Personal and Commercial Banking

Overall business strategy

• Deliver superior service and a premium brand-based customer experience.
• Leverage premium customer experience to achieve superior financial results over the long-term through:
  • Better customer retention.
  • Better customer attraction.
  • Increased share of business from current customers.
• Grow under-penetrated businesses at above average growth rates:
  • Commercial banking.
  • Small business banking.
  • Insurance.
• Maintain a core competency in expense management.
• Disciplined execution of strategy and operational excellence.

Challenges in 2003

• Contraction in net interest margins due to a combination of rate environment, competitive pricing and customer preferences.
• Modest decline in personal market share.
• Lower branch revenue from sales of wealth management products due to instability in equity markets earlier in the year.

2003 Highlights

• Earnings growth of 15% driven by a three percentage point spread between revenue and expense growth.
• Completed a series of process re-engineering initiatives to permanently lower our cost base in order to meet earnings targets despite declining net interest margins.
• Reduced personal lending credit losses and delinquency rates through improvements in credit adjudication and collection processes.
• Achieved a new high in customer satisfaction, as measured by our Retail Customer Satisfaction Index (CSI).
• Acquired 57 branches and 144,000 customers from Laurentian Bank on October 31, 2003 adding approximately $2 billion to both lending and deposit volume.

Business outlook and focus for 2004

Revenue growth is expected to continue to be challenging given the competitive environment. Accordingly, our focus for the coming year will be to:

• Improve customer attraction rates and increase share of business with our current customers:
  • Increase focus on growing personal chequing accounts.
  • Improve cross-sell rates by building on early successes with a recently introduced sales-prompt system.
  • Grow commercial and small business deposit revenue at above average rates.
  • Grow insurance revenue at double-digit growth rates.
• Continue to keep expense growth below revenue growth:
  • Continue to invest in process re-engineering to reduce errors and lower costs.
  • Manage everyday costs by eliminating duplication and redundancy.
  • Achieve expense synergies by using our extensive branch merger experience to integrate the Laurentian branches into the TD Canada Trust network.
• Continue to build an enhanced retail risk management platform with a staged implementation over the next two years to further lower credit losses and improve pricing for risk.
• Consider further strategic acquisitions and investments that will grow our franchise.