank sold its holdings of First
 
Horizon common shares.
Gains of $115 million (US$75 million) recognized in OCI since
 
the date of conversion, which included the impact
 
of foreign exchange, were reclassified
 
directly to
retained earnings during the third quarter of
 
fiscal 2024.
The Bank had also implemented a strategy
 
to mitigate the impact of interest rate volatility
 
to capital on closing of the acquisition.
 
The Bank determined that the
fair value of First Horizon’s fixed rate financial assets
 
and liabilities and certain intangible
 
assets would have been sensitive to interest
 
rate changes. The fair value
of net assets would have determined the
 
amount of goodwill to be recognized on
 
closing of the acquisition. Increases in goodwill
 
and intangibles would have
negatively impacted capital ratios because they
 
are deducted from capital under OSFI
 
Basel III rules. In order to mitigate this volatility
 
to closing capital, the Bank
de-designated certain interest rate swaps
 
hedging fixed income investments in
 
fair value hedge accounting
 
relationships.
As a result of the de-designation, mark-to-market
 
gains (losses) on these swaps were recognized
 
in earnings, without any corresponding offset
 
from the
previously hedged investments. Such gains (losses)
 
would have mitigated the capital impact from
 
changes in the amount of goodwill recognized
 
on closing of the
acquisition. The de-designation also triggered
 
the amortization of the investments’ basis adjustment
 
to net interest income over the remaining
 
expected life of the
investments.
Prior to the termination of the merger agreement
 
on May 4, 2023, for the year ended October
 
31, 2023, the Bank reported ($1,386)
 
million in non-interest
income related to the mark-to-market on
 
the swaps, and $262 million in net interest
 
income related to the basis adjustment
 
amortization. In addition, for the year
ended October 31, 2023, the Bank reported
 
$585 million in non-interest income related
 
to the net interest earned on the swaps.
Following the announcement to terminate
 
the merger agreement, the Bank discontinued
 
this strategy and reinstated hedge accounting
 
on the portfolio of fixed
income investments using new swaps entered
 
into at higher market rates. The impact
 
from the higher swap rates and the basis adjustment
 
amortization discussed
above is reported in net interest income.
 
Income recognized from this strategy
 
will reverse over time causing a decrease
 
to net interest income. For the year ended
October 31, 2024, the decrease to net interest income
 
was $242 million (October 31, 2023 – $127
 
million), recorded in the Corporate segment.
NOTE 14: GOODWILL AND OTHER INTANGIBLES
GOODWILL
The recoverable amount of the Bank’s CGUs or groups
 
of CGUs is determined from internally
 
developed valuation models that consider
 
various factors and
assumptions such as forecasted earnings, growth
 
rates, discount rates, and terminal
 
growth rates. Management is required
 
to use judgment in estimating the
recoverable amount of the CGUs or groups
 
of CGUs,
 
and the use of different assumptions and estimates
 
in the calculations could influence the
 
determination of
the existence of impairment and the valuation
 
of goodwill. Management believes that the assumptions
 
and estimates used are reasonable
 
and supportable. Where
possible, assumptions generated internally
 
are compared to relevant market information.
 
The carrying amounts of the Bank’s CGUs or groups
 
of CGUs are
determined by management using risk-based
 
capital models to adjust net assets and liabilities
 
by CGU. These models consider various
 
factors including market
risk, credit risk,
 
and operational risk, including investment
 
capital (comprised of goodwill and other intangibles).
 
As at the date of the last impairment test,
 
the
amount of capital not directly attributable
 
to the CGUs and held within the Corporate
 
segment was approximately $11.5 billion and primarily related to
 
treasury
assets and excess capital managed within the
 
Corporate segment.
 
The Bank’s capital oversight committees provide
 
oversight to the Bank’s capital allocation
methodologies.
Key Assumptions
The recoverable amount of each CGU or group
 
of CGUs has been determined based on its estimated
 
value-in-use. In assessing value-in-use, estimated
 
future
cash flows based on the Bank’s internal forecast
 
are discounted using an appropriate pre-tax
 
discount rate.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 66
The following were the key assumptions
 
applied in the goodwill impairment testing:
Discount Rate
The pre-tax discount rates used reflect
 
current market assessments
 
of the risks specific to each group of
 
CGUs and are dependent on the risk profile
 
and capital
requirements of each group of CGUs.
Forecasted Earnings
The earnings included in the goodwill impairment
 
testing for each group of CGUs were based
 
on the Bank’s internal forecast, which projects
 
expected cash flows
over the next five years,
 
with the exception of the U.S. Personal and
 
Commercial Banking group of CGUs
 
where cash flow projections covering a
 
seven year
period were used, which more closely aligns
 
with the long-term strategic growth plan for
 
the business.
Terminal Growth Rates
Beyond the Bank’s internal forecast, cash flows
 
were assumed to grow at a steady terminal
 
growth rate. Terminal growth rates were based on the expected long-
term growth of gross domestic product and
 
inflation and ranged from 2.0% to
 
4.1% (2023
 
– 2.0% to 4.1%).
In considering the sensitivity of the key assumptions
 
discussed above, management determined
 
that a reasonable change in any of the
 
above would not result in
the recoverable amount of any of the groups
 
of CGUs to be less than their carrying amount.
Goodwill by Segment
(millions of Canadian dollars)
Canadian
Personal and
Wealth
Commercial
U.S.
Management
Wholesale
Banking
Retail
1
and Insurance
Banking
Total
Carrying amount of goodwill as at November 1, 2022
$
902
$
14,363
$
2,104
$
287
$
17,656
Additions (disposals)
–
–
–
744
744
Foreign currency translation adjustments and other
–
257
18
(73)
202
Carrying amount of goodwill as at October 31, 2023
2
$
902
$
14,620
$
2,122
$
958
$
18,602
Additions (disposals)
3
–
–
–
128
128
Foreign currency translation adjustments and other
–
43
3
75
121
Carrying amount of goodwill as at October 31, 2024
2
$
902
$
14,663
$
2,125
$
1,161
$
18,851
Pre-tax discount rates
2023
9.7–9.9
%
10.0–11.3
%
9.6–11.0
%
13.9
%
2024
9.7–9.9
 
10.7–11.8
 
10.9–11.0
 
14.4
1
Goodwill predominantly relates to U.S. Personal and Commercial Banking.
2
Accumulated impairment as at October 31, 2024 and October 31, 2023
 
was nil.
3
Includes adjustments to the purchase price allocation in connection with the Cowen acquisition.
OTHER INTANGIBLES
The following table presents details of other
 
intangibles
 
as at October 31, 2024 and October 31, 2023.
Other Intangibles
(millions of Canadian dollars)
Credit card
Internally
Core deposit
related
generated
Other
Other
intangibles
intangibles
software
software
intangibles
Total
Cost
As at November 1, 2022
$
2,664
$
848
$
2,918
$
233
$
1,165
$
7,828
Additions
–
–
846
52
395
1,293
Disposals
–
–
(1)
(2)
–
(3)
Fully amortized intangibles
–
–
(582)
(37)
–
(619)
Foreign currency translation adjustments
and other
1
48
2
(78)
(10)
(4)
(42)
As at October 31, 2023
$
2,712
$
850
$
3,103
$
236
$
1,556
$
8,457
Additions
–
–
961
23
9
993
Disposals
–
–
(5)
(6)
(6)
(17)
Fully amortized intangibles
–
–
(627)
(60)
–
(687)
Foreign currency translation adjustments
and other
8
1
(25)
2
36
22
As at October 31, 2024
$
2,720
$
851
$
3,407
$
195
$
1,595
$
8,768
Amortization and impairment
As at November 1, 2022
$
2,662
$
771
$
1,256
$
153
$
683
$
5,525
Disposals
–
–
–
–
–
–
Impairment losses (reversals)
–
–
–
–
–
–
Amortization charge for the year
2
11
443
36
180
672
Fully amortized intangibles
–
–
(582)
(37)
–
(619)
Foreign currency translation adjustments
and other
1
48
3
10
11
36
108
As at October 31, 2023
$
2,712
$
785
$
1,127
$
163
$
899
$
5,686
Disposals
–
–
–
(3)
–
(3)
Impairment losses (reversals)
–
–
–
–
–
–
Amortization charge for the year
–
11
498
32
161
702
Fully amortized intangibles
–
–
(627)
(60)
–
(687)
Foreign currency translation adjustments
and other
8
–
(2)
3
17
26
As at October 31, 2024
$
2,720
$
796
$
996
$
135
$
1,077
$
5,724
Net Book Value:
As at October 31, 2023
$
–
$
65
$
1,976
$
73
$
657
$
2,771
As at October 31, 2024
–
55
2,411
60
518
3,044
1
 
Includes amounts related to restructuring. Refer to Note 26 for further details.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 67
NOTE 15: LAND, BUILDINGS, EQUIPMENT, OTHER DEPRECIABLE ASSETS,
 
AND RIGHT-OF-USE ASSETS
The following table presents details of the
 
Bank’s land, buildings, equipment, and other depreciable
 
assets as at October 31, 2024
 
and October 31, 2023.
Land, Buildings, Equipment, and Other
 
Depreciable Assets
(millions of Canadian dollars)
Furniture,
fixtures,
and other
Computer
depreciable
Leasehold
Land
Buildings
equipment
assets
improvements
Total
Cost
As at November 1, 2022
$
949
$
2,564
$
817
$
1,415
$
3,461
$
9,206
Additions
 
1
172
227
244
401
1,045
Disposals
1
(13)
(11)
(15)
(53)
(21)
(113)
Fully depreciated assets
–
(18)
(109)
(112)
(199)
(438)
Foreign currency translation adjustments
 
and other
2
(18)
(152)
(3)
17
37
(119)
As at October 31, 2023
 
919
2,555
917
1,511
3,679
9,581
Additions
–
216
153
362
485
1,216
Disposals
1
–
(9)
(65)
(137)
(127)
(338)
Fully depreciated assets
–
(22)
(143)
(171)
(289)
(625)
Foreign currency translation adjustments
 
and other
2
6
47
(11)
2
42
86
As at October 31, 2024
$
925
$
2,787
$
851
$
1,567
$
3,790
$
9,920
Accumulated depreciation and
impairment losses
As at November 1, 2022
$
–
$
983
$
365
$
785
$
1,702
$
3,835
Depreciation charge for the year
–
84
175
152
274
685
Disposals
1
–
(8)
(15)
(53)
(20)
(96)
Impairment losses
–
1
1
5
4
11
Fully depreciated assets
–
(18)
(109)
(112)
(199)
(438)
Foreign currency translation adjustments
 
and other
2
–
(50)
1
10
31
(8)
As at October 31, 2023
 
–
992
418
787
1,792
3,989
Depreciation charge for the year
–
93
179
165
298
735
Disposals
1
–
(9)
(62)
(134)
(108)
(313)
Impairment losses
–
–
11
7
1
19
Fully depreciated assets
–
(22)
(143)
(171)
(289)
(625)
Foreign currency translation adjustments
 
and other
2
–
25
(4)
13
42
76
As at October 31, 2024
$
–
$
1,079
$
399
$
667
$
1,736
$
3,881
Net Book Value Excluding Right-of-Use Assets:
As at October 31, 2023
$
919
$
1,563
$
499
$
724
$
1,887
$
5,592
As at October 31, 2024
925
1,708
452
900
2,054
6,039
1
 
Cash received from disposals was $22 million for the year ended October 31, 2024
 
(October 31, 2023
 
– $57 million).
2
 
Includes amounts related to restructuring and adjustments to reclassify held-for-sale items to other assets.
 
Refer to Note 26 for further details.
The following table presents details of the
 
Bank’s ROU assets as recorded in accordance
 
with IFRS 16,
Leases
. Refer to Note 18 and Note 26 for the related
 
lease
liabilities details.
Right-of-Use Assets Net Book Value
(millions of Canadian dollars)
Computer
Land
Buildings
equipment
Total
As at November 1, 2022
$
777
$
3,208
$
44
$
4,029
Additions
5
238
–
243
Depreciation
(91)
(439)
(13)
(543)
Reassessments, modifications, and variable
 
lease payment adjustments
6
70
–
76
Terminations and impairment
–
–
–
–
Foreign currency translation adjustments
 
and other
12
24
1
37
As at October 31, 2023
$
709
$
3,101
$
32
$
3,842
Additions
3
373
48
424
Depreciation
(97)
(462)
(13)
(572)
Reassessments, modifications, and variable lease
 
payment adjustments
21
130
(20)
131
Terminations and impairment
–
1
–
1
Foreign currency translation adjustments
 
and other
(3)
(25)
–
(28)
As at October 31, 2024
$
633
$
3,118
$
47
$
3,798
Total Land, Buildings, Equipment, Other Depreciable
 
Assets, and Right-of-Use Assets Net
 
Book Value
(millions of Canadian dollars)
Furniture,
fixtures,
and other
Computer
depreciable
Leasehold
Land
Buildings
equipment
assets
improvements
Total
As at October 31, 2023
$
1,628
$
4,664
$
531
$
724
$
1,887
$
9,434
As at October 31, 2024
1,558
4,826
499
900
2,054
9,837
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 68
NOTE 16: OTHER ASSETS
Other Assets
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Accounts receivable and other items
1
$
12,931
$
13,893
Accrued interest
5,509
5,504
Cheques and other items in transit
1,656
–
Current income tax receivable
4,061
4,814
Defined benefit asset
(Note 23)
1,042
1,254
Prepaid expenses
2
1,794
1,462
Reinsurance contract assets
1,188
702
Total
2
$
28,181
$
27,629
1
 
Includes assets related to disposal groups classified as held-for-sale in connection with the Cowen
 
acquisition. Refer to Note 13 for further details.
2
 
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for details.
NOTE 17: DEPOSITS
Demand deposits are those for which
 
the Bank does not have the right to require notice
 
prior to withdrawal, which primarily include business
 
and government
chequing accounts. Notice deposits are those
 
for which the Bank can legally require notice
 
prior to withdrawal, which include both
 
savings and chequing accounts.
Term deposits are payable on a given date of maturity and are purchased by
 
customers to earn interest over a fixed period,
 
with terms ranging from one day to ten
years and generally include fixed term deposits,
 
guaranteed investment certificates,
 
senior debt, and similar instruments.
 
The aggregate amount of term deposits
in denominations of $100,000 or more as
 
at October 31, 2024
 
was $546 billion (October 31, 2023
 
– $512 billion).
Deposits
(millions of Canadian dollars)
As at
October 31
October 31
By Type
By Country
2024
2023
Demand
Notice
Term
1
Canada
United States
International
Total
Total
Personal
$
18,068
$
479,841
$
143,758
$
339,534
$
302,133
$
–
$
641,667
$
626,596
Banks
12,646
317
44,735
20,590
36,484
624
57,698
31,225
Business and government
2
150,664
193,134
225,517
400,439
161,291
7,585
569,315
540,369
181,378
673,292
414,010
760,563
499,908
8,209
1,268,680
1,198,190
Trading
–
–
30,412
23,807
3,357
3,248
30,412
30,980
Designated at fair value
through profit or loss
3
–
–
207,668
56,029
75,140
76,499
207,668
191,988
Total
$
181,378
$
673,292
$
652,090
$
840,399
$
578,405
$
87,956
$
1,506,760
$
1,421,158
Non-interest-bearing deposits included
 
above
4
Canada
 
 
$
58,873
$
61,581
United States
 
73,509
76,376
International
–
23
Interest-bearing deposits included above
4
Canada
 
 
781,526
712,283
United States
5
 
 
504,896
482,247
International
 
 
 
87,956
88,648
Total
2,6
 
 
 
 
 
$
1,506,760
$
1,421,158
1
Includes $97.6 billion (October 31, 2023 – $103.3 billion) of senior debt which is subject to the bank recapitalization
 
“bail-in” regime. This regime provides certain statutory powers to the
Canada Deposit Insurance Corporation, including the ability to convert specified eligible shares and liabilities into
 
common shares in the event that the Bank becomes non-viable.
2
Includes $75.4 billion relating to covered bondholders (October 31, 2023 – $54.0 billion).
3
 
Financial liabilities designated at FVTPL on the Consolidated Balance Sheet also includes $246.0 million (October
 
31, 2023 – $142.3 million) of loan commitments and financial
guarantees designated at FVTPL.
4
 
The geographical splits of the deposits are based on the point of origin of the deposits.
5
 
Includes $13.1 billion (October 31, 2023
 
– $13.9 billion) of U.S. federal funds deposited and $36.2 billion (October 31, 2023 – $9.0 billion) of deposits
 
and advances with the FHLB.
6
 
Includes deposits of $810.2 billion (October 31, 2023 – $779.9 billion) denominated in U.S. dollars and $140.7
 
billion (October 31, 2023 – $115.0 billion) denominated
 
in other foreign
currencies.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 69
Term Deposits by Remaining Term-to-Maturity
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Over
Over
Over
Over
Within
1 year to
2 years to
3 years to
4 years to
Over
1 year
2 years
3 years
4 years
5 years
5 years
Total
Total
Personal
$
113,041
$
15,120
$
8,906
$
3,253
$
3,431
$
7
$
143,758
$
118,862
Banks
44,732
–
1
–
2
–
44,735
19,710
Business and government
87,025
37,681
45,697
16,981
13,989
24,144
225,517
215,709
Trading
15,622
5,488
3,967
1,611
1,988
1,736
30,412
30,980
Designated at fair value through
profit or loss
206,191
1,477
–
–
–
–
207,668
191,988
Total
$
466,611
$
59,766
$
58,571
$
21,845
$
19,410
$
25,887
$
652,090
$
577,249
Term Deposits due within a Year
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
 
Over 3
Over 6
Within
months to
months to
3 months
6 months
12 months
Total
Total
Personal
$
46,226
$
30,780
$
36,035
$
113,041
$
81,215
Banks
19,001
2,434
23,297
44,732
19,705
Business and government
47,672
11,295
28,058
87,025
88,034
Trading
7,038
2,768
5,816
15,622
16,416
Designated at fair value through
profit or loss
75,982
51,980
78,229
206,191
191,876
Total
$
195,919
$
99,257
$
171,435
$
466,611
$
397,246
NOTE 18: OTHER LIABILITIES
Other Liabilities
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Accounts payable, accrued expenses, and
 
other items
1,2
$
7,706
$
8,314
Accrued interest
5,559
4,421
Accrued salaries and employee benefits
5,386
4,993
Cheques and other items in transit
2
–
2,245
Current income tax payable
67
162
Deferred tax liabilities
(Note 24)
300
204
Defined benefit liability
(Note 23)
1,380
1,244
Lease liabilities
3
5,013
5,050
Liabilities related to structured entities
22,792
17,520
Provisions
(Note 26)
3,675
3,421
Total
2
$
51,878
$
47,574
1
Includes liabilities related to disposal groups classified as held-for-sale in connection with the Cowen acquisition.
 
Refer to Note 13 for further details.
2
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for details.
3
Refer to Note 26 for lease liability maturity and lease payment details.
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 70
NOTE 19: SUBORDINATED NOTES AND DEBENTURES
Subordinated notes and debentures are
 
direct unsecured obligations of the Bank
 
or its subsidiaries and are subordinated in
 
right of payment to the claims of
depositors and certain other creditors. Redemptions,
 
cancellations, exchanges, and modifications
 
of subordinated debentures qualifying
 
as regulatory capital are
subject to the consent and approval of OSFI.
Subordinated Notes and Debentures
(millions of Canadian dollars, except
 
as noted)
As at
Earliest par
Interest
Reset
redemption
October 31
October 31
Maturity date
rate (%)
spread (%)
date
2024
2023
May 26, 2025
9.150
n/a
–
$
200
$
196
July 25, 2029
1
3.224
2,3
1.250
2
July 25, 2024
–
1,513
April 22, 2030
1
3.105
2
2.160
2
April 22, 2025
2,989
3,005
March 4, 2031
1
4.859
2
3.490
2
March 4, 2026
1,257
1,246
September 15, 2031
1
3.625
4
2.205
4
September 15, 2026
2,045
2,018
January 26, 2032
1
3.060
2
1.330
2
January 26, 2027
1,637
1,642
April 9, 2034
1
5.177
5
1.530
5
April 9, 2029
1,803
–
September 10, 2034
1
5.146
6
1.500
September 10, 2029
1,359
–
October 30, 2034
1
1.601
7
1.032
October 30, 2029
183
–
Total
$
11,473
$
9,620
1
The subordinated notes and debentures include non-viability contingent capital (NVCC) provisions and qualify as
 
regulatory capital under OSFI’s Capital Adequacy Requirements (CAR)
guideline. Refer to Note 20 for further details.
2
 
Interest rate is for the period to but excluding the earliest par redemption date, and thereafter,
 
it will be reset at a rate of three-month bankers’ acceptance rate (as such term is defined in
the applicable offering document) plus the reset spread noted.
3
On July 25, 2024, the Bank redeemed all of its outstanding $1.5 billion 3.224% medium-term notes due
 
July 25, 2029, at a redemption price of 100 per cent of the principal amount, plus
accrued and unpaid interest to, but excluding, the redemption date.
4
Interest rate is for the period to but excluding the earliest par redemption date, and thereafter,
 
it will be reset at a rate of 5-year Mid-Swap Rate plus the reset spread noted.
5
Interest rate is for the period to but excluding the earliest par redemption date, and thereafter,
 
it will be reset at Daily Compounded Canadian Overnight Repo Rate Average
 
plus the reset
spread noted.
6
Interest rate is for the period to but excluding the earliest par redemption date, and thereafter,
 
it will be reset at the prevailing 5-year U.S. Treasury Rate plus the reset
 
spread noted.
7
Interest rate is for the period to but excluding the earliest par redemption date, and thereafter,
 
it will be reset at the Japanese government bond yield plus the reset spread noted.
NOTE 20: EQUITY
COMMON SHARES
The Bank is authorized by its shareholders
 
to issue an unlimited number of common
 
shares, without par value, for unlimited
 
consideration. The common shares
are not redeemable or convertible. Dividends
 
are typically declared by the Board of
 
Directors of the Bank on a quarterly basis and
 
the amount may vary from
quarter to quarter.
PREFERRED SHARES AND OTHER EQUITY
 
INSTRUMENTS
Preferred Shares
The Bank is authorized by its shareholders
 
to issue, in one or more series, an unlimited
 
number of Class A First Preferred Shares,
 
without nominal or par value.
Non-cumulative preferential dividends are payable
 
either quarterly or semi-annually in accordance
 
with applicable terms, as and when declared
 
by the Board of
Directors of the Bank. All preferred shares
 
issued by the Bank currently include
 
NVCC provisions, necessary for the
 
preferred shares to qualify as regulatory
capital under OSFI’s CAR guideline. NVCC provisions
 
require the conversion of the impacted instruments
 
into a variable number of common shares
 
upon the
occurrence of a Trigger Event. A Trigger Event is currently defined
 
in the CAR Guideline as an event where
 
OSFI determines that the Bank is, or is about
 
to
become, non-viable and that after conversion
 
or write-off, as applicable, of all non-common
 
capital instruments and consideration of
 
any other relevant factors or
circumstances, the viability of the Bank is expected
 
to be restored, or where the Bank has accepted
 
or agreed to accept a capital injection or equivalent
 
support
from a federal or provincial government of
 
Canada without which the Bank would have
 
been determined by OSFI to be non-viable.
Limited Recourse Capital Notes
The Bank has issued Limited Recourse
 
Capital Notes (the “LRCNs”) with recourse
 
limited to assets held in a trust consolidated
 
by the Bank (the “Limited Recourse
Trust”). The Limited Recourse Trust’s assets consist of Class A First
 
Preferred Shares of the Bank, each series
 
which is issued concurrently with the LRCNs
 
(the
“LRCN Preferred Shares”). The LRCN Preferred
 
Shares are eliminated on the Bank’s consolidated
 
financial statements.
In the event of (i) non-payment of interest
 
following any interest payment date,
 
(ii) non-payment of the redemption price
 
in case of a redemption of the LRCNs,
(iii) non-payment of principal plus accrued
 
and unpaid interest at the maturity of the LRCNs,
 
(iv) an event of default on the LRCNs, or
 
(v) a Trigger Event, the
recourse of each LRCN holder will be limited
 
to that holder’s pro rata share of the
 
Limited Recourse Trust’s assets.
The LRCNs, by virtue of the recourse to the LRCN
 
Preferred Shares, include standard
 
NVCC provisions necessary for them to qualify
 
as Additional Tier 1
Capital under OSFI’s CAR guideline. NVCC provisions
 
require the conversion of the instrument
 
into a variable number of common
 
shares upon the occurrence of
a Trigger Event. In such an event, each LRCN Preferred
 
Share will automatically and immediately be
 
converted into a variable number of common
 
shares which
will be delivered to LRCN holders in
 
satisfaction of the principal amount of, and accrued
 
and unpaid interest on, the LRCNs.
 
The number of common shares issued
will be determined based on the conversion
 
formula set out in the terms of the respective
 
series of LRCN Preferred Shares.
The LRCNs are compound instruments with
 
both equity and liability features. Non-payment
 
of interest and principal in cash does not
 
constitute an event of
default and will trigger the delivery of the LRCN
 
Preferred Shares. The liability component
 
has a nominal value and, therefore,
 
the proceeds received upon
issuance have been presented as equity, and any interest payments
 
are accounted for as distributions on other
 
equity instruments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 71
Perpetual Subordinated Capital Notes
The Bank has issued Perpetual Subordinated
 
Capital Notes (“Perpetual Notes”). The
 
Perpetual Notes have no scheduled maturity
 
or redemption date. Interest
payments are at the discretion of the Bank.
 
The Perpetual Notes include standard NVCC
 
provisions necessary for them to qualify
 
as Additional Tier 1 Capital
under OSFI’s CAR guideline.
The Perpetual Notes are compound instruments
 
with both equity and liability features. The
 
liability component has a nominal value
 
and, therefore, the proceeds
received upon issuance have been presented
 
as equity, and any interest payments are accounted for as distributions
 
on other equity instruments.
The following table summarizes the changes
 
to the shares and other equity instruments
 
issued and outstanding and treasury instruments
 
held as at and for the
years ended October 31, 2024 and October
 
31, 2023.
Shares and Other Equity Instruments
 
Issued and Outstanding and Treasury Instruments
 
Held
(millions of shares or other equity instruments
 
and millions of Canadian dollars)
October 31, 2024
October 31, 2023
Number
Number
of shares
Amount
of shares
Amount
Common Shares
Balance as at beginning of year
1,791.4
$
25,434
1,821.7
$
24,363
Proceeds from shares issued on exercise
 
of stock options
1.7
112
1.2
83
Shares issued as a result of dividend reinvestment
 
plan
6.6
529
20.5
1,720
Purchase of shares for cancellation and other
(49.4)
(702)
(52.0)
(732)
Balance as at end of year – common shares
1,750.3
$
25,373
1,791.4
$
25,434
Preferred Shares and Other Equity Instruments
Preferred Shares – Class A
Series 1
20.0
$
500
20.0
$
500
Series 3
1
–
–
20.0
500
Series 5
20.0
500
20.0
500
Series 7
14.0
350
14.0
350
Series 9
8.0
200
8.0
200
Series 16
14.0
350
14.0
350
Series 18
14.0
350
14.0
350
Series 22
2
–
–
14.0
350
Series 24
3
–
–
18.0
450
Series 27
0.8
850
0.8
850
Series 28
0.8
800
0.8
800
 
91.6
$
3,900
143.6
$
5,200
Other Equity Instruments
4
Limited Recourse Capital Notes – Series 1
1.8
$
1,750
1.8
$
1,750
Limited Recourse Capital Notes – Series 2
1.5
1,500
1.5
1,500
Limited Recourse Capital Notes – Series 3
5
1.7
2,403
1.7
2,403
Limited Recourse Capital Notes – Series 4
5
0.7
1,023
–
–
Perpetual Subordinated Capital Notes – Series
 
2023-9
6
0.1
312
–
–
5.8
6,988
5.0
5,653
Balance as at end of year – preferred shares
 
and other equity instruments
97.4
$
10,888
148.6
$
10,853
Treasury – common shares
7
Balance as at beginning of year
0.7
$
(64)
1.0
$
(91)
Purchase of shares
139.1
(11,209)
94.9
(7,959)
Sale of shares
(139.6)
11,256
(95.2)
7,986
Balance as at end of year – treasury
 
– common shares
0.2
$
(17)
0.7
$
(64)
Treasury – preferred shares and other equity instruments
7
Balance as at beginning of year
0.1
$
(65)
0.1
$
(7)
Purchase of shares and other equity instruments
6.6
(625)
3.7
(590)
Sale of shares and other equity instruments
(6.5)
672
(3.7)
532
Balance as at end of year – treasury
 
– preferred shares and other equity
instruments
0.2
$
(18)
0.1
$
(65)
1
 
On July 31, 2024, the Bank redeemed all of its 20 million outstanding Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares NVCC, Series 3 (“Series 3 Preferred Shares”), at
a redemption price of $25.00 per Series 3 Preferred Share, for a total redemption cost of approximately
 
$500 million.
2
 
On April 30, 2024, the Bank redeemed all of its 14 million outstanding Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares NVCC, Series 22 (“Series 22 Preferred
Shares”), at a redemption price of $25.00 per Series 22 Preferred Share, for a total redemption cost
 
of $350 million.
3
 
On July 31, 2024, the Bank redeemed all of its 18 million outstanding Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares NVCC, Series 24 (“Series 24 Preferred Shares”),
at a redemption price of $25.00 per Series 24 Preferred Share, for a total redemption cost of approximately $450
 
million.
4
 
For Limited Recourse Capital Notes, the number of shares represents the number of notes issued.
5
 
For LRCNs – Series 3 and 4, the amount represents the Canadian dollar equivalent of the U.S. dollar notional
 
amount. Refer to “Preferred Shares and Other Equity Instruments –
Significant Terms and Conditions” table
 
for further details.
6
 
For perpetual subordinated capital notes, the amount represents the Canadian dollar equivalent of the Singapore
 
dollar notional amount. Refer to “Preferred Shares and Other Equity
Instruments – Significant Terms and Conditions”
 
table for further details.
7
 
When the Bank purchases its own equity instruments as part of its trading business, they are classified as treasury
 
instruments and the cost of these instruments is recorded as a
reduction in equity.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 72
Preferred Shares and Other Equity Instruments –
 
Significant Terms and
 
Conditions
(millions of Canadian dollars)
Annual
 
Dividend
Reset
Next redemption/
Convertible
Issue date
yield (%)
1
frequency
1
spread (%)
1
conversion date
1,2
into
1,2
NVCC Rate Reset Preferred Shares
Series 1
3
June 4, 2014
4.970
Quarterly
2.240
October 31, 2029
Series 2
Series 5
December 16, 2014
3.876
Quarterly
2.250
January 31, 2025
Series 6
Series 7
March 10, 2015
3.201
Quarterly
2.790
July 31, 2025
Series 8
Series 9
April 24, 2015
3.242
Quarterly
2.870
October 31, 2025
Series 10
Series 16
July 14, 2017
6.301
Quarterly
3.010
October 31, 2027
Series 17
Series 18
4
March 14, 2018
5.747
Quarterly
2.700
April 30, 2028
Series 19
Series 27
April 4, 2022
5.750
Semi-annual
3.317
October 31, 2027
 
–
Series 28
July 25, 2022
7.232
Semi-annual
4.200
October 31, 2027
 
–
Annual
 
Coupon
Reset
Next redemption
Recourse to
Issue date
yield (%)
frequency
spread (%)
date
Preferred Shares
5
Other Equity Instruments
Perpetual Subordinated Capital Notes
6
July 10, 2024
5.700
Semi-annual
2.652
July 31, 2029
n/a
NVCC Limited Recourse Capital Notes
7
Series 1
July 29, 2021
3.600
Semi-annual
2.747
October 31, 2026
Series 26
Series 2
September 14, 2022
7.283
Semi-annual
4.100
October 31, 2027
Series 29
Series 3
8
October 17, 2022
8.125
Quarterly
4.075
October 31, 2027
Series 30
Series 4
8
July 3, 2024
7.250
Quarterly
2.977
July 31, 2029
Series 31
1
 
Non-cumulative preferred dividends for each series are payable as and when declared by the Board of Directors.
 
The dividend rate of the Rate Reset Preferred Shares will reset on the
next earliest optional redemption/conversion date and every 5 years thereafter to equal the then 5-year Government
 
of Canada bond yield plus the noted reset spread. If converted into a
series of floating rate preferred shares, the dividend rate for the quarterly period will be equal to the then 90-day
 
Government of Canada Treasury bill yield plus the noted reset spread
unless otherwise stated.
2
 
Subject to regulatory consent and unless otherwise stated, preferred shares are redeemable on the next earliest
 
optional redemption date as noted and every 5 years thereafter. Preferred
Shares, except Series 27 and Series 28, are convertible into the corresponding series of floating rate preferred shares
 
on the conversion date noted and every 5 years thereafter if not
redeemed. If converted,
 
the holders have the option to convert back to the original series of preferred shares every 5 years.
3
 
On October 16, 2024, the Bank announced that none of its 20 million Non-Cumulative 5-Year
 
Rate Reset Class A First Preferred Shares, Series 1 NVCC (“Series 1 Shares”) would be
converted on October 31, 2024 into Non-Cumulative Floating Rate Class A First Preferred Shares, Series 2 (NVCC)
 
(“Series 2 Shares”) of TD. As previously announced on October 1,
2024, the dividend rate for the Series 1 Shares for the 5-year period from and including October 31, 2024 to but
 
excluding October 31, 2029 will be 4.97%.
4
 
On April 18, 2023, the Bank announced that none of its 14 million Non-Cumulative 5-Year
 
Rate Reset Preferred Shares NVCC, Series 18 (“Series 18 Shares”) would be converted on
April 30, 2023 into Non-Cumulative Floating Rate Preferred Shares NVCC, Series 19 (“Series 19 Shares”). As had
 
been previously announced on March 31, 2023, the dividend rate for
the Series 18 Shares for the 5-year period from and including April 30, 2023 to but excluding April 30, 2028, if declared,
 
is payable at a per annum rate of 5.747%.
5
 
LRCN Preferred Share Series 26 and Series 29 were issued at a price of $1,000 per share and LRCN Preferred
 
Share Series 30 and Series 31 were issued at a price of US$1,000 per
share. The LRCN Preferred Shares are eliminated on the Bank’s Consolidated Balance Sheet.
6
 
Perpetual Subordinated Capital Notes are denominated in Singapore dollars. The interest rate on Perpetual Subordinated
 
Capital Notes will reset on the next interest reset date and every
5 years thereafter to a rate equal to the then prevailing 5-year SORA-OIS Rate plus the noted reset
 
spread.
7
 
LRCNs may be redeemed at the option of the Bank, with the prior written approval of OSFI, in whole
 
or in part on prior notice by the Bank as of the earliest redemption date and each
optional redemption date thereafter. Unless otherwise stated, the interest rate on the
 
LRCNs will reset on the next earliest optional redemption date and every 5 years thereafter at a rate
equal to the then 5-year Government of Canada bond yield plus the noted reset spread.
8
 
LRCN Series 3 and 4 are denominated in U.S. dollars. The interest rate on LRCN Series 3 and 4 will
 
reset on the next interest reset date and every 5 years thereafter to equal the then
5-year U.S. Treasury yield plus the noted reset spread.
NVCC Provision
If an NVCC trigger event were to occur, for all series of
 
Class A First Preferred Shares excluding
 
the preferred shares issued with respect
 
to LRCNs, the maximum
number of common shares that could be issued,
 
assuming there are no declared and unpaid
 
dividends on the respective series of preferred
 
shares at the time of
conversion, would be 0.8 billion in aggregate.
The LRCNs, by virtue of the recourse
 
to the preferred shares held in the Limited Recourse
 
Trust, include NVCC provisions. For LRCNs, if an
 
NVCC trigger were
to occur, the maximum number of common shares that
 
could be issued, assuming there are
 
no declared and unpaid dividends on the preferred
 
shares series
issued in connection with such LRCNs, would
 
be 1.3 billion in aggregate.
For NVCC subordinated notes and debentures
 
(including Perpetual Notes), if an
 
NVCC trigger event were to occur, the maximum number of common
 
shares
that could be issued, assuming there is no accrued
 
and unpaid interest on the respective
 
subordinated notes and debentures, would be
 
3.5 billion in aggregate.
DIVIDEND RESTRICTIONS
The Bank is prohibited by the
Bank Act (Canada)
 
from declaring dividends on its preferred
 
or common shares if there are reasonable
 
grounds for believing that the
Bank is, or the payment would cause the
 
Bank to be, in contravention of the capital adequacy
 
and liquidity regulations of the
Bank Act (Canada)
 
or directions of
OSFI. The Bank does not anticipate that this
 
condition will restrict it from paying dividends
 
in the normal course of business. In addition,
 
the ability to pay dividends
on common shares without the approval of
 
the holders of the outstanding preferred
 
shares is restricted unless all dividends on
 
the preferred shares have been
declared and paid or set apart for payment.
 
Currently, these limitations do not restrict the payment of dividends
 
on common shares or preferred shares.
DIVIDENDS
On December 4, 2024, the Board approved
 
a dividend in an amount of one dollar and
 
five cents ($1.05) per fully paid common
 
share in the capital stock of the
Bank for the quarter ending January 31, 2025,
 
payable on and after January 31, 2025,
 
to shareholders of record at the close of
 
business on January 10, 2025.
At October 31, 2024, the quarterly dividend
 
was $1.02 per common share. Common
 
share cash dividends declared and paid during
 
the year totalled $4.08 per
share (2023 – $3.84), representing a payout
 
ratio of 52.1%, slightly above the Bank’s target payout
 
range of 40-50% of adjusted earnings.
 
For cash dividends
payable on the Bank’s preferred shares, refer
 
to Note 20. As at October 31, 2024, 1,750
 
million common shares were outstanding
 
(2023 – 1,791 million).
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 73
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan
 
for its common shareholders. Participation in
 
the plan is optional and under the terms of the
 
plan, cash dividends on
common shares are used to purchase additional
 
common shares. At the option of the Bank,
 
the common shares may be issued from treasury
 
at an average
market price based on the last five trading
 
days before the date of the dividend payment,
 
with a discount of between 0% to 5% at the Bank’s
 
discretion or
purchased from the open market at market
 
price.
During the year ended October 31, 2024, under
 
the dividend reinvestment plan, the Bank
 
issued 6.6 million common shares from
 
treasury with no discount.
During the year ended October 31, 2023, under
 
the dividend reinvestment plan, the Bank
 
issued 3.7 million common shares from
 
treasury with no discount and
16.8 million common shares with a 2% discount.
NORMAL COURSE ISSUER BID
On August 28, 2023, the Bank announced
 
that the Toronto Stock Exchange (TSX) and OSFI approved a normal course issuer
 
bid (NCIB) to repurchase for
cancellation up to 90 million of its common
 
shares. The NCIB commenced on August 31,
 
2023, and during the year ended October
 
31, 2024, the Bank
repurchased 49.4 million common shares
 
under the NCIB at an average price of
 
$80.15 per share for a total amount of
 
$4.0 billion. From the commencement of
the NCIB to October 31, 2024, the Bank repurchased
 
71.4 million shares under the program.
NOTE 21: INSURANCE
(a)
 
INSURANCE SERVICE RESULT
Insurance revenue and expenses are presented
 
on the Consolidated Statement of Income
 
under Insurance revenue and Insurance
 
service expenses,
respectively. Net income or expense from reinsurance is presented
 
in other income (loss). The following
 
table shows components of the insurance service
 
result
presented in the Consolidated Statement of
 
Income for the Bank which includes the results
 
of property and casualty insurance, life and
 
health insurance, as well
as reinsurance issued and held in Canada and
 
internationally.
Insurance Service Result
(millions of Canadian dollars)
For the year ended
October 31, 2024
October 31, 2023
Insurance revenue
$
6,952
$
6,311
Insurance service expenses
6,647
5,014
Insurance service result before reinsurance
 
contracts held
 
305
1,297
Net income (expense) from reinsurance
 
contracts held
524
(137)
Insurance service result
$
829
$
1,160
Net income (expense) from reinsurance
 
contracts held is comprised of recoveries
 
from reinsurers offset by ceded premiums. For
 
the year ended October 31, 2024,
the Bank recognized recoveries from reinsurers
 
of $1,054 million (October 31, 2023 –
 
$405 million) and ceded premiums of $530
 
million (October 31, 2023 –
$542 million). For the year ended October
 
31, 2024,
 
the Bank recognized insurance finance
 
expenses of $443 million (October 31,
 
2023 – $204 million) from
insurance and reinsurance contracts in other
 
income (loss). The Bank’s investment return on
 
securities supporting insurance contracts
 
is comprised of interest
income reported in net interest income and
 
fair value changes reported in other income (loss).
 
Investment return on securities
 
supporting insurance contracts was
$372 million for the year ended October 31, 2024
 
(October 31, 2023 – $209 million).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 74
(b)
 
INSURANCE CONTRACT LIABILITIES
Insurance contract liabilities are comprised
 
of amounts related to the LRC, LIC and
 
other insurance liabilities.
The following table presents movements in
 
the property and casualty insurance liabilities.
Property and casualty insurance contract
 
liabilities by LRC and LIC
(millions of Canadian dollars)
For the year ended October 31, 2024
Liabilities for remaining coverage
Liabilities for incurred claims
Total
Excluding
Estimates of the
loss
Loss
present value of
Risk
component
component
future cash flows
adjustment
Insurance contract liabilities at beginning
 
of year
$
630
$
129
$
4,740
$
220
$
5,719
Insurance revenue
(5,506)
–
–
–
(5,506)
Insurance service expenses:
Incurred claims and other insurance service
 
expenses
–
(145)
5,099
96
5,050
Amortization of insurance acquisition cash
 
flows
803
–
–
–
803
Losses and reversal of losses on onerous
 
contracts
–
117
–
–
117
Changes to liabilities for incurred claims
–
–
(65)
(114)
(179)
Insurance service result
(4,703)
(28)
5,034
(18)
285
Insurance finance expenses
7
–
479
19
505
Total changes in the Consolidated Statement of Income
(4,696)
(28)
5,513
1
790
Cash flows:
Premiums received
5,576
–
–
–
5,576
Claims and other insurance service expenses
 
paid
–
–
(4,264)
–
(4,264)
Acquisition cash flows paid
(796)
–
–
–
(796)
Total cash flows
4,780
–
(4,264)
–
516
Insurance contract liabilities at end of year
$
714
$
101
$
5,989
$
221
$
7,025
Property and casualty insurance contract
 
liabilities by LRC and LIC
(millions of Canadian dollars)
For the year ended October 31, 2023
Liabilities for remaining coverage
Liabilities for incurred claims
Total
Excluding
Estimates of the
loss
Loss
present value of
Risk
component
component
future cash flows
adjustment
Insurance contract liabilities at beginning
 
of year
$
623
$
113
$
4,700
$
208
$
5,644
Insurance revenue
(4,898)
–
–
–
(4,898)
Insurance service expenses:
Incurred claims and other insurance service
 
expenses
–
(102)
3,801
82
3,781
Amortization of insurance acquisition cash
 
flows
789
–
–
–
789
Losses and reversal of losses on onerous
 
contracts
–
118
–
–
118
Changes to liabilities for incurred claims
–
–
(356)
(78)
(434)
Insurance service result
(4,109)
16
3,445
4
(644)
Insurance finance expenses
1
–
215
8
224
Total changes in the Consolidated Statement of Income
(4,108)
16
3,660
12
(420)
Cash flows:
Premiums received
4,920
–
–
–
4,920
Claims and other insurance service expenses
 
paid
–
–
(3,620)
–
(3,620)
Acquisition cash flows paid
(805)
–
–
–
(805)
Total cash flows
4,115
–
(3,620)
–
495
Insurance contract liabilities at end of year
$
630
$
129
$
4,740
$
220
$
5,719
Other insurance contract liabilities were $144
 
million as at October 31, 2024 (October 31,
 
2023 – $127 million) and include life and health
 
insurance contract
liabilities of $121 million (October 31, 2023
 
– $124 million).
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 75
(c)
 
PROPERTY AND CASUALTY CLAIMS DEVELOPMENT
The following table shows the estimates of
 
the insurance liabilities for incurred
 
claims net of reinsurance assets for incurred
 
claims (net LIC) with subsequent
developments during the periods and cumulative
 
payments to date. The original estimates
 
are evaluated monthly for redundancy or
 
deficiency. The evaluation is
based on actual payments in full or partial
 
settlement of claims and current estimates
 
of the net LIC related to claims still open
 
or claims still unreported.
Incurred Claims by Accident Year
(millions of Canadian dollars)
Accident Year
2015
 
and prior
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
Net ultimate claims cost at
 
end of accident year
$
6,353
$
2,438
$
2,425
$
2,631
$
2,727
$
2,646
$
2,529
$
3,242
$
3,830
$
4,478
Revised estimates
One year later
6,104
2,421
2,307
2,615
2,684
2,499
2,367
3,182
4,039
Two years later
5,802
2,334
2,258
2,573
2,654
2,412
2,278
3,167
Three years later
5,553
2,264
2,201
2,522
2,575
2,278
2,225
Four years later
5,279
2,200
2,151
2,465
2,489
2,230
Five years later
5,137
2,159
2,108
2,408
2,474
Six years later
5,115
2,143
2,086
2,396
Seven years later
5,069
2,134
2,078
Eight years later
5,044
2,129
Nine years later
5,035
Current estimates of
 
cumulative net claims
5,035
2,129
2,078
2,396
2,474
2,230
2,225
3,167
4,039
4,478
Cumulative net claims paid to date
(4,894)
(2,062)
(2,004)
(2,260)
(2,255)
(1,975)
(1,856)
(2,490)
(2,716)
(2,133)
Net undiscounted provision
for unpaid claims
141
67
74
136
219
255
369
677
1,323
2,345
$
5,606
Effect of discounting
(534)
Effect of risk adjustment for
non-financial risk
184
Net liabilities for incurred claims
$
5,256
Insurance liabilities for incurred claims
6,210
Reinsurance assets for incurred claims
(954)
(d)
 
RISK ADJUSTMENT FOR NON-FINANCIAL
 
RISK AND DISCOUNTING
The risk adjustment reflects an amount that
 
an insurer would reasonably pay to remove
 
the uncertainty that future cash flows
 
will exceed the expected value
amount. The Bank has estimated the risk adjustment
 
for its property and casualty operations’ LIC
 
using statistical techniques in accordance
 
with Canadian
accepted actuarial principles to develop potential
 
future observations and a confidence level
 
range of 80
th
 
to 90
th
 
percentile.
Insurance contract liabilities are calculated
 
by discounting expected future cash flows.
 
The interest rates used to discount the Bank’s insurance
 
balances over a
duration of 1 to 10 years range from 3.8%
 
to 4.5% as at October 31, 2024 (October
 
31, 2023 – 5.5% to 5.7%).
(e)
 
SENSITIVITY TO INSURANCE RISK
A variety of assumptions are made related
 
to the future level of claims, policyholder behaviour, expenses
 
and sales levels when products are designed
 
and priced,
as well as when actuarial liabilities are determined.
 
Such assumptions require a significant amount
 
of professional judgment. The LIC is
 
sensitive to certain
assumptions. It has not been possible
 
to quantify the sensitivity of certain assumptions
 
such as legislative changes or uncertainty
 
in the estimation process. Actual
experience may differ from the assumptions
 
made by the Bank.
For property and casualty insurance, the
 
main assumption underlying the LIC is that past
 
claims development experience can be
 
used to project future claims
development and hence ultimate claims costs.
 
As such, these methods extrapolate the development
 
of paid and incurred losses, average
 
costs per claim, and
claim numbers based on the observed development
 
of earlier years and expected loss ratios.
 
Net LIC estimates are based on various quantitative
 
and qualitative
factors including the discount rate, the risk
 
adjustment,
 
reinsurance, trends in claims severity and
 
frequency,
 
and other external drivers.
Qualitative and other unforeseen factors could
 
negatively impact the Bank’s ability to accurately
 
assess the risk of the insurance policies that
 
the Bank
underwrites. In addition, there may be
 
significant lags between the occurrence of
 
an insured event and the time it is actually
 
reported to the Bank and additional
lags between the time of reporting and final
 
settlements of claims.
The following table outlines the sensitivity of
 
the Bank’s property and casualty LIC to reasonably
 
possible movements in the discount
 
rate, risk adjustment, and
the frequency and severity of claims, with
 
all other assumptions held constant.
 
Movements in the assumptions may be non-linear.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 76
Sensitivity of Critical Assumptions – Property
 
and Casualty Insurance
(millions of Canadian dollars)
As at
October 31, 2024
October 31, 2023
Impact on net
 
Impact on net
 
income (loss)
 
income (loss)
 
before
Impact on
before
Impact on
income taxes
equity
income taxes
1
equity
1
Impact of a 1% change in key assumptions
 
and estimates
Discount rate
Increase in assumption
$
121
$
90
$
102
$
75
Decrease in assumption
(129)
(95)
(108)
(80)
Risk adjustment
Increase in assumption
 
(52)
 
(38)
 
(63)
 
(47)
Decrease in assumption
40
29
42
31
Impact of a 5% change in key assumptions
 
and estimates
Frequency of claims
Increase in assumption
$
(182)
$
(135)
$
(165)
$
(122)
Decrease in assumption
182
135
165
122
Severity of claims
Increase in assumption
(288)
(213)
(228)
(169)
Decrease in assumption
288
213
228
169
1
 
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for details.
For life and health insurance, the processes
 
used to determine critical assumptions
 
are as follows:
●
Mortality, morbidity, and lapse assumptions are based on industry and historical company
 
data; and
●
Expense assumptions are based on the annual
 
Finance expense study.
A sensitivity
 
analysis for
 
possible movements
 
in life
 
and health
 
insurance business
 
assumptions was
 
performed and
 
the impact
 
is not
 
significant to
 
the Bank’s
Consolidated Financial Statements.
(f)
 
CONCENTRATION OF INSURANCE RISK
Concentration risk is the risk resulting from
 
large exposures to similar risks that are positively
 
correlated.
Risk associated with automobile, residential
 
and other products may vary in relation to the
 
geographical area of the risk insured. Exposure
 
to concentrations of
insurance risk, by type of risk, is mitigated by
 
ceding these risks through reinsurance
 
contracts, as well as careful selection and implementation
 
of underwriting
strategies, which is in turn largely achieved
 
through diversification by line of business and
 
geographical areas. For automobile insurance,
 
legislation is in place at a
provincial level and this creates differences in
 
the benefits provided among the provinces.
As at October 31, 2024, for the property
 
and casualty insurance business, 65.5%
 
of insurance revenue was mainly derived
 
from automobile policies
(October 31, 2023 – 66.8%) followed by residential
 
with 34.3% (October 31, 2023 – 33.2%).
 
The distribution by provinces show that business
 
is mostly
concentrated in Ontario with 50.5% of insurance
 
revenue (October 31, 2023 – 50.6%).
 
The Western provinces represented 31.9% (October
 
31, 2023 – 32.2%),
followed by the Atlantic provinces with 10.6% (October
 
31, 2023 – 10.6%), and Québec at 6.8%
 
(October 31, 2023 – 6.6%).
Concentration risk is not a major concern
 
for the life and health insurance business
 
as it does not have a material level of regional
 
specific characteristics like
those exhibited in the property and casualty
 
insurance business. Reinsurance is used
 
to limit the liability on a single claim.
 
Concentration risk is further limited by
diversification across uncorrelated risks. This
 
limits the impact of a regional pandemic
 
and other concentration risks.
To
improve understanding of exposure
 
to this
risk, a pandemic scenario is tested annually.
NOTE 22: SHARE-BASED COMPENSATION
STOCK OPTION PLAN
The Bank maintains a stock option program
 
for certain key employees. Options on
 
common shares are granted to eligible employees
 
of the Bank under the plan
for terms of ten years and vest over a four-year
 
period. These options provide holders
 
with the right to purchase common shares of
 
the Bank at a fixed price equal
to the closing market price of the shares
 
on the TSX on the day prior to the date the
 
options were issued. The outstanding options
 
expire on various dates to
December 12, 2033. The following table summarizes
 
the Bank’s stock option activity and related information,
 
adjusted to reflect the impact of the 2014
 
stock
dividend on a retrospective basis, for the
 
years ended October 31, 2024
 
and October 31, 2023.
Stock Option Activity
(millions of shares and Canadian dollars)
2024
2023
Weighted-
Weighted-
Number
average
Number
average
of shares
exercise price
of shares
exercise price
Number outstanding, beginning of year
14.1
$
76.58
12.8
$
72.05
Granted
2.6
81.78
2.5
90.55
Exercised
(1.7)
60.07
(1.2)
58.32
Forfeited/expired
(0.3)
85.36
–
79.27
Number outstanding, end of year
14.7
$
79.17
14.1
$
76.58
Exercisable, end of year
5.4
$
68.51
5.1
$
64.18
Available for grant
5.1
7.4
The weighted-average share price for the
 
options exercised in 2024 was $80.57
 
(2023 – $85.53).
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 77
The following table summarizes information
 
relating to stock options outstanding and
 
exercisable as at October 31, 2024.
Range of Exercise Prices
(millions of shares and Canadian dollars)
 
Options outstanding
 
Options exercisable
Weighted-
 
average
Weighted-
 
Weighted-
 
Number
remaining
average
Number
average
 
of shares
contractual
exercise
of shares
exercise
outstanding
life (years)
price
exercisable
price
$52.46-$69.39
2.9
2.8
64.74
2.9
64.74
$71.88-$72.64
2.9
5.1
72.12
0.9
72.64
$72.84-$81.78
4.1
7.4
78.24
1.6
72.84
$90.55
2.4
8.0
90.55
–
–
$95.33
2.4
7.0
95.33
–
–
For the year ended October 31, 2024, the Bank
 
recognized compensation expense for stock
 
option awards of $34.2 million (October 31,
 
2023 – $35.1 million). For
the year ended October 31, 2024, 2.6
 
million (October 31, 2023 – 2.5 million) options
 
were granted by the Bank at a weighted-average
 
fair value of $14.36 per
option (2023 – $14.70 per option) estimated
 
using a binomial tree-based valuation option
 
pricing model.
The following table summarizes the assumptions
 
used for estimating the fair value of options
 
for the years ended October 31, 2024 and
 
October 31, 2023.
Assumptions Used for Estimating the
 
Fair Value of Options
(in Canadian dollars, except as noted)
2024
2023
Risk-free interest rate
3.41
%
2.87
%
Option contractual life
 
10 years
 
10 years
Expected volatility
18.92
%
18.43
%
Expected dividend yield
3.78
%
3.69
%
Exercise price/share price
$
81.78
$
90.55
The risk-free interest rate is based on Government
 
of Canada benchmark bond yields as
 
at the grant date. Expected volatility is
 
calculated based on the historical
average daily volatility and expected dividend
 
yield is based on dividend payouts in the last
 
fiscal year. These assumptions are measured over a period
corresponding to the option contractual life.
OTHER SHARE-BASED COMPENSATION PLANS
The Bank operates restricted share unit and performance
 
share unit plans which are offered to certain employees
 
of the Bank. Under these plans, participants
 
are
awarded share units equivalent to the Bank’s
 
common shares that generally vest over
 
three years. During the vesting period, dividend
 
equivalents accrue to the
participants in the form of additional share
 
units. At the maturity date, the participant receives
 
cash representing the value of the share
 
units. The final number of
performance share units will typically vary
 
from 80% to 120% of the number of units
 
outstanding at maturity (consisting of
 
initial units awarded plus additional units
in lieu of dividends) based on the Bank’s total
 
shareholder return relative to the average of
 
a peer group of large Canadian financial
 
institutions.
 
For the year ended
October 31, 2024, the Bank awarded 9.9 million
 
of such share units at a weighted-average
 
price of $81.54 (2023
 
– 9.1 million units at a weighted-average price
 
of
$88.75). The number of such share units outstanding
 
under these plans as at October 31, 2024
 
was 27.9 million (October 31, 2023 – 25.8 million).
The Bank also offers deferred share unit plans
 
to eligible employees and non-employee directors.
 
Under these plans, a portion of the participant’s
 
annual
incentive award may be deferred,
 
or in the case of non-employee directors,
 
a portion of their annual compensation
 
may be delivered as share units equivalent
 
to
the Bank’s common shares. The deferred share units
 
are not redeemable by the participant until
 
termination of employment or directorship. Once
 
these conditions
are met, the deferred share units
 
must be redeemed for cash no later than
 
the end of the next calendar year. Dividend equivalents accrue
 
to the participants in the
form of additional units. For the year ended
 
October 31, 2024, the Bank awarded 0.2
 
million deferred share units at a weighted-average
 
price of $81.57 (2023
 
–
0.2 million units at a weighted-average price
 
of $89.88). As at October 31, 2024, 6.6
 
million deferred share units were outstanding
 
(October 31, 2023 – 7.0 million).
Compensation expense for these plans is recorded
 
in the year the incentive award is earned
 
by the plan participant. Changes in the
 
value of these plans are
recorded, net of the effects of related hedges, on
 
the Consolidated Statement of Income.
 
For the year ended October 31, 2024, the Bank
 
recognized
compensation expense,
 
net of the effects of hedges, for these plans of
 
$970 million (2023 – $870 million). The
 
compensation expense recognized before
 
the
effects of hedges was $903 million (2023 – $533
 
million). The carrying amount of the liability relating
 
to these plans,
 
based on the closing share price, was
$2.7 billion at October 31, 2024 (October
 
31, 2023 – $2.4
 
billion), and is reported in Other liabilities
 
on the Consolidated Balance Sheet.
EMPLOYEE OWNERSHIP PLAN
The Bank also operates a share purchase plan
 
available to Canadian employees. Employees
 
can contribute up to 10% of their annual
 
eligible earnings (net of
source deductions) to the Employee Ownership
 
Plan. For participating employees
 
below the level of Vice President, the Bank
 
matches 100% of the first $250 of
employee contributions each year and the remainder
 
of employee contributions at 50% to an
 
overall maximum of 3.5% of the employee’s eligible
 
earnings or
$2,250, whichever comes first. The Bank’s contributions
 
vest once an employee has completed
 
two years of continuous service with the Bank.
 
For the year ended
October 31, 2024, the Bank’s contributions totalled $91
 
million (2023 – $89 million) and were expensed
 
as salaries and employee benefits. As at
October 31, 2024, an aggregate of 24 million
 
(October 31, 2023 – 24 million)
 
common shares were held under the Employee
 
Ownership Plan. The shares in the
Employee Ownership Plan are purchased in
 
the open market and are considered outstanding
 
for computing the Bank’s basic and diluted earnings
 
per share.
Dividends earned on the Bank’s
 
common shares held by the Employee Ownership
 
Plan are used to purchase additional common
 
shares for the Employee
Ownership Plan in the open market.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 78
NOTE 23: EMPLOYEE BENEFITS
PENSION AND OTHER POST-RETIREMENT
 
BENEFIT PLANS
The Bank sponsors a number of pension and
 
post-retirement benefit plans for current eligible
 
and former employees. Pension arrangements
 
include defined
benefit pension plans, defined contribution
 
pension plans and supplementary arrangements
 
that provide pension benefits in excess
 
of statutory limits. The Bank
also provides certain post-retirement benefits.
The Bank’s principal defined benefit pension plans,
 
consisting of The Pension Fund Society of
 
The Toronto-Dominion Bank (the “Society”) and the defined
benefit portion of the TD Pension Plan (Canada)
 
(the “TDPP DB”), are for eligible Canadian
 
Bank employees who elected to join the Society
 
or the TDPP DB. The
Society was closed to new members on January
 
30, 2009, and the TDPP DB commenced
 
on March 1, 2009. Effective December 31, 2018,
 
the TDPP DB was
closed to new employees hired after that
 
date. All new permanent employees hired
 
in Canada on or after January 1, 2019 are eligible
 
to join the defined
contribution portion of the TDPP (the “TDPP
 
DC”) after one year of service. Benefits
 
under the principal defined benefit pension
 
plans are determined based upon
the period of plan participation and the average
 
salary of the member in the best consecutive
 
five years in the last ten years of combined plan
 
membership.
Benefits under the TDPP DC are funded
 
from the balance of the accumulated
 
contributions of the member and the Bank plus
 
the member’s investment earnings.
Annual expense for the TDPP DC is
 
equal to the Bank’s contributions to the plan.
Funding for the Bank’s principal defined benefit
 
pension plans is provided by contributions
 
from the Bank and members of the plans
 
through a separate trust. In
accordance with legislation, the Bank contributes
 
amounts, as determined on an actuarial basis,
 
to the plans and has the ultimate responsibility
 
for ensuring that
the liabilities of the plans are adequately funded
 
over time. Any deficits determined
 
in the funding valuations must generally be
 
funded over a period not exceeding
fifteen years. The Bank’s funding policy is to
 
make at least the minimum annual contributions
 
required by legislation. Any contributions
 
in excess of the minimum
requirements are discretionary. The principal defined benefit pension
 
plans are registered with OSFI and
 
the Canada Revenue Agency and are subject
 
to the acts
and regulations that govern federally regulated
 
pension plans. The 2024
 
and 2023 contributions were made in accordance
 
with the actuarial valuation reports for
funding purposes as at October 31, 2023 and
 
October 31, 2022, respectively. Valuations for funding purposes are being prepared as
 
of October 31, 2024 for the
Society and no later than October 31, 2026
 
for the TDPP DB.
Post-retirement defined benefit plans are unfunded
 
and, where offered, generally include health
 
care and dental benefits or, to assist with the cost, a benefits
subsidy to be used to reduce the cost of
 
coverage. Employees must meet certain
 
age and service requirements to be eligible
 
for post-retirement benefits and are
generally required to pay a portion of the
 
cost of the benefits. Effective June 1, 2017, the
 
Bank’s principal post-retirement defined benefit
 
plan, covering eligible
Canadian employees, was closed to new employees
 
hired on or after that date.
(a)
 
INVESTMENT STRATEGY AND ASSET ALLOCATION
The principal defined benefit pension plans are
 
expected to each achieve a rate of return
 
that meets or exceeds the change in value
 
of the plan’s respective
liabilities over rolling five-year periods.
 
The investments are managed with the primary
 
objective of providing reasonable rates
 
of return, consistent with available
market opportunities, economic conditions,
 
consideration of plan liabilities, prudent portfolio
 
management, and the target risk profiles for
 
the plans.
The asset allocations by asset category for
 
the principal defined benefit pension plans
 
are as follows:
Plan Asset Allocation
(millions of Canadian dollars except as noted)
Society
1
TDPP DB
1
Target
% of
Fair value
Target
% of
Fair value
As at October 31, 2024
range
total
Quoted
Unquoted
range
total
Quoted
Unquoted
Debt
60-90
%
71
%
$
–
$
4,245
55-75
%
67
%
$
–
$
2,106
Equity
0-21
5
104
194
0-30
5
54
106
Alternative investments
2
0-29
24
–
1,458
5-38
28
–
877
Other
3
n/a
n/a
–
86
n/a
n/a
–
188
Total
 
100
%
$
104
$
5,983
100
%
$
54
$
3,277
As at October 31, 2023
4
Debt
60-90
%
70
%
$
–
$
3,686
55-75
%
63
%
$
–
$
1,690
Equity
0-21
4
72
153
0-30
9
79
166
Alternative investments
2
0-29
26
–
1,351
5-38
28
–
734
Other
3
n/a
n/a
–
159
n/a
n/a
–
130
Total
 
100
%
$
72
$
5,349
100
%
$
79
$
2,720
1
 
The principal defined benefit pension plans invest in investment vehicles which may hold shares or debt issued
 
by the Bank.
2
 
The principal defined benefit pension plans’ alternative investments are primarily private equity,
 
infrastructure, and real estate funds.
3
Consists mainly of amounts due to and due from brokers for securities traded but not yet settled, bond repurchase
 
agreements, interest and dividends receivable, and Pension
Enhancement Account assets, which are invested at the members’ discretion in certain mutual and
 
pooled funds.
4
Balances as at October 31, 2023 have been restated to reflect plan assets in ‘Other’
 
that were reported in ‘Debt’, with no impact on the measurement of the total plan assets, to reflect the
categorization of certain plan assets in the comparative period.
Public debt instruments of the Bank’s principal defined
 
benefit pension plans must meet or exceed
 
a credit rating of BBB – at the time of
 
purchase.
The equity portfolios of the principal defined
 
benefit pension plans are broadly diversified
 
primarily across small to large capitalization
 
quality companies with no
individual holding exceeding 10% of the equity
 
portfolio or 10% of the outstanding shares
 
of any one company. Foreign equities are included to further diversify
 
the
portfolio. A maximum of 10% of the equity
 
portfolio can be invested in emerging
 
market equities.
Derivatives can be utilized by the principal
 
defined benefit pension plans provided
 
they are not used to create financial leverage,
 
unless the financial leverage is
for risk management purposes. The principal
 
defined benefit pension plans are permitted
 
to invest in alternative investments, such as private
 
equity, infrastructure
equity, and real estate.
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 79
(b)
 
RISK MANAGEMENT PRACTICES
The Bank’s principal defined benefit pension plans
 
are overseen by a single retirement governance
 
structure established by the Human Resources
 
Committee of
the Bank’s Board of Directors. The governance
 
structure utilizes retirement governance
 
committees who have responsibility
 
to oversee plan operations and
investments, acting in a fiduciary capacity. Strategic, material
 
plan changes require the approval of the
 
Bank’s Board of Directors.
The principal defined benefit pension plans’ investments
 
include financial instruments which
 
are exposed to various risks. These risks include
 
market risk
(including foreign currency, interest rate, inflation, equity price, and
 
credit spread risks), credit risk, and liquidity
 
risk. Key material risks faced by defined
 
benefit
plans are a decline in interest rates or credit
 
spreads, which could increase the present
 
value of the projected benefit obligation by
 
more than the change in the
value of plan assets, and from longevity risk
 
(that is, lower mortality rates).
Asset-liability matching strategies are employed
 
to focus on obtaining an appropriate balance
 
between earning an adequate return
 
and having changes in
liability values hedged by changes in asset
 
values.
The principal defined benefit pension plans
 
manage these financial risks in accordance
 
with the
Pension Benefits Standards Act, 1985
, applicable regulations,
as well as the plans’ written investment policies.
 
Specific risk management practices monitored
 
for the principal defined benefit pension plans
 
include performance,
credit exposure, and asset mix.
(c)
 
OTHER SIGNIFICANT PENSION AND POST-RETIREMENT
 
BENEFIT PLANS
Canada Trust (CT) Pension Plan
As a result of the acquisition of CT Financial
 
Services Inc., the Bank sponsors a defined
 
benefit pension plan, which is closed
 
to new members, but for which
active members continue to accrue benefits.
 
Funding for the plan is provided by contributions
 
from the Bank and members of the plan.
TD Insurance Pension Plan
As a result of the acquisition of Meloche
 
Monnex Inc., the Bank sponsors a defined benefit
 
pension plan, which is closed to new
 
members, but for which active
members continue to accrue benefits. Funding
 
for the plan is provided by contributions
 
from the Bank.
TD Bank, N.A. Retirement Plans
TD Bank, N.A. and its subsidiaries maintain
 
a defined contribution 401(k) plan covering
 
all employees. Annual expense is equal
 
to the Bank’s contributions to the
plan. TD Bank, N.A. also has frozen defined
 
benefit pension plans covering certain legacy
 
TD Banknorth and TD Auto Finance (legacy
 
Chrysler Financial)
employees.
Government Pension Plans
The Bank also makes contributions to government
 
pension plans, including the Canada Pension
 
Plan, Quebec Pension Plan and Social Security
 
under the
U.S.
Federal Insurance Contribution Act.
(d)
 
DEFINED CONTRIBUTION PLAN EXPENSE
The following table summarizes expenses for
 
the Bank’s defined contribution plans.
Defined Contribution Plan Expenses
(millions of Canadian dollars)
 
For the years ended October 31
2024
2023
Defined contribution pension plans
1
$
310
$
250
Government pension plans
2
533
502
Total
$
843
$
752
1
 
Includes the TDPP DC and the TD Bank, N.A. defined contribution 401(k) plan.
2
 
Includes Canada Pension Plan, Quebec Pension Plan, and Social Security under the U.S.
Federal Insurance Contributions Act
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 80
(e)
 
DEFINED BENEFIT PLAN FINANCIAL INFORMATION
The following table presents the financial position
 
of the Bank’s principal pension and post-retirement
 
defined benefit plans and the Bank’s other material
 
defined
benefit pension plans for the years ended October
 
31, 2024 and October 31, 2023. Other
 
employee defined benefit plans operated
 
by the Bank and certain of its
subsidiaries are not considered material
 
for disclosure purposes.
Employee Defined Benefit Plans’ Obligations, Assets,
 
Funded Status, and Expense
(millions of Canadian dollars, except as noted)
 
Principal
post-retirement
Principal pension plans
benefit plan
1
Other pension plans
2
2024
2023
2024
2023
2024
2023
Change in projected benefit obligation
Projected benefit obligation at beginning of year
 
$
6,833
$
6,763
$
352
$
372
$
2,264
$
2,339
Service cost – benefits earned
217
247
5
6
15
17
Interest cost on projected benefit obligation
381
353
20
19
128
122
Remeasurement (gain) loss – financial
1,155
(487)
40
(9)
220
(97)
Remeasurement (gain) loss – demographic
–
–
–
(18)
(1)
–
Remeasurement (gain) loss – experience
92
151
–
2
20
11
Members’ contributions
 
112
113
–
–
–
–
Benefits paid
(355)
(307)
(20)
(20)
(149)
(149)
Change in foreign currency exchange rate
–
–
–
–
3
21
Past service cost
3
35
–
–
–
–
–
Projected benefit obligation as at October 31
8,470
6,833
397
352
2,500
2,264
Wholly or partially funded projected benefit obligation
8,470
6,833
–
–
1,898
1,711
Unfunded projected benefit obligation
–
–
397
352
602
553
Total projected benefit obligation
 
as at October 31
8,470
6,833
397
352
2,500
2,264
Change in plan assets
 
Plan assets at fair value at beginning of year
8,220
8,481
–
–
1,816
1,894
Interest income on plan assets
464
453
–
–
102
99
Remeasurement gain (loss) – return on plan assets less
 
interest income
988
(698)
–
–
177
(76)
Members’ contributions
 
112
113
–
–
–
–
Employer’s contributions
 
–
187
20
20
56
33
Benefits paid
(355)
(307)
(20)
(20)
(149)
(149)
Change in foreign currency exchange rate
–
–
–
–
3
21
Defined benefit administrative expenses
(11)
(9)
–
–
(5)
(6)
Plan assets at fair value as at October 31
9,418
8,220
–
–
2,000
1,816
Excess (deficit) of plan assets at fair value over projected
 
benefit obligation
 
948
1,387
(397)
(352)
(500)
(448)
Effect of asset limitation and minimum funding requirement
–
(195)
–
–
(21)
(53)
Net defined benefit asset (liability)
948
1,192
(397)
(352)
(521)
(501)
Recorded in
Other assets in the Bank’s Consolidated Balance Sheet
948
1,192
–
–
94
62
Other liabilities in the Bank’s Consolidated Balance Sheet
–
–
(397)
(352)
(615)
(563)
Net defined benefit asset (liability)
948
1,192
(397)
(352)
(521)
(501)
Annual expense
Net employee benefits expense includes the following:
Service cost – benefits earned
217
247
5
6
15
17
Net interest cost (income) on net defined benefit liability
 
(asset)
 
(83)
(100)
20
19
26
23
Interest cost on asset limitation and minimum funding requirement
11
21
–
–
3
4
Past service cost
3
35
–
–
–
–
–
Defined benefit administrative expenses
9
10
–
–
5
5
Total
$
189
$
178
$
25
$
25
$
49
$
49
Actuarial assumptions used to determine the annual expense
Weighted-average discount rate for projected benefit
 
obligation
5.66
%
5.44
%
5.71
%
5.45
%
5.95
%
5.56
%
Weighted-average rate of compensation increase
2.78
%
2.88
%
3.05
%
3.25
%
1.35
%
1.42
%
Assumed life expectancy at age 65, in years
Male aged 65
 
23.2
23.2
23.2
23.2
21.9
21.9
Female aged 65
24.3
24.3
24.3
24.3
23.4
23.4
Male aged 45
24.1
24.1
24.1
24.1
22.6
22.6
Female aged 45
25.2
25.2
25.2
25.2
24.3
24.2
Actuarial assumptions used to determine the projected
benefit obligation as at October 31
Weighted-average discount rate for projected benefit
 
obligation
4.83
%
5.66
%
4.80
%
5.71
%
5.06
%
5.95
%
Weighted-average rate of compensation increase
2.78
%
2.78
%
3.00
%
3.05
%
1.37
%
1.35
%
Assumed life expectancy at age 65, in years
Male aged 65
 
23.2
23.2
23.2
23.2
21.9
21.9
Female aged 65
24.3
24.3
24.3
24.3
23.5
23.4
Male aged 45
24.1
24.1
24.1
24.1
22.7
22.6
Female aged 45
25.2
25.2
25.2
25.2
24.3
24.3
1
The rate of increase for health care costs for the next year used to measure the expected cost of benefits covered
 
for the principal post-retirement defined benefit plan is 2.59%.
The rate
is assumed to decrease gradually to 0.89% by the year 2040 and remain at that level thereafter (2023
 
– 3.24% grading to 0.89%
 
by the year 2040 and remain at that
 
level thereafter).
2
 
Includes Canada Trust defined benefit pension plan, TD Banknorth defined benefit pension
 
plan, TD Auto Finance defined benefit pension plan, TD Insurance defined benefit pension
plan, and supplemental executive defined benefit pension plans.
3
 
Relates to the Pension Fund Society that was modified in fiscal 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 81
The Bank recognized the following amounts
 
on the Consolidated Balance Sheet.
Amounts Recognized in the Consolidated
 
Balance Sheet
(millions of Canadian dollars)
As at
 
October 31
October 31
2024
2023
Other assets
Principal defined benefit pension plans
$
948
$
1,192
Other defined benefit pension plans
 
94
 
62
Total
 
1,042
 
1,254
Other liabilities
Principal post-retirement defined benefit
 
plan
397
352
Other defined benefit pension plans
615
563
Other employee benefit plans
1
368
329
Total
 
1,380
 
1,244
Net amount recognized
 
$
(338)
$
10
1
 
Consists of other pension and other post-retirement benefit plans operated by the Bank and its subsidiaries that
 
are not considered material for disclosure purposes.
The following table summarizes the remeasurements
 
recognized in OCI for the Bank’s principal pension
 
and post-retirement defined benefit plans and
 
certain of
the Bank’s other material defined benefit pension plans.
Amounts Recognized in Other Comprehensive
 
Income for Remeasurement of Defined
 
Benefit Plans
1,2
(millions of Canadian dollars)
Principal
 
post-retirement
Principal pension plans
benefit plan
Other pension plans
For the years ended October 31
2024
2023
2024
2023
2024
2023
Remeasurement gains (losses) – financial
$
(1,155)
$
487
$
(40)
$
9
$
(220)
$
97
Remeasurement gains (losses) – demographic
–
–
–
18
1
–
Remeasurement gains (losses) – experience
(92)
(151)
–
(2)
(20)
(11)
Remeasurement gains (losses) – return
 
on
 
plan assets less interest income
986
(697)
–
–
177
(77)
Changes in asset limitation and minimum funding
 
requirement
206
210
–
–
35
12
Total
$
(55)
$
(151)
$
(40)
$
25
$
(27)
$
21
1
 
Amounts are presented on a pre-tax basis.
2
Excludes net remeasurement gains (losses) recognized in OCI in respect of other employee defined
 
benefit plans operated by the Bank and certain of its subsidiaries not considered
material for disclosure purposes totalling ($29) million (2023 – $10 million).
(f)
 
CASH FLOWS
During the year ended October 31, 2025,
 
the Bank expects to contribute $140
 
million to its principal defined benefit pension
 
plans, $21 million to its principal post-
retirement defined benefit plan, and $60 million
 
to its other defined benefit pension plans.
 
Future contribution amounts may change upon
 
the Bank’s review of its
contribution levels during the year.
The following table summarizes the expected
 
future benefit payments for the next 10 years.
Expected Future Benefit Payments
(millions of Canadian dollars)
 
Principal
Principal
post-retirement
pension plans
benefit plan
Other pension
plans
Benefit payments expected to be paid
 
in:
 
 
 
2025
$
416
$
21
$
166
2026
439
22
169
2027
463
23
170
2028
487
24
172
2029
508
24
173
2030-2034
2,814
131
852
Total
$
5,127
$
245
$
1,702
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 82
(g)
 
MATURITY PROFILE
The breakdown of the projected benefit obligations
 
between active, deferred, and retired
 
members is as follows:
Disaggregation of Projected Benefit Obligation
(millions of Canadian dollars)
Principal
Principal
post-retirement
pension plans
benefit plan
Other pension plans
As at October 31
2024
2023
2024
2023
2024
2023
Active members
$
5,722
$
4,459
$
163
$
135
$
488
$
448
Deferred members
543
452
–
–
373
362
Retired members
2,205
1,922
234
217
1,639
1,454
Total
$
8,470
$
6,833
$
397
$
352
$
2,500
$
2,264
The weighted-average duration of the projected
 
benefit obligations is as follows:
Duration of Projected Benefit Obligation
(number of years)
Principal
Principal
pension
post-retirement
plans
benefit plan
Other pension plans
As at October 31
2024
2023
2024
2023
2024
2023
Weighted-average duration
14
13
13
12
11
10
(h)
 
SENSITIVITY ANALYSIS
The following table provides the sensitivity
 
of the projected benefit obligation for the
 
Bank’s principal defined benefit pension plans,
 
the principal post-retirement
defined benefit plan, and the Bank’s significant
 
other defined benefit pension plans to actuarial
 
assumptions considered significant by the Bank.
 
These include
discount rate, rates of compensation increase,
 
life expectancy, and health care cost initial trend rates, as applicable.
 
The sensitivity analysis provided in the
 
table
should be used with caution, as it is hypothetical
 
and the impact of changes in each significant
 
assumption may not be linear. For each sensitivity test,
 
the impact
of a reasonably possible change in a single
 
factor is shown with other assumptions left
 
unchanged. Actual experience may result in
 
simultaneous changes in a
number of key assumptions, which could
 
magnify or diminish certain sensitivities.
Sensitivity of Significant Defined Benefit
 
Plan Actuarial Assumptions
(millions of Canadian dollars, except
 
as noted)
As at
October 31, 2024
Obligation Increase (Decrease)
 
Principal
Principal
post-
Other
pension
retirement
pension
plans
benefit plan
plans
Impact of an absolute change in
significant actuarial assumptions
Discount rate
1% decrease in assumption
$
1,250
$
54
$
294
1% increase in assumption
(989)
(44)
(244)
Rates of compensation increase
1% decrease in assumption
(242)
–
1
(20)
1% increase in assumption
217
–
1
23
Life expectancy
1 year decrease in assumption
(150)
(11)
(75)
1 year increase in assumption
146
11
73
Health care cost initial trend rate
1% decrease in assumption
n/a
(7)
n/a
1% increase in assumption
n/a
7
n/a
1
An absolute change in this assumption is immaterial.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 83
NOTE 24: INCOME TAXES
The provision for (recovery of) income
 
taxes is comprised of the following:
Provision for (Recovery of) Income Taxes
(millions of Canadian dollars)
For the years ended October 31
 
2024
2023
Provision for (recovery of) income taxes
 
– Consolidated Statement of Income
 
Current income taxes
Provision for (recovery of) income taxes
 
for the current period
$
3,956
$
3,244
Adjustments in respect of prior years and
 
other
(204)
1,180
1
Total current income taxes
3,752
4,424
Deferred income taxes
Provision for (recovery of) deferred income
 
taxes related to the origination
 
and reversal of temporary differences
2
(1,254)
(656)
Effect of changes in tax rates
(13)
(74)
Adjustments in respect of prior years and
 
other
206
(576)
Total deferred income taxes
2
(1,061)
(1,306)
Total provision for (recovery of) income taxes – Consolidated Statement
 
of Income
2
2,691
3,118
Provision for (recovery of) income taxes
 
– Statement of Other Comprehensive Income
Current income taxes
767
65
Deferred income taxes
183
(452)
Total provision for (recovery of) income taxes – Statement of Other
 
Comprehensive Income
2
950
(387)
Income taxes – other items including
 
business combinations and other adjustments
Current income taxes
(38)
(188)
Deferred income taxes
2
(12)
(32)
(50)
(220)
Total provision for (recovery of) income taxes
2
3,591
2,511
Current income taxes
Federal
1,712
2,099
Provincial
1,221
1,380
Foreign
1,548
822
4,481
4,301
Deferred income taxes
 
Federal
2
92
(761)
Provincial
2
54
(449)
Foreign
(1,036)
(580)
(890)
(1,790)
Total provision for (recovery of) income taxes
2
$
3,591
$
2,511
1
 
The 2023 amount includes the $585 million impact to provision for income taxes as discussed in the Implementation
 
of the Canada Recovery Dividend and Change in Corporate Tax
 
Rate
section below.
2
 
Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for
 
details.
The Bank’s statutory and effective tax rate is outlined
 
in the following table.
Reconciliation to Statutory Income Tax Rate
(millions of Canadian dollars, except
 
as noted)
2024
2023
Income taxes at Canadian statutory income
 
tax rate
1
$
3,009
27.8
%
$
3,575
27.7
%
Increase (decrease) resulting from:
Dividends received
(28)
(0.3)
(109)
(0.8)
Rate differentials on international operations
(270)
(2.5)
(952)
(7.4)
Other – net
1
(20)
(0.2)
604
4.7
2
Provision for income taxes and effective
 
income tax rate
1
$
2,691
24.8
%
$
3,118
24.2
%
1
 
Amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for
 
details.
2
 
The 2023 amount includes the $585 million impact to provision for income taxes as discussed in the Implementation
 
of the Canada Recovery Dividend and Change in Corporate Tax
 
Rate
section below.
Implementation of the Canada Recovery
 
Dividend and Change in Corporate
 
Tax Rate
On December 15, 2022, Bill C-32,
Fall Economic Statement Implementation
 
Act, 2022
, received Royal Assent. This bill enacted
 
the Canada Recovery Dividend
(CRD) and increased the Canadian federal
 
tax rate for bank and life insurer groups by 1.5%.
The implementation of the CRD resulted
 
in a provision for income taxes of $553
 
million and a charge to OCI of $239 million,
 
recognized in the first quarter of
2023.
The increase in the Canadian federal tax rate
 
of 1.5%, prorated for the first taxation year
 
that ends after April 7, 2022, resulted in a
 
provision for income taxes of
$82 million and a tax benefit of $75 million
 
in OCI related to fiscal 2022, recognized
 
in the first quarter of 2023. The Bank also
 
remeasured certain Canadian
deferred tax assets and liabilities for
 
the increase in tax rate, which resulted in an
 
increase in net deferred tax assets of
 
$50 million, which was recorded in
provision for income taxes.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 84
International Tax Reform – Pillar Two Global Minimum Tax
On December 20, 2021, the OECD published
 
Pillar Two model rules as part of its efforts toward international
 
tax reform. The Pillar Two model rules provide for the
implementation of a 15% global minimum
 
tax for large multinational enterprises,
 
which is to be applied on a jurisdiction-by-jurisdiction
 
basis. Pillar Two legislation
was enacted in Canada on June 20, 2024
 
under Bill C-69, which includes the
Global Minimum Tax Act
 
addressing the Pillar Two model rules. The rules are
effective for the Bank for the fiscal year beginning
 
on November 1, 2024. The
Global Minimum Tax Act
may result in a tax on future dispositions
 
of shares in
Charles Schwab, depending on the accounting
 
gain at that time and its impact on effective tax
 
rates. The tax could be up to 15% of
 
the accounting gain and would
be payable in Canada. Also, similar legislation
 
has passed in other jurisdictions in which
 
the Bank operates and will result in additional
 
taxes being paid in those
countries. The Bank estimates that its effective
 
tax rate will increase by 0.25%-0.50% as a
 
result of these additional annual taxes,
 
with the bulk of the additional
taxes arising in Ireland due to its statutory corporate
 
tax rate of 12.5%.
Other Tax Matters
The Canada Revenue Agency (CRA), Revenu
 
Québec Agency (RQA) and Alberta Tax and Revenue Administration (ATRA) are denying certain
 
dividend and
interest deductions claimed by the Bank.
 
During the year ended October 31, 2024,
 
the RQA reassessed the Bank for $1
 
million of additional income tax and
interest in respect of its 2018 taxation year. As at October 31,
 
2024, the CRA has reassessed the
 
Bank for $1,661 million for the years 2011 to 2018, the RQA has
reassessed the Bank for $52 million for the
 
years 2011 to 2018, and the ATRA has reassessed the Bank for $71 million for the
 
years 2011 to 2018. In total, the
Bank has been reassessed for $1,784
 
million of income tax and interest. The Bank
 
expects to continue to be reassessed
 
for open years. The Bank is of the view
that its tax filing positions were appropriate
 
and filed a Notice of Appeal with the
 
Tax Court of Canada on March 21, 2023.
Deferred tax assets and liabilities comprise of
 
the following:
Deferred Tax Assets and Liabilities
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Deferred tax assets
Allowance for credit losses
$
1,592
$
1,466
Trading loans
31
30
Employee benefits
1,036
867
Losses available for carry forward
45
127
Tax credits
89
46
Land, buildings, equipment, other depreciable
 
assets, and right-of-use assets
366
471
Securities
589
314
Deferred income
353
–
Intangibles
92
–
Other
1
727
1,006
Total deferred tax assets
1
4,920
4,327
Deferred tax liabilities
Pensions
81
158
Deferred expenses
–
238
Intangibles
–
10
Goodwill
202
174
Total deferred tax liabilities
283
580
Net deferred tax assets
1
4,637
3,747
Reflected on the Consolidated Balance Sheet
 
as follows:
Deferred tax assets
1
4,937
3,951
Deferred tax liabilities
2
300
204
Net deferred tax assets
1
$
4,637
$
3,747
1
 
Balances as at October 31, 2023 have been restated for the adoption of IFRS 17. Refer to Note 4 for details.
2
 
Included in Other liabilities on the Consolidated Balance Sheet.
The amount of temporary differences, unused tax
 
losses, and unused tax credits for which
 
no deferred tax asset is recognized on the
 
Consolidated Balance Sheet
was $658 million as at October 31, 2024
 
(October 31, 2023 – $663 million), of which
 
$2 million (October 31, 2023
 
– $11 million) is scheduled to expire within five
years.
Certain taxable temporary differences associated
 
with the Bank’s investments in subsidiaries, branches
 
and associates, and interests in joint ventures
 
did not
result in the recognition of deferred tax liabilities
 
as at October 31, 2024. The total amount
 
of these temporary differences was $72 billion as
 
at October 31, 2024
(October 31, 2023
 
– $88 billion).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 85
The movement in the net deferred tax asset
 
for the years ended October 31, 2024 and
 
October 31, 2023, was as follows:
Deferred Income Tax Expense (Recovery)
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Consolidated
Other
Business
 
Consolidated
Other
Business
 
statement of
comprehensive
combinations
 
statement of
comprehensive
combinations
 
income
income
and other
Total
income
income
and other
Total
Deferred income tax expense
 
(recovery)
Allowance for credit losses
$
(126)
$
–
$
–
$
(126)
$
(127)
$
–
$
–
$
(127)
Trading loans
 
(1)
–
–
(1)
(2)
–
–
(2)
Employee benefits
(154)
(15)
–
(169)
(9)
12
(113)
(110)
Losses available for carry
 
forward
82
–
–
82
(53)
–
(12)
(65)
Tax credits
(43)
–
–
(43)
(5)
–
–
(5)
Land, buildings, equipment, other depreciable
assets, and right-of-use assets
105
–
–
105
(194)
–
3
(191)
Other deferred tax assets
1
291
–
(12)
279
(754)
–
5
(749)
Securities
 
(494)
219
–
(275)
 
(66)
(443)
–
(509)
Pensions
(56)
(21)
–
(77)
(5)
(21)
–
(26)
Deferred (income) expenses
(591)
–
–
(591)
11
–
–
11
Intangibles
(102)
–
–
(102)
(122)
–
85
(37)
Goodwill
28
–
–
28
20
–
–
20
Total deferred income tax
 
expense (recovery)
1
$
(1,061)
$
183
$
(12)
$
(890)
$
(1,306)
$
(452)
$
(32)
$
(1,790)
1
Amounts for the year ended October 31, 2023
 
have been restated for the adoption of IFRS 17. Refer to Note 4 for details.
NOTE 25: EARNINGS PER SHARE
Basic earnings per share is calculated by
 
dividing net income attributable to common
 
shareholders by the weighted-average number
 
of common shares
outstanding for the period.
Diluted earnings per share is calculated using
 
the same method as basic earnings per
 
share except that certain adjustments are
 
made to net income
attributable to common shareholders and
 
the weighted-average number of shares outstanding
 
for the effects of all dilutive potential common
 
shares that are
assumed to be issued by the Bank.
The following table presents the Bank’s basic and
 
diluted earnings per share for the years
 
ended October 31, 2024 and October 31, 2023.
Basic and Diluted Earnings Per Share
1
(millions of Canadian dollars, except
 
as noted)
For the years ended October 31
 
2024
2023
Basic earnings per share
Net income attributable to common shareholders
$
8,316
$
10,071
Weighted-average number of common shares outstanding
 
(millions)
1,758.8
1,822.5
Basic earnings per share
(Canadian dollars)
$
4.73
$
5.53
Diluted earnings per share
Net income attributable to common shareholders
$
8,316
$
10,071
Net income available to common shareholders
 
including impact of dilutive securities
 
8,316
 
10,071
Weighted-average number of common shares outstanding
 
(millions)
1,758.8
1,822.5
Effect of dilutive securities
Stock options potentially exercisable (millions)
2
1.2
1.9
Weighted-average number of common shares outstanding
 
– diluted (millions)
1,760.0
1,824.4
Diluted earnings per share
(Canadian dollars)
2
$
4.72
$
5.52
1
Certain amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to
 
Note 4 for details.
2
For the year ended October 31, 2024, the computation of diluted earnings per share excluded average options
 
outstanding of 6.9 million with an exercise price of $89.49 as the option
price was greater than the average market price of the Bank’s common shares. For the
 
year ended October 31, 2023, the computation of diluted earnings per share excluded average
options outstanding of 4.6 million with an exercise price of $93.09, as the option price was greater than the average
 
market price of the Bank’s common shares.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 86
NOTE 26: PROVISIONS, CONTINGENT LIABILITIES,
 
COMMITMENTS, GUARANTEES, PLEDGED
 
ASSETS, AND COLLATERAL
(a)
 
PROVISIONS
The following table summarizes
 
the Bank’s provisions recorded in other liabilities.
Provisions
(millions of Canadian dollars)
Legal, Regulatory,
 
Restructuring
and Other
1
Total
Balance as at November 1, 2023
$
192
$
2,180
$
2,372
Additions
590
4,699
5,289
Amounts used
(525)
(4,228)
(4,753)
Release of unused amounts
(24)
(8)
(32)
Foreign currency translation adjustments
 
and other
3
(247)
(244)
Balance as at October 31, 2024, before
 
allowance for
 
 
 
credit losses for off-balance sheet instruments
$
236
$
2,396
$
2,632
Add: Allowance for credit losses for off-balance sheet
 
instruments
2
1,043
Balance as at October 31, 2024
$
3,675
1
The Bank recognized provisions totalling US$3.088 billion ($4.233 billion) for the global resolution of the investigations
 
into the Bank’s U.S. Bank Secrecy Act (BSA)/Anti-Money
Laundering (AML) program during the year ended October 31, 2024. The balance of the provisions as at October
 
31, 2024 is US$1.43 billion ($1.99 billion).
2
Refer to Note 8 for further details.
(b)
 
RESTRUCTURING
The Bank continued to undertake certain
 
measures during fiscal 2024 to reduce its cost
 
base and achieve greater efficiency. In connection with these
 
measures,
the Bank incurred $566 million of restructuring
 
charges during the year ended October 31,
 
2024 (October 31, 2023 – $363 million).
 
The restructuring costs
primarily relate to: (i) employee severance
 
and other personnel-related costs recorded
 
as provisions and (ii) real estate optimization
 
mainly recorded as a reduction
to buildings (refer to Note 15). This restructuring
 
program concluded in the third quarter
 
of 2024.
(c)
 
LEGAL AND REGULATORY MATTERS
In the ordinary course of business, the Bank
 
and its subsidiaries are involved in various
 
legal and regulatory actions, including but
 
not limited to civil claims and
lawsuits, regulatory examinations, investigations,
 
audits, and requests for information by
 
governmental, regulatory and self-regulatory
 
agencies and law
enforcement authorities in various jurisdictions,
 
in respect of our businesses and compliance
 
programs. The Bank establishes provisions
 
when it becomes
probable that the Bank will incur a loss and
 
the amount can be reliably estimated.
 
The Bank also estimates the aggregate range
 
of reasonably possible losses
(RPL) in its legal and regulatory actions (that
 
is, those which are neither probable nor
 
remote), in excess of provisions. However, the Bank does
 
not disclose the
specific possible loss associated with each underlying
 
matter given the substantial uncertainty associated
 
with each possible loss as described below and
 
the
negative consequences to the Bank’s resolution
 
of the matters that comprise the
 
RPL should individual possible losses be disclosed.
 
As at October 31, 2024, the
Bank’s RPL is from zero to approximately $625
 
million (October 31, 2023 – from zero to approximately
 
$1.44 billion). The Bank’s provisions and
 
RPL represent the
Bank’s best estimates based upon currently available
 
information for actions for which estimates
 
can be made, but there are a number of factors
 
that could cause
the Bank’s actual losses to be significantly different
 
from its provisions or RPL. For example,
 
the Bank’s estimates involve significant judgment
 
due to the varying
stages of the proceedings, the existence of
 
multiple defendants in many proceedings
 
whose share of liability has yet to be determined,
 
the numerous yet-
unresolved issues in many of the proceedings,
 
some of which are beyond the Bank’s control and/or
 
involve novel legal theories and interpretations,
 
the attendant
uncertainty of the various potential outcomes
 
of such proceedings, and the fact that the underlying
 
matters will change from time to time.
 
In addition, some actions
seek very large or indeterminate damages.
On October 10, 2024, the Bank announced
 
that, following active cooperation and engagement
 
with authorities and regulators, it reached a resolution
 
of
previously disclosed investigations related
 
to its U.S. BSA and AML compliance programs.
 
The Bank and certain of its U.S. subsidiaries consented
 
to orders with
the Office of the Comptroller of the Currency (OCC),
 
the Federal Reserve Board, and the Financial
 
Crimes Enforcement Network (FinCEN) and entered
 
into plea
agreements with the Department of Justice (DOJ),
 
Criminal Division, Money Laundering and Asset
 
Recovery Section and the United States
 
Attorney’s Office for
the District of New Jersey. Details of the resolution include: (i)
 
a total payment of US$3.088 billion ($4.233 billion);
 
(ii) TD Bank, N.A. pleading guilty to one
 
violation
of conspiring to willfully fail to maintain an adequate
 
AML program, knowingly fail to file accurate
 
currency transaction reports (CTRs) and money
 
laundering and
TD Bank US Holding Company (TDBUSH)
 
pleading guilty to two violations of failing
 
to maintain an adequate AML program and
 
failing to file accurate CTRs; (iii)
requirements to remediate the Bank’s U.S. BSA/AML
 
program, broadly aligned to its existing
 
remediation program, which requirements
 
the Bank has begun to
address; (iv) a requirement to prioritize the
 
funding and staffing of the remediation, which includes
 
Board certifications for dividend distributions
 
from certain of the
Bank’s U.S. subsidiaries to the Bank; (v) formal oversight
 
of the U.S. BSA/AML remediation
 
through an independent compliance monitorship;
 
(vi) prohibition
against the average combined total assets
 
of TD’s two U.S. bank subsidiaries (TD Bank,
 
NA and TD Bank USA, NA) (collectively, the “U.S. Bank”) exceeding
US$434 billion (representing the combined
 
total assets of the U.S. Bank as at September
 
30, 2024), and if the U.S. Bank does not achieve
 
compliance with all
actionable articles in the OCC consent orders
 
(and for each successive year that the
 
U.S. Bank remains non-compliant),
 
the OCC may require the U.S. Bank to
further reduce total consolidated assets by up
 
to 7%; (vii) the U.S. Bank being subject
 
to OCC supervisory approval processes
 
for any additions of new bank
products, services, markets, and stores
 
prior to the OCC’s acceptance of the
 
U.S. Bank’s improved AML policies and procedures,
 
to ensure the AML risk of new
initiatives is appropriately considered and
 
mitigated; (viii) requirements for the Bank
 
and TD Group Holdings, LLC (TDGUS)
 
to retain a third party to assess the
effectiveness of the corporate governance and
 
U.S. Board and management structure and composition
 
to adequately oversee U.S. operations; (ix)
 
requirements to
comply with the terms of the plea agreements
 
with the DOJ during a five-year term of probation
 
(which could be extended as a result of
 
the Bank failing to
complete the compliance undertakings, failing
 
to cooperate or to report alleged misconduct
 
as required, or committing additional
 
crimes); (x) an ongoing obligation
to cooperate with DOJ investigations;
 
and (xi) an ongoing obligation to report evidence
 
or allegations of violations by the Bank, its
 
affiliates, or their employees that
may be a violation of U.S. federal law.
The Bank, together with some former or
 
current directors, officers and employees, have been
 
named as defendants in proposed class
 
action lawsuits in the
United States and Canada purporting
 
to be brought on behalf of TD shareholders
 
alleging, among other things, that a
 
decline in the price of TD’s shares was the
result of misleading disclosures with
 
respect to the Bank’s AML program and/or the potential
 
outcomes of the government agencies’ or regulators’
 
investigations.
We anticipate that additional lawsuits may be
 
filed and that some of these lawsuits may
 
be consolidated into one or more actions. All
 
of the proceedings are still in
early stages and none have been certified to
 
proceed as a class action. Losses or damages
 
cannot be estimated at this time.
The Bank also has been named as defendant
 
in a purported class action lawsuit in
 
the United States purporting to be brought
 
on behalf of First Horizon
shareholders alleging that a decline in the price
 
of First Horizon shares was the result
 
of alleged misleading disclosures TD
 
made with respect to TD’s U.S. AML
program and its effect on the Bank’s contemplated
 
merger with First Horizon. These proceedings
 
are still in early stages and have not been
 
certified to proceed as
a class action.
 
Losses or damages cannot be estimated at
 
this time.
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 87
The Bank is a defendant in Canada and/or
 
the United States in a number of matters brought
 
by customers, including class actions,
 
alleging claims in connection
with various fees, practices and credit decisions.
 
The cases are in various stages of maturity, with a number of
 
cases not yet certified.
On September 30, 2024, TD Securities (USA)
 
LLC (TDS-US) entered into a Deferred
 
Prosecution Agreement (DPA) with the U.S. DOJ related to
 
the actions of
a former TDS trader. Pursuant to the terms of the DPA, TDS-US agreed to pay
 
total monetary sanctions of approximately
 
US$15.5 million, which consists of a
criminal penalty, forfeiture and victim compensation. TDS-US and,
 
in certain instances, TD Group US Holdings
 
LLC, further agreed to abide by certain
cooperation, reporting and compliance obligations
 
in connection with the DPA.
 
These include, but are not limited to: (i)
 
an ongoing obligation to cooperate with
DOJ investigations; (ii) an ongoing obligation
 
to report evidence or allegations of violations
 
by TDS-US of certain federal statutes; (iii)
 
the implementation and
maintenance of a corporate compliance program
 
that meets certain enumerated standards;
 
and (iv) an ongoing obligation to regularly
 
report to the DOJ on its
efforts to bolster its compliance program. TDS-US
 
also resolved investigations by the U.S.
 
Securities and Exchange Commission
 
(SEC) and the Financial Industry
Regulatory Authority (FINRA) relating
 
to the actions of the former TDS-US trader. As part of the resolutions,
 
TDS-US agreed to pay approximately US$7
 
million in
total monetary sanctions to the SEC
 
and US$6 million to FINRA.
The Bank was named as a defendant in
Rotstain v. Trustmark National Bank, et al
., a putative class action lawsuit in the
 
United States District Court for the
Northern District of Texas related to a US$7.2 billion Ponzi scheme perpetrated
 
by R. Allen Stanford, the owner of Stanford
 
International Bank, Limited (SIBL), an
offshore bank based in Antigua. Plaintiffs purported to represent
 
a class of investors in SIBL issued
 
certificates of deposit.
 
The Bank provided certain
correspondent banking services to SIBL.
 
Plaintiffs alleged that the Bank and four other banks
 
aided and abetted Mr. Stanford and that the bank defendants
received fraudulent transfers from SIBL by
 
collecting fees for providing certain services.
 
The district court denied Plaintiffs’
 
motion for class certification, which the
Fifth Circuit declined to review on appeal.
 
The Official Stanford Investors Committee (OSIC),
 
a court-approved committee representing investors,
 
received
permission to intervene in the lawsuit and brought
 
similar claims against all the bank defendants.
 
In fiscal year 2023, the Bank reached a settlement
 
agreement
pursuant to which the Bank agreed to pay
 
US$1.205 billion to the U.S. Receiver to resolve
 
all claims against the Bank arising from
 
or related to R. Allen Stanford,
including the claims asserted in the
Rotstain et al. v. Trustmark National Bank et al
. and
Smith et al. v. Independent Bank
 
actions. Under the terms of the
agreement, all involved parties have agreed
 
to a bar order dismissing and releasing all
 
current or future claims arising from or
 
related to R. Allen Stanford.
 
In
August 2023, R. Allen Stanford filed an appeal
 
of the order approving the settlement,
 
which the Fifth Circuit denied. On
 
May 31, 2024, the claims against the Bank
were dismissed with prejudice in
Rotstain v. Trustmark National Bank, et al
. On June 3, 2024, the United States Supreme
 
Court denied R. Allen Stanford’s request
for rehearing regarding the denial of his petition
 
for a writ of certiorari in which he challenged
 
the settlement in this action. This brings to
 
a close the Stanford
litigation in the United States.
In the third quarter of 2024, the Bank and
 
certain of its subsidiaries resolved the investigations
 
by the SEC and the Commodity Futures
 
Trading Commission
(CFTC) concerning compliance with records preservation
 
requirements relating to business
 
communications exchanged on unapproved
 
electronic channels. The
Bank and its subsidiaries in the aggregate paid
 
penalties totalling US$124.5 million,
 
for which the Bank was fully provisioned, and
 
agreed to various other
customary terms similar to those imposed on
 
other financial institutions that have
 
resolved similar investigations.
In the second quarter of 2024, the Bank and
 
certain of its subsidiaries reached a settlement
 
in principle relating to a civil matter, pursuant to which
 
the Bank
recorded a provision of $274 million.
Refer to Note 24 for disclosures related
 
to tax matters.
(d)
 
COMMITMENTS
Credit-related Arrangements
In the normal course of business, the Bank
 
enters into various commitments and
 
contingent liability contracts. The primary purpose
 
of these contracts is to make
funds available for the financing needs of
 
customers. The Bank’s policy for requiring
 
collateral security with respect to these contracts
 
and the types of collateral
security held is generally the same as for loans
 
made by the Bank.
Financial and performance standby letters
 
of credit represent irrevocable assurances
 
that the Bank will make payments in the event
 
that a customer cannot
meet its obligations to third parties and they
 
carry the same credit risk, recourse,
 
and collateral security requirements as loans
 
extended to customers.
Performance standby letters of credit are
 
considered non-financial guarantees as payment
 
does not depend on the occurrence of
 
a credit event and is generally
related to a non-financial trigger event.
Documentary and commercial letters of
 
credit are instruments issued on behalf
 
of a customer authorizing a third party to
 
draw drafts on the Bank up to a certain
amount subject to specific terms and conditions.
 
The Bank is at risk for any drafts drawn
 
that are not ultimately settled by the customer, and the amounts
 
are
collateralized by the assets to which
 
they relate.
Commitments to extend credit represent unutilized
 
portions of authorizations to extend credit
 
in the form of loans and customers’ liability
 
under acceptances. A
discussion on the types of liquidity facilities
 
the Bank provides to its securitization
 
conduits is included in Note 10.
The values of credit instruments reported as
 
follows represent the maximum amount
 
of additional credit that the Bank could
 
be obligated to extend should
contracts be fully utilized.
Credit Instruments
(millions of Canadian dollars)
As at
October 31
October 31
2024
2023
Financial and performance standby letters
 
of credit
$
44,463
$
39,310
Documentary and commercial letters
 
of credit
337
167
Commitments to extend credit
1
Original term-to-maturity of one year or less
76,060
69,686
Original term-to-maturity of more than one
 
year
245,846
230,565
Total
$
366,706
$
339,728
1
 
Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable
 
at the Bank’s discretion at any time.
In addition, as at October 31, 2024, the Bank
 
is committed to fund $594 million (October
 
31, 2023 – $554 million) of private equity
 
investments.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 88
Long-term Commitments or Leases
The Bank has obligations under long-term non-cancellable
 
leases for premises and equipment.
 
The maturity profile for undiscounted lease liabilities
 
is $40 million
for 2025, $119 million for 2026, $216 million for 2027, $225
 
million for 2028, $469 million for 2029, $5,330
 
million for 2030 and thereafter. Total lease payments,
including $19 million (October 31, 2023 – $10
 
million) paid for short-term and low-value
 
asset leases, for the year ended October
 
31, 2024, were $829 million
(October 31, 2023 – $780 million).
(e)
 
ASSETS SOLD WITH RECOURSE
In connection with its securitization activities,
 
the Bank typically makes customary representations
 
and warranties about the underlying assets
 
which may result in
an obligation to repurchase the assets. These
 
representations and warranties attest that
 
the Bank, as the seller, has executed the sale of assets in
 
good faith, and
in compliance with relevant laws and contractual
 
requirements. In the event that they do not
 
meet these criteria, the loans may be required
 
to be repurchased by
the Bank.
(f)
 
GUARANTEES
In addition to financial and performance
 
standby letters of credit, the following types
 
of transactions represent the principal guarantees
 
that the Bank has entered
into.
Credit Enhancements
The Bank guarantees payments to counterparties
 
in the event that third-party credit enhancements
 
supporting asset pools are insufficient.
Indemnification Agreements
In the normal course of operations, the Bank
 
provides indemnification agreements
 
to various counterparties in transactions such as
 
service agreements, leasing
transactions, and agreements relating
 
to acquisitions and dispositions. Under these agreements,
 
the Bank is required to compensate counterparties
 
for costs
incurred as a result of various contingencies
 
such as changes in laws and regulations
 
and litigation claims. The nature of certain
 
indemnification agreements
prevent the Bank from making a reasonable
 
estimate of the maximum potential amount
 
that the Bank would be required to pay such
 
counterparties.
The Bank also indemnifies directors, officers,
 
and other persons, to the extent permitted by
 
law, against certain claims that may be made against
 
them as a
result of their services to the Bank or, at the Bank’s request, to
 
another entity.
(g)
 
PLEDGED ASSETS AND COLLATERAL
In the ordinary course of business, securities
 
and other assets are pledged against liabilities
 
or contingent liabilities, including repurchase
 
agreements,
securitization liabilities, covered bonds,
 
obligations related to securities sold
 
short, and securities borrowing transactions.
 
Assets are also deposited for the
purposes of participation in clearing and payment
 
systems and depositories or to have access
 
to the facilities of central banks in foreign jurisdictions,
 
or as security
for contract settlements with derivative exchanges
 
or other derivative counterparties.
Details of assets pledged against liabilities
 
and collateral assets held or repledged are
 
shown in the following table:
Sources and Uses of Pledged Assets
 
and Collateral
(millions of Canadian dollars)
As at
 
October 31
October 31
2024
2023
Sources of pledged assets and collateral
Bank assets
 
 
Interest-bearing deposits with banks
$
6,161
$
6,166
Loans
205,337
130,829
Securities
1
240,425
218,981
Other assets
238
696
452,161
356,672
Third-party assets
1,2
Collateral received and available for sale or
 
repledging
364,178
355,147
Less: Collateral not repledged
(73,996)
(76,265)
290,182
278,882
742,343
635,554
Uses of pledged assets and collateral
3
Derivatives
15,964
14,696
Obligations related to securities sold
 
under repurchase agreements
1
186,777
162,284
Securities borrowing and lending
1
137,292
126,031
Obligations related to securities sold
 
short
1
34,336
39,436
Securitization
36,806
29,135
Covered bond
76,698
55,719
Clearing systems, payment systems, and depositories
10,540
11,863
Foreign governments and central banks
119,522
109,878
Other
124,408
86,512
Total
1
$
742,343
$
635,554
1
Balances as at October 31, 2023 have been restated, with no impact on the measurement of the related financial
 
instruments in the Bank’s Consolidated Financial Statements, to reflect
the categorization of certain pledged assets in the comparative period.
2
Includes collateral received from reverse repurchase agreements, securities lending,
 
margin loans, and other client activity.
3
Includes $63.7 billion of on-balance sheet assets that the Bank has pledged and that the counterparty can subsequently repledge
 
as at October 31, 2024 (October 31, 2023 –
$52.3 billion).
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 89
NOTE 27: RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party
 
has the ability to directly or indirectly
 
control the other party or exercise significant influence
 
over the other party in
making financial or operational decisions.
 
The Bank’s related parties include key management
 
personnel, their close family members and
 
their related entities,
subsidiaries, associates, joint ventures, and
 
post-employment benefit plans for the Bank’s employees.
TRANSACTIONS WITH KEY MANAGEMENT
 
PERSONNEL, THEIR CLOSE FAMILY MEMBERS,
 
AND THEIR RELATED ENTITIES
Key management personnel are those persons
 
having authority and responsibility
 
for planning, directing,
 
and controlling the activities of the Bank, directly
 
or
indirectly. The Bank considers certain of its officers and directors to be
 
key management personnel. The Bank
 
makes loans to its key management personnel,
 
their
close family members,
 
and their related entities on market
 
terms and conditions with the exception of
 
banking products and services for key
 
management
personnel, which are subject to approved policy
 
guidelines that govern all employees.
As at October 31, 2024, $14 million (October
 
31, 2023
 
– $105 million) of related party loans were
 
outstanding from key management personnel,
 
their close family
members,
 
and their related entities. This amount
 
also includes balances from certain retired
 
key management personnel.
COMPENSATION
The remuneration of key management personnel
 
was as follows:
Compensation
(millions of Canadian dollars)
For the years ended October 31
 
2024
2023
Short-term employee benefits
 
$
30
$
33
Post-employment benefits
 
1
1
Share-based payments
 
23
38
Total
 
$
54
$
72
In addition, the Bank offers deferred share and
 
other plans to non-employee directors, executives,
 
and certain other key employees. Refer
 
to Note 22 for further
details.
In the ordinary course of business, the Bank
 
also provides various banking services to associated
 
and other related corporations on
 
terms similar to those
offered to non-related parties.
TRANSACTIONS WITH SUBSIDIARIES,
 
SCHWAB, AND SYMCOR INC.
Transactions between the Bank and its subsidiaries
 
meet the definition of related party transactions.
 
If these transactions are eliminated on
 
consolidation, they are
not disclosed as related party transactions.
Transactions between the Bank, Schwab, and Symcor
 
Inc. (Symcor) also qualify as related party
 
transactions. There were no significant transactions
 
between
the Bank, Schwab, and Symcor during the
 
year ended October 31, 2024, other than as
 
described in the following sections and in
 
Note 12.
i) TRANSACTIONS WITH SCHWAB
A description of significant transactions
 
between the Bank and its affiliates with Schwab
 
is set forth below.
Insured Deposit Account Agreement
During the year ended October 31, 2024, Schwab
 
exercised its option to buy down the remaining
 
$0.7 billion (US$0.5 billion) of the US$5
 
billion FROA permitted
and paid $32 million (US$23 million) in
 
termination fees to the Bank in accordance
 
with the 2023 Schwab IDA Agreement. During
 
the year ended October 31,
2023, Schwab exercised its option to buy
 
down an initial $6.1 billion (US$4.5 billion)
 
of FROA and paid $305 million (US$227
 
million) in termination fees to the
Bank in accordance with the 2023 Schwab
 
IDA Agreement.
As at October 31, 2024, deposits under
 
the Schwab IDA Agreement were $117 billion (US$84 billion) (October
 
31, 2023 – $133 billion (US$96 billion)).
 
The
Bank paid fees, net of the termination fees
 
received from Schwab, of $908 million during
 
the year ended October 31, 2024 (October
 
31, 2023 – $932 million) to
Schwab related to sweep deposit accounts.
 
The amount paid by the Bank is based on
 
the average insured deposit balance of $121
 
billion for the year ended
October 31, 2024 (October 31, 2023 – $147
 
billion) and yields based on agreed upon
 
market benchmarks, less the actual interest
 
paid to clients of Schwab.
As at October 31, 2024, amounts receivable
 
from Schwab were $12 million (October
 
31, 2023 – $38 million). As at October 31,
 
2024, amounts payable to
Schwab were $42 million (October 31, 2023 –
 
$24 million).
ii) TRANSACTIONS WITH SYMCOR
The Bank has one-third ownership in Symcor, a Canadian
 
provider of business process outsourcing
 
services offering a diverse portfolio of integrated
 
solutions in
item processing, statement processing and
 
production, and cash management
 
services. The Bank accounts for Symcor’s
 
results using the equity method of
accounting. During the year ended October 31,
 
2024, the Bank paid $88 million (October
 
31, 2023 – $81 million)
 
for these services. As at October 31, 2024,
 
the
amount payable to Symcor was $6 million
 
(October 31, 2023 – $12
 
million).
The Bank and two other shareholder banks
 
have also provided a $100 million unsecured
 
loan facility to Symcor which was undrawn
 
as at October 31, 2024 and
October 31, 2023.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 90
NOTE 28: SEGMENTED INFORMATION
For management reporting purposes, the Bank
 
reports its results under four key
 
business segments: Canadian Personal and
 
Commercial Banking,
 
U.S. Retail,
Wealth Management and Insurance,
 
and Wholesale Banking. The Bank’s other activities
 
are grouped into the Corporate segment.
Canadian Personal and Commercial Banking
 
provides financial products and services
 
to personal, small business and commercial
 
customers, and includes TD
Auto Finance Canada. U.S. Retail is comprised
 
of personal and business banking in the
 
U.S., TD Auto Finance U.S., the U.S.
 
wealth business, as well as the
Bank’s equity investment in Schwab. Wealth Management
 
and Insurance includes the Canadian
 
wealth business which provides investment products
 
and services
to institutional and retail investors, and the insurance
 
business which provides property and casualty
 
insurance, as well as life and health insurance
 
products to
customers across Canada. Effective fiscal 2024,
 
certain asset management businesses
 
which were previously reported in the
 
U.S. Retail segment are now
reported in the Wealth Management and Insurance
 
segment. Comparative period information has
 
been adjusted to reflect the new alignment.
 
Wholesale Banking
provides a wide range of capital markets,
 
investment banking, and corporate banking
 
products and services, including underwriting
 
and distribution of new debt
and equity issues, providing advice on strategic
 
acquisitions and divestitures, and
 
meeting the daily trading, funding, and investment
 
needs of the Bank’s clients.
The Corporate segment includes the effects of
 
certain asset securitization programs,
 
treasury management, elimination of taxable
 
equivalent adjustments and
other management reclassifications, corporate
 
level tax items, and residual unallocated
 
revenue and expenses.
The results of each business segment reflect
 
revenue, expenses, and assets generated
 
by the businesses in that segment.
 
Due to the complexity of the Bank,
its management reporting model uses various
 
estimates, assumptions, allocations, and
 
risk-based methodologies for funds
 
transfer pricing, inter-segment
revenue, income tax rates, capital, indirect
 
expenses and cost transfers to
 
measure business segment results. The basis
 
of allocation and methodologies are
reviewed periodically to align with management’s
 
evaluation of the Bank’s business segments.
 
Transfer pricing of funds is generally applied at market rates.
Intersegment revenue is negotiated between
 
each business segment and approximates
 
the fair value of the services provided. Income
 
tax provision or recovery is
generally applied to each segment based on
 
a statutory tax rate and may be adjusted
 
for items and activities unique to each segment.
 
Amortization of intangibles
acquired as a result of business combinations
 
is included in the Corporate segment. Accordingly, net income for
 
business segments is presented before
amortization of these intangibles.
Non-interest income is earned by the Bank
 
primarily through investment and
 
securities services, credit fees, trading
 
income, service charges, card services,
 
and
insurance revenues. Revenues from
 
investment and securities services are earned
 
predominantly in the Wealth Management
 
and Insurance segment. Revenues
from credit fees are primarily earned
 
in the Wholesale Banking and Canadian Personal
 
and Commercial Banking segments.
 
Trading income is earned within
Wholesale Banking. Both service charges
 
and card services revenue are mainly earned
 
in the U.S. Retail and Canadian Personal
 
and Commercial Banking
segments. Insurance revenue is earned in
 
the Wealth Management and Insurance segment.
Net interest income within Wholesale
 
Banking is calculated on a taxable equivalent
 
basis (TEB), which means that the value
 
of non-taxable or tax-exempt
income, primarily dividends, is adjusted
 
to its equivalent before-tax value. Using TEB allows
 
the Bank to measure income from all
 
securities and loans consistently
and makes for a more meaningful comparison
 
of net interest income with similar institutions.
 
The TEB adjustment reflected in Wholesale
 
Banking is reversed in the
Corporate segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 91
The following table summarizes the segment
 
results for the years ended October 31, 2024
 
and October 31, 2023.
Results by Business Segment
1,2
(millions of Canadian dollars)
For the years ended
October 31, 2024
Canadian
Personal and
Wealth
Commercial
U.S.
Management
Wholesale
Banking
Retail
and Insurance
Banking
3
Corporate
3
Total
Net interest income (loss)
$
15,697
$
11,600
$
1,226
$
582
$
1,367
$
30,472
Non-interest income (loss)
4,093
2,113
12,309
6,704
1,532
26,751
Total revenue
19,790
13,713
13,535
7,286
2,899
57,223
Provision for (recovery of)
credit losses
1,755
1,532
–
317
649
4,253
Insurance service expenses
–
–
6,647
–
–
6,647
Non-interest expenses
 
8,010
12,615
4,285
5,576
5,007
35,493
Income (loss) before income taxes
and share of net income from
investment in Schwab
10,025
(434)
2,603
1,393
(2,757)
10,830
Provision for (recovery of)
income taxes
2,806
200
648
275
(1,238)
2,691
Share of net income from
 
investment in Schwab
4,5
–
709
–
–
(6)
703
Net income (loss)
$
7,219
$
75
$
1,955
$
1,118
$
(1,525)
$
8,842
October 31, 2023
Net interest income (loss)
$
14,192
$
12,029
$
1,064
$
1,538
$
1,121
$
29,944
Non-interest income (loss)
4,125
2,261
10,566
4,280
(486)
20,746
Total revenue
18,317
14,290
11,630
5,818
635
50,690
Provision for (recovery of)
credit losses
1,343
928
1
126
535
2,933
Insurance service expenses
–
–
5,014
–
–
5,014
Non-interest expenses
 
7,700
8,079
3,908
4,760
5,408
29,855
Income (loss) before income taxes
and share of net income
 
from investment in Schwab
9,274
5,283
2,707
932
(5,308)
12,888
Provision for (recovery of)
 
income taxes
2,586
658
706
162
(994)
3,118
Share of net income from
investment in Schwab
4,5
–
939
–
–
(75)
864
Net income (loss)
$
6,688
$
5,564
$
2,001
$
770
$
(4,389)
$
10,634
1
Certain amounts for the year ended October 31, 2023 have been restated for the adoption of IFRS 17. Refer to
 
Note 4 for details.
2
The retailer program partners’
 
share of revenues and credit losses is presented in the Corporate segment, with an offsetting
 
amount (representing the partners’
 
net share) recorded in
Non-interest expenses, resulting in no impact to Corporate reported Net income (loss).
 
The Net income (loss) included in the U.S. Retail segment includes only the portion of revenue and
credit losses attributable to the Bank under the agreements.
3
Net interest income within Wholesale Banking is calculated on a TEB. The TEB adjustment reflected in Wholesale
 
Banking is reversed in the Corporate segment.
4
The after-tax amounts for amortization of acquired intangibles, the Bank’s share of acquisition and integration
 
charges associated with Schwab’s acquisition of TD Ameritrade, the Bank’s
share of Schwab’s restructuring charges, and the Bank’s share of Schwab’s Federal
 
Deposit Insurance Corporation special assessment charge are recorded in the Corporate segment.
5
The Bank’s share of Schwab’s earnings is reported with a one-month lag. Refer to Note
 
12 for further details.
Total Assets by Business Segment
1
(millions of Canadian dollars)
Canadian
Personal and
Wealth
Commercial
Management
Wholesale
Banking
U.S. Retail
and Insurance
Banking
Corporate
Total
 
As at October 31, 2024
Total assets
$
584,468
$
606,572
$
23,217
$
686,795
$
160,699
$
2,061,751
As at October 31, 2023
Total assets
$
560,303
$
561,350
$
22,293
$
673,398
$
137,795
$
1,955,139
1
Certain balances as at October 31, 2023 have been restated for the adoption of IFRS 17 (refer to Note 4 for details)
 
and restated to reflect assets in the U.S. Retail Segment that were
reported in the Corporate Segment (with no impact on the measurement of the related total assets in the Bank’s
 
Consolidated Financial Statements).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 92
RESULTS BY GEOGRAPHY
For reporting of geographic results, segments
 
are grouped into Canada, United States,
 
and Other international. Transactions are primarily
 
recorded in the location
responsible for recording the revenue or assets.
 
This location frequently corresponds
 
with the location of the legal entity through which
 
the business is conducted
and the location of the customer.
Results by Geography
1
(millions of Canadian dollars)
For the years ended
As at
 
October 31
October 31
 
2024
2024
Total revenue
Total assets
Canada
$
31,453
$
1,146,243
United States
22,097
749,353
Other international
3,673
166,155
Total
$
57,223
$
2,061,751
2023
2023
Canada
$
29,159
$
1,043,638
United States
18,267
763,332
Other international
3,264
148,169
Total
$
50,690
$
1,955,139
1
Certain amounts have been restated for the adoption of IFRS 17 as at and for the year
 
ended October 31, 2023.
 
Refer to Note 4 for details.
NOTE 29: INTEREST INCOME AND EXPENSE
The following tables present interest income
 
and interest expense by basis of accounting
 
measurement.
Interest Income
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Measured at amortized cost
1
$
80,581
$
69,088
 
Measured at FVOCI – Debt instruments
1
3,743
3,315
84,324
72,403
Measured or designated at FVTPL
8,742
7,980
Measured at FVOCI – Equity instruments
323
291
Total
$
93,389
$
80,674
1
 
Interest income is calculated using EIRM.
Interest Expense
(millions of Canadian dollars)
For the years ended October 31
2024
2023
Measured at amortized cost
1,2
$
50,382
$
41,059
 
Measured or designated at FVTPL
12,535
9,671
Total
$
62,917
$
50,730
1
 
Interest expense is calculated using EIRM.
2
 
Includes interest expense on lease liabilities for the year ended October 31, 2024 of $151 million (October 31, 202
 
3
 
– $135 million).
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 93
NOTE 30: CREDIT RISK
Concentration of credit risk exists where
 
a number of borrowers or counterparties are
 
engaged in similar activities, are located
 
in the same geographic area or
have comparable economic characteristics.
 
Their ability to meet contractual obligations
 
may be similarly affected by changing economic, political
 
or other
conditions. The Bank’s portfolio could be sensitive
 
to changing conditions in particular geographic
 
regions.
Concentration of Credit Risk
(millions of Canadian dollars,
As at
except as noted)
Loans and customers’ liability
Derivative financial
under acceptances
1,2
Credit Instruments
3,4
instruments
5,6
October 31
October 31
October 31
October 31
October 31
October 31
2024
2023
2024
2023
2024
2023
Canada
66
%
66
%
32
%
30
%
28
%
26
%
United States
33
33
64
65
32
33
United Kingdom
–
–
1
2
9
9
Europe – other
–
–
2
2
21
21
Other international
1
1
1
1
10
11
Total
100
%
100
%
100
%
100
%
100
%
100
%
$
949,779
$
913,937
 
$
366,706
$
339,728
 
$
69,970
$
82,761
 
1
 
Of the total loans and customers’ liability under acceptances, the only industry segment which equalled or exceeded
 
5% of the total concentration as at October 31, 2024
 
was real estate
10% (October 31, 2023 – 10%).
2
 
Includes loans that are measured at FVOCI.
3
 
As at October 31, 2024, the Bank had commitments and contingent liability contracts in the amount of $367 billion
 
(October 31, 2023 – $340 billion). Included are commitments to extend
credit totalling $322 billion (October 31, 2023 – $300 billion), of which the credit risk is dispersed as detailed in the
 
table above.
 
4
 
Of the commitments to extend credit, industry segments which equalled or exceeded 5% of the total concentration
 
were as follows as at October 31, 2024: financial institutions 19%
(October 31, 2023 – 17%); power and utilities 11% (October
 
31, 2023 – 10%); government, public sector entities and education 7% (October 31, 2023 – 8%); automotive
 
7%
(October 31, 2023
 
– 8%); professional and other services 8% (October 31, 2023 – 7%); sundry manufacturing and wholesale
 
7% (October 31, 2023 – 7%); non-residential real estate 6%
(October 31, 2023
 
– 6%).
5
 
As at October 31, 2024, the current replacement cost of derivative financial instruments, excluding the impact of
 
master netting agreements and collateral, amounted to $70 billion
(October 31, 2023 – $83 billion). Based on the location of the ultimate counterparty,
 
the credit risk was allocated as detailed in the table above. The table excludes the fair
 
value of
exchange traded derivatives.
 
6
 
The largest concentration by counterparty type was with financial institutions (including non-banking financial institutions),
 
which accounted for 66% of the total as at October 31, 2024
(October 31, 2023 – 60%). The second largest concentration was with governments, which accounted for 24% of
 
the total as at October 31, 2024 (October 31, 2023 – 32%). No other
industry segment exceeded 5% of the total.
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 94
The following table presents the maximum
 
exposure to credit risk of financial instruments,
 
before taking account of any collateral
 
held or other credit
enhancements.
Gross Maximum Credit Risk Exposure
(millions of Canadian dollars)
As at
 
October 31
October 31
2024
2023
Cash and due from banks
$
6,437
$
6,721
Interest-bearing deposits with banks
169,930
98,348
Securities
1
Financial assets designated at fair value through
 
profit or loss
Government and government-insured
 
securities
3,056
2,720
Other debt securities
3,361
3,098
Trading
Government and government-insured
 
securities
46,575
51,493
Other debt securities
22,482
20,685
Retained interest
1
3
Non-trading securities at fair value through
 
profit or loss
 
Government and government-insured
 
securities
271
288
Other debt securities
1,376
2,683
Securities at fair value through other
 
comprehensive income
 
Government and government-insured
 
securities
78,422
52,927
Other debt securities
10,830
13,004
Debt securities at amortized cost
Government and government-insured
 
securities
205,098
230,304
Other debt securities
66,517
77,712
Securities purchased under reverse purchase
 
agreements
208,217
204,333
Derivatives
2
78,061
87,382
Loans
Residential mortgages
331,284
319,938
Consumer instalment and other personal
226,333
215,745
Credit card
38,542
36,726
Business and government
353,390
323,538
Trading loans
23,518
17,261
Non-trading loans at fair value through profit
 
or loss
 
3,057
3,495
Loans at fair value through other comprehensive
 
income
 
230
421
Customers’ liability under acceptances
–
17,569
Amounts receivable from brokers, dealers,
 
and clients
22,115
30,416
Other assets
12,761
12,504
Total assets
1,911,864
1,829,314
Credit instruments
3
366,706
339,728
Unconditionally cancellable commitments
 
to extend credit
450,574
430,163
Total credit exposure
$
2,729,144
$
2,599,205
1
 
Excludes equity securities.
2
 
The carrying amount of the derivative assets represents the maximum credit risk exposure related to derivative contracts.
3
The balance represents the maximum amount of additional funds that the Bank could be obligated to extend should the contracts
 
be fully utilized. The actual maximum exposure may
differ
 
from the amount reported above. Refer to Note 26 for further details.
NOTE 31: REGULATORY CAPITAL
The Bank manages its capital in accordance
 
with guidelines established by OSFI. The regulatory
 
capital guidelines measure capital in relation
 
to credit, market,
and operational risks. The Bank has various
 
capital policies, procedures,
 
and controls which it utilizes to achieve its
 
goals and objectives. The Bank is designated
as a domestic systemically important bank
 
(D-SIB) and a global systemically important
 
bank (G-SIB).
The Bank’s capital management objectives are:
●
 
To maintain an adequate level of capital based on the Bank’s risk profile
 
as determined by:
–
 
the Bank’s Risk Appetite Statement;
–
 
capital requirements defined by relevant
 
regulatory authorities; and
–
 
the Bank’s internal assessment of capital requirements,
 
including stress test analysis, consistent
 
with the Bank’s risk profile and risk tolerance levels.
●
 
Manage capital levels, in order to:
–
 
insulate the Bank from unexpected loss events;
–
 
maintain stakeholder confidence in the Bank;
–
 
establish that the Bank has adequate capital
 
under a severe but plausible stress event;
 
and
 
–
 
support and facilitate business growth and/or
 
strategic deployment consistent with the
 
Bank’s strategy and risk appetite.
●
 
To have the most economic weighted-average cost of capital achievable, while
 
preserving the appropriate mix of
 
capital elements to meet targeted
capitalization levels.
●
 
To support strong external debt ratings, in order to manage the Bank’s overall cost
 
of funds and to maintain access to required
 
funding (in the event of
unexpected loss or business growth).
●
 
To maintain a robust capital planning process and framework to support capital
 
funding decisions such as issuances, redemptions
 
and distributions which in
turn support the Bank’s capital adequacy.
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 95
These objectives are applied in a manner
 
consistent with the Bank’s overall objective of
 
providing a satisfactory return on
 
shareholders’ equity.
Basel III Capital Framework
Capital requirements of the Basel Committee
 
on Banking Supervision are commonly referred
 
to as Basel III. Under Basel III,
 
Total Capital consists of three
components, namely
 
Common Equity Tier 1 (CET1),
 
Additional Tier 1, and
 
Tier 2 Capital. Risk sensitive regulatory capital
 
ratios are calculated by dividing CET1,
Tier 1, and Total Capital by risk-weighted
 
assets (RWA), inclusive of any minimum
 
requirements outlined under the regulatory
 
floor. In 2015, Basel III also
implemented a non-risk sensitive leverage
 
ratio to act as a supplementary
 
measure to the risk-sensitive capital requirements.
 
The objective of the leverage ratio is
to constrain the build-up of excess leverage in the banking
 
sector. The leverage ratio is calculated
 
by dividing Tier 1 Capital by leverage
 
exposure which is
primarily comprised of on-balance sheet
 
assets with adjustments made to derivative
 
and securities financing transaction exposures,
 
and credit equivalent amounts
of off-balance sheet exposures.
Capital Position and Capital Ratios
The Basel framework allows qualifying banks
 
to determine capital levels consistent with
 
the way they measure, manage, and mitigate
 
risks. It specifies
methodologies for the measurement of credit,
 
trading market, and operational risks.
 
The Bank uses the Internal Ratings-Based approaches
 
to credit risk for all
material portfolios.
For accounting purposes, IFRS is followed
 
for consolidation of subsidiaries and joint ventures.
 
For regulatory capital purposes,
 
all subsidiaries of the Bank are
consolidated except for insurance subsidiaries
 
which are deconsolidated and follow prescribed
 
treatment per OSFI’s CAR guidelines. Insurance
 
subsidiaries are
subject to their own capital adequacy reporting,
 
such as OSFI’s Minimum Capital
 
Test for General Insurance and Life Insurance Capital
 
Adequacy Test for Life and
Health.
Some of the Bank’s subsidiaries are individually
 
regulated by either OSFI or other regulators.
 
Many of these entities have minimum
 
capital requirements which
may limit the Bank’s ability to extract capital
 
or funds for other uses.
The impact to CET1 capital upon adoption
 
of IFRS 17 is immaterial to the Bank.
Canadian banks designated as D-SIBs are required
 
to comply with OSFI’s minimum targets for risk-based
 
capital and leverage ratios. The minimum
 
targets
include a D-SIB surcharge and Domestic Stability
 
Buffer (DSB) for CET1, Tier 1, Total Capital and risk-based Total Loss Absorbing Capacity (TLAC) ratios. The
DSB level was increased to 3.5% as
 
of November 1, 2023, which sets these
 
minimum target ratios at 11.5%, 13.0%, 15.0% and 25.0%, respectively. The OSFI
target includes the greater of the D-SIB or
 
G-SIB surcharge, both of which are
 
currently 1% for the Bank. On February 1, 2023,
 
OSFI announced revisions to the
Leverage Requirements Guideline to introduce
 
a requirement for D-SIBs to hold a leverage
 
ratio buffer of 0.50% in addition to the existing
 
minimum requirement.
This sets the minimum targets for leverage
 
and TLAC leverage ratios at 3.5% and
 
7.25%, respectively.
The Bank complied with all published regulatory
 
minimum risk-based capital and leverage ratio
 
requirements set by OSFI during the
 
year ended October 31, 2024.
The following table summarizes the Bank’s regulatory
 
capital position as at October 31, 2024 and
 
October 31, 2023.
Regulatory Capital Position
(millions of Canadian dollars, except
 
as noted)
As at
October 31
October 31
 
2024
2023
Capital
Common Equity Tier 1 Capital
$
82,714
$
82,317
Tier 1 Capital
 
93,248
 
92,752
Total Capital
 
105,745
 
103,648
Risk-weighted assets used in the calculation
 
of capital ratios
630,900
571,161
Capital and leverage ratios
Common Equity Tier 1 Capital ratio
 
13.1
%
14.4
%
Tier 1 Capital ratio
14.8
 
16.2
 
Total Capital ratio
16.8
 
18.1
 
Leverage ratio
4.2
4.4
TLAC Ratio
28.7
32.7
TLAC Leverage Ratio
8.1
8.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 96
NOTE 32: INFORMATION ON SUBSIDIARIES
The following is a list of the directly or indirectly
 
held significant subsidiaries.
SIGNIFICANT SUBSIDIARIES
1
(millions of Canadian dollars)
October 31, 2024
Address of Head
Carrying value of shares
North America
or Principal Office
2
owned by the Bank
3
Meloche Monnex Inc.
Montreal, Québec
$
2,753
Security National Insurance Company
Montreal, Québec
Primmum Insurance Company
Toronto, Ontario
TD Direct Insurance Inc.
Toronto, Ontario
TD General Insurance Company
Toronto, Ontario
TD Home and Auto Insurance Company
Toronto, Ontario
TD Wealth Holdings Canada Limited
Toronto, Ontario
10,367
TD Asset Management Inc.
Toronto, Ontario
GMI Servicing Inc.
Winnipeg, Manitoba
TD Waterhouse Private Investment Counsel Inc.
Toronto, Ontario
TD Waterhouse Canada Inc.
Toronto, Ontario
TD Auto Finance (Canada) Inc.
Toronto, Ontario
4,287
TD Group US Holdings LLC
Wilmington, Delaware
81,374
Toronto Dominion Holdings (U.S.A.), Inc.
New York, New York
Cowen Inc.
New York, New York
Cowen Structured Holdings LLC
New York, New York
Cowen Structured Holdings Inc.
New York, New York
ATM Execution LLC
New York, New York
RCG LV Pearl, LLC
New York, New York
Cowen Financial Products LLC
New York, New York
Cowen Holdings, Inc.
New York, New York
Cowen and Company, LLC
New York, New York
Cowen CV Acquisition LLC
New York, New York
Cowen Execution Holdco LLC
New York, New York
Westminster Research Associates LLC
New York, New York
RCG Insurance Company
New York, New York
TD Prime Services LLC
New York, New York
TD Securities Automated Trading LLC
Chicago, Illinois
TD Securities (USA) LLC
New York, New York
Toronto Dominion (Texas)
 
LLC
New York, New York
Toronto Dominion (New York) LLC
New York, New York
Toronto Dominion Investments, Inc.
New York, New York
TD Bank US Holding Company
Cherry Hill, New Jersey
Epoch Investment Partners, Inc.
New York, New York
TD Bank USA, National Association
Cherry Hill, New Jersey
TD Bank, National Association
Cherry Hill, New Jersey
TD Equipment Finance, Inc.
Mt. Laurel, New Jersey
TD Private Client Wealth LLC
New York, New York
TD Public Finance LLC
New York, New York
TD Wealth Management Services Inc.
Mt. Laurel, New Jersey
TD Investment Services Inc.
Toronto, Ontario
56
TD Life Insurance Company
Toronto, Ontario
163
TD Mortgage Corporation
Toronto, Ontario
13,231
TD Pacific Mortgage Corporation
Vancouver, British Columbia
The Canada Trust Company
Toronto, Ontario
TD Securities Inc.
Toronto, Ontario
3,213
TD Vermillion Holdings Limited
Toronto, Ontario
23,714
TD Financial International Ltd.
Hamilton, Bermuda
TD Reinsurance (Barbados) Inc.
St. James, Barbados
International
Cowen Malta Holdings Limited
Birkirkara, Malta
27
Cowen Insurance Company Ltd
Birkirkara, Malta
Ramius Enterprise Luxembourg Holdco S.à.r.l.
Luxembourg, Luxembourg
247
Cowen Reinsurance S.A.
Luxembourg, Luxembourg
TD Ireland Unlimited Company
Dublin, Ireland
2,805
TD Global Finance Unlimited Company
Dublin, Ireland
TD Securities (Japan) Co. Ltd.
Tokyo, Japan
13
Toronto Dominion Australia Limited
Sydney, Australia
104
TD Bank Europe Limited
London, England
1,407
Toronto Dominion International Pte. Ltd.
Singapore, Singapore
6,812
Cowen Execution Services Limited
London, England
Toronto Dominion (South East Asia) Limited
Singapore, Singapore
1,643
1
 
Unless otherwise noted, The Toronto-Dominion Bank, either directly or through its subsidiaries, owns 100% of the entity and/or
 
100% of any issued and outstanding voting
securities and
non-voting securities of the entities listed.
2
 
Each subsidiary is incorporated or organized in the country in which its head or principal office is located.
3
 
Carrying amounts are prepared for purposes of meeting the disclosure requirements of Section 308 (3)(a)(ii) of the
Bank Act (Canada)
. Intercompany transactions may be included herein
which are eliminated for consolidated financial reporting purposes.
TD BANK GROUP • 2024 ANNUAL REPORT • FINANCIAL STATEMENTS AND NOTES
Page 97
SUBSIDIARIES WITH RESTRICTIONS
 
TO TRANSFER FUNDS
Certain of the Bank’s subsidiaries have regulatory requirements
 
to fulfil, in accordance with applicable law, in order to transfer
 
funds, including paying dividends to,
repaying loans to, or redeeming subordinated
 
debentures issued to, the Bank. These
 
customary requirements include, but
 
are not limited to:
●
 
Local regulatory capital and/or surplus adequacy
 
requirements;
●
 
Basel requirements under Pillar 1 and Pillar
 
2;
●
 
Local regulatory approval requirements; and
●
 
Local corporate and/or securities laws.
Pursuant to the terms of the orders that
 
TD Bank USA, N.A. (TDBUSA) and TD Bank
 
N.A. (TDBNA) entered into with the OCC,
 
the boards of directors of TDBUSA
and TDBNA will be required to certify to
 
the OCC that the Bank has allocated appropriate
 
resources and staffing to the remediation required
 
by the orders before
declaring or paying dividends, engaging in
 
share repurchases, or making any other
 
capital distribution. In addition, pursuant to the
 
terms of the cease and desist
order that the Bank, TDGUS and TDBUSH
 
entered into with the Federal Reserve,
 
the boards of directors of TDGUS and
 
TDBUSH will be required to certify to
 
the
Federal Reserve that appropriate resources
 
and staffing have been allocated to remediation,
 
as required by the order, before declaring or paying any dividends,
engaging in share repurchases, or making any
 
other capital distributions. If TDBUSA,
 
TDBNA, TDGUS or TDBUSH are unable
 
to so certify, then there would be
restrictions on (i) the payment of dividends
 
or making of any other capital distributions to
 
the Bank, or (ii) the repurchase of shares
 
of these entities from the Bank
.
As at October 31, 2024, the net assets of
 
subsidiaries subject to regulatory or CAR
 
was approximately $109 billion (October 31,
 
2023 – $103 billion), before
intercompany eliminations.
In addition to regulatory requirements outlined
 
above, the Bank may be subject to significant
 
restrictions on its ability to use the assets
 
or settle the liabilities of
members of its group. Key contractual restrictions
 
may arise from the provision of collateral to
 
third parties in the normal course of business,
 
for example through
secured financing transactions; assets
 
securitized which are not subsequently available
 
for transfer by the Bank; and assets transferred
 
into other consolidated
and unconsolidated
 
structured entities. The impact of these restrictions
 
has been disclosed in Notes 9 and 26.
 
 
 
 
 
 
 
RETURN ON ASSETS, DIVIDEND PAYOUTS, AND EQUITY TO ASSETS RATIOS
1,2
For the three months ended
For the year ended
October 31
July 31
April 30
January 31
October 31
October 31
October 31
2024
2024
2024
2024
2024
2023
2022
Return on Assets - reported
3,4
0.67
%
(0.05)
%
0.50
%
0.56
%
0.42
%
0.52
%
0.95
%
Return on Assets - adjusted
4,5
0.59
0.72
0.76
0.73
0.70
0.75
0.84
Dividend Payout Ratio - reported
6
51.8
n/m
7
75.8
65.8
86.3
69.5
37.5
Dividend Payout Ratio - adjusted
8
59.2
49.8
50.0
50.7
52.2
48.5
42.5
Equity to Asset Ratio
4,9
5.5
5.7
5.8
5.7
5.7
5.9
5.6
1
 
Calculated pursuant to the U.S. Securities and Exchange Commission Industry Guide 3.
2
 
The Bank prepares its consolidated financial statements in accordance with International Financial Reporting Standards
 
(IFRS), the current generally accepted accounting principles
(GAAP), and refers to results prepared in accordance with IFRS as the “reported” results. The Bank
 
also utilizes non-GAAP financial measures such as “adjusted” results (i.e. reported
results excluding “items of note”) and non-GAAP ratios to assess each of its businesses and measure overall Bank
 
performance. The Bank believes that non-GAAP financial measures
and non-GAAP ratios provide the reader with a better understanding of how management views the Bank’s
 
performance. Non-GAAP financial measures and ratios used in this
presentation are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other
 
issuers. Refer to the “Significant Events” or “Financial Results
Overview” section in the Bank’s 2024 MD&A (available at www.td.com/investor
 
and www.sedar.com),
 
which is incorporated by reference, for further explanation, reported basis results, a
list of the items of note, and a reconciliation of adjusted to reported results.
3
 
Calculated as reported net income available to common shareholders divided by average total assets.
4
 
For the year ended October 31, 2023, certain amounts in the calculation of these ratios have been restated for the
 
adoption of IFRS 17,
Insurance Contracts (IFRS 17).
5
Calculated as adjusted net income available to common shareholders divided by average total assets.
6
 
Calculated as dividends declared per common share divided by reported basic earnings per share.
7
 
Not meaningful.
8
 
Calculated as dividends declared per common share divided by adjusted basic earnings per share.
9
 
Calculated as average total equity divided by average total assets.
Exhibit 99.6
Consent of Independent
 
Registered Public
 
Accounting Firm
We consent to the reference
 
to our Firm under
 
the caption “Experts”, which appears
 
in the Annual Information
 
Form in Exhibit 99.1, and to the use in
 
this Annual
Report on Form 40-F/A of our reports dated
 
December 4, 2024, with respect to the
 
consolidated balance sheets of The Toronto-Dominion Bank (the “Bank”)
 
as
of October 31, 2024 and 2023, and the
 
consolidated statements of income, comprehensive
 
income, changes in equity and cash flows
 
for the two-year period
ended October 31,
 
2024, and the
 
effectiveness of internal
 
control over
 
financial reporting
 
of the Bank as
 
of October 31, 2024.
We also
 
consent to
 
the incorporation
 
by reference
 
of our
 
reports dated
 
December 4,
 
2024 in
 
the following
 
Registration Statements of the Bank:
1)
Registration Statement
 
(Form F-3 No.
 
333-83232),
2)
Registration Statement
 
(Form F-3 No.
 
333-262557),
3)
Registration Statement
 
(Form S-8 No.
 
333-101026),
4)
Registration Statement
 
(Form S-8 No.
 
333-116159),
5)
Registration Statement
 
(Form S-8 No.
 
333-120815),
6)
Registration Statement
 
(Form S-8 No.
 
333-142253),
7)
Registration Statement
 
(Form S-8 No. 333-150000),
8)
Registration Statement
 
(Form S-8 No.
 
333-167234),
9)
Registration Statement
 
(Form S-8 No.
 
333-169721),
10)
Registration Statement
 
(Form S-8 No. 333-263318),
 
and
11)
Registration Statement
 
(Form S-8, No.
 
333-275850).
/s/Ernst & Young LLP
Chartered Professional
 
Accountants
 
Licensed Public Accountants
Toronto, Canada
December 9,
 
2024
 
Exhibit 99.7
Certification Pursuant to Section 302 of the
 
U.S. Sarbanes-Oxley Act of 2002
I, Bharat Masrani, certify that:
1.
 
I have reviewed this annual report on
 
Form 40-F/A of The Toronto-Dominion Bank;
2.
 
Based on my knowledge, this report does not
 
contain any untrue statement of a material
 
fact or omit to state a material fact necessary
 
to make the
statements made, in light of the circumstances
 
under which such statements were
 
made, not misleading with respect to
 
the period covered
 
by this report;
3.
 
Based on my knowledge, the financial statements,
 
and other financial information included in
 
this report, fairly present in all material respects
 
the financial
condition, results of operations and cash flows
 
of the issuer as of, and for, the periods presented in
 
this report;
4.
 
The issuer’s other certifying officer and
 
I are responsible for establishing and maintaining
 
disclosure controls and procedures (as defined
 
in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal
 
control over financial reporting (as defined
 
in Exchange Act Rules 13a-15(f) and 15d-15(f))
 
for the issuer and
have:
a)
 
Designed such disclosure controls and procedures,
 
or caused such disclosure controls and
 
procedures to be designed under our supervision,
 
to ensure
that material information relating to the issuer, including
 
its consolidated subsidiaries, is made
 
known to us by others within those entities,
 
particularly
during the period in which this report is being
 
prepared;
b)
 
Designed such internal control over financial
 
reporting, or caused such internal control
 
over financial reporting to be designed under
 
our supervision, to
provide reasonable assurance regarding the reliability
 
of financial reporting and the preparation
 
of financial statements for external purposes
 
in
accordance with generally accepted accounting
 
principles;
c)
 
Evaluated the effectiveness of the issuer’s disclosure
 
controls and procedures and presented in
 
this report our conclusions about the effectiveness
 
of
the disclosure controls and procedures, as of
 
the end of the period covered by this report
 
based on such evaluation; and
d)
 
Disclosed in this report any change in
 
the issuer’s internal control over financial
 
reporting that occurred during the period covered
 
by the annual report
that has materially affected, or is reasonably likely
 
to materially affect, the issuer’s internal control
 
over financial reporting; and
5.
 
The issuer’s other certifying officer and
 
I have disclosed, based on our most recent
 
evaluation of internal control over
 
financial reporting, to the issuer’s
auditors and the audit committee of the issuer’s
 
board of directors (or persons performing
 
the equivalent functions):
a)
 
All significant deficiencies and material
 
weaknesses in the design or operation of
 
internal control over financial reporting
 
which are reasonably likely to
adversely affect the issuer’s ability to record,
 
process, summarize and report financial
 
information; and
b)
 
Any fraud, whether or not material, that involves
 
management or other employees who have
 
a significant role in the issuer’s
 
internal control over
financial reporting.
Date:
December 9, 2024
/s/ Bharat Masrani
Bharat Masrani
 
Group President and Chief Executive Officer
 
Certification Pursuant to Section 302 of the
 
U.S. Sarbanes-Oxley Act of 2002
I, Kelvin Tran, certify that:
1.
 
I have reviewed this annual report on
 
Form 40-F/A of The Toronto-Dominion Bank;
2.
 
Based on my knowledge, this report does not
 
contain any untrue statement of a material
 
fact or omit to state a material fact necessary
 
to make the
statements made, in light of the circumstances
 
under which such statements were
 
made, not misleading with respect
 
to the period covered by this report;
3.
 
Based on my knowledge, the financial statements,
 
and other financial information included in
 
this report, fairly present in all material respects
 
the financial
condition, results of operations and cash flows
 
of the issuer as of, and for, the periods presented in
 
this report;
4.
 
The issuer’s other certifying officer and
 
I are responsible for establishing and maintaining
 
disclosure controls and procedures (as defined
 
in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal
 
control over financial reporting (as defined
 
in Exchange Act Rules 13a-15(f) and 15d-15(f))
 
for the issuer and
have:
a)
 
Designed such disclosure controls and procedures,
 
or caused such disclosure controls and
 
procedures to be designed under our supervision,
 
to ensure
that material information relating to the issuer, including
 
its consolidated subsidiaries, is made
 
known to us by others within those entities,
 
particularly
during the period in which this report is being
 
prepared;
b)
 
Designed such internal control over financial
 
reporting, or caused such internal control
 
over financial reporting to be designed under
 
our supervision, to
provide reasonable assurance regarding the reliability
 
of financial reporting and the preparation
 
of financial statements for external purposes
 
in
accordance with generally accepted accounting
 
principles;
c)
 
Evaluated the effectiveness of the issuer’s disclosure
 
controls and procedures and presented in
 
this report our conclusions about the effectiveness
 
of
the disclosure controls and procedures, as of
 
the end of the period covered by this report
 
based on such evaluation; and
d)
 
Disclosed in this report any change in
 
the issuer’s internal control over financial
 
reporting that occurred during the period covered
 
by the annual report
that has materially affected, or is reasonably likely
 
to materially affect, the issuer’s internal control
 
over financial reporting; and
5.
 
The issuer’s other certifying officer and
 
I have disclosed, based on our most recent
 
evaluation of internal control over financial
 
reporting, to the issuer’s
auditors and the audit committee of the issuer’s
 
board of directors (or persons performing
 
the equivalent functions):
a)
 
All significant deficiencies and material
 
weaknesses in the design or operation of
 
internal control over financial reporting
 
which are reasonably likely to
adversely affect the issuer’s ability to record,
 
process, summarize and report financial
 
information; and
b)
 
Any fraud, whether or not material, that involves
 
management or other employees who have
 
a significant role in the issuer’s
 
internal control over
financial reporting.
Date:
December 9, 2024
/s/ Kelvin Tran
Kelvin Tran
Group Head and Chief Financial Officer
 
 
 
Exhibit 99.8
Certification Pursuant to 18 U.S.C. Section
 
1350 as Adopted Pursuant to
 
Section 906 of the U.S. Sarbanes-Oxley
 
Act of 2002
In connection with the Annual Report of The
 
Toronto-Dominion Bank (the "Bank") on Form 40-F/A for the year ended October
 
31, 2024 as filed with the Securities
and Exchange Commission on the date hereof
 
(the "Report"), I, Bharat Masrani, Group
 
President and Chief Executive Officer of the Bank,
 
certify, pursuant to 18
U.S.C. § 1350, as adopted pursuant to Section
 
906 of the Sarbanes-Oxley Act of 2002
 
that:
1.
 
The Report fully complies with the requirements
 
of Section 13(a) or 15(d) of the Securities
 
Exchange Act of 1934; and
 
2.
 
The information contained in the Report
 
fairly presents, in all material respects,
 
the financial condition and results of operations
 
of the Bank.
Date:
December 9, 2024
/s/ Bharat Masrani
Bharat Masrani
 
Group President and Chief Executive Officer
 
 
 
Certification Pursuant to 18 U.S.C. Section
 
1350 as Adopted Pursuant to
 
Section 906 of the U.S. Sarbanes-Oxley
 
Act of 2002
In connection with the Annual Report of The
 
Toronto-Dominion Bank (the "Bank") on Form 40-F/A for the year ended October
 
31, 2024 as filed with the Securities
and Exchange Commission on the date hereof
 
(the "Report"), I, Kelvin Tran, Group Head and
 
Chief Financial Officer of the Bank, certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to Section 906
 
of the Sarbanes-Oxley Act of
 
2002 that:
1.
 
The Report fully complies with the requirements
 
of Section 13(a) or 15(d) of the Securities
 
Exchange Act of 1934; and
 
2.
 
The information contained in the Report
 
fairly presents, in all material respects,
 
the financial condition and results of operations
 
of the Bank.
Date:
December 9, 2024
/s/Kelvin Tran
Kelvin Tran
Group Head and Chief Financial Officer