Personal and Commercial Banking

Financial results of key product segments within Personal and Commercial Banking

Real estate secured lending

• Offers mortgages and home equity secured lines of credit through branches and other sales channels.
• Highlights for 2003 include:
  • Growth of average real estate lending volumes of $6 billion, a 7% increase over 2002 average volumes. Improved new lending origination volume by 18% over 2002 and improved the mortgage retention rate by four percentage points.
  • Introduced industry leading automated property valuation on both mortgages and home equity lines of credit designed to both save the customer money and enhance their real estate credit experience.
  • Launched the new five year Best Rate Mortgage – a fixed price “no haggle” product guaranteeing a comfortable customer experience at market competitive rates.
  • Strong migration from mortgages to home equity lines of credit as customers responded to this superior product and service offering.
• Fiscal 2003 demonstrated continued buoyancy in real estate in both home purchase and refinance activity.
• The industry will continue to be extremely competitive due to historical low interest rates and the emergence of non-traditional and third party mortgage providers. Competitive pricing reduced net interest margins throughout 2003 and further compression is expected in 2004.
• Objectives for 2004 are to grow volume and maximize revenue by enhancing the customer’s real estate financing experience through improvements in the application and legal process and by continuing to offer customers a full range of options between traditional mortgage products and home equity lines of credit.

Personal deposits

• Offers a complete range of Canadian and U.S. dollar chequing, savings and term investment vehicles designed to promote primary banking relationships, retirement savings and retirement income options.
• During 2003, the industry experienced strong growth in personal deposits at a rate of over 6% with growth primarily in more liquid investment vehicles. Core deposit margins narrowed due to the impact of the low rate environment and customer preference, which weighted volume growth towards the Guaranteed Investment Account. Term deposit margins narrowed due to competitive pricing in short-term products. Further compression in term deposit margins may occur in 2004 however core deposit margins are expected to be stable.
• Experienced a modest market share decline in short-term deposits in a competitive rate environment, but kept the number one position in personal deposit market share with growth in both non-term and term volumes of 7% and 4%, respectively.
• Continued moderate growth in term deposit volumes in 2004 is expected. Non-term volumes are projected to grow at a slower rate. An increased emphasis will be placed on growing personal chequing acccounts to compensate for the projected slow down in volume growth.

Consumer lending

• Offers Lines of Credit, Loans, Overdraft Protection products and a wide selection of Visa credit cards including Classic, Premium and Rewards cards such as the GM Visa card and the TD Gold Travel Visa card.
• Revenue from credit cards grew by 9% on 7% growth in both outstandings and purchase volumes while revenues from other products were up 3% on 1% volume growth.
• Credit quality improved due to better adjudication and collection processes. Provision for credit losses as a percent of consumer lending volume improved to 1.98% from 2.14% last year.
• The tighter adjudication standards contributed to the relatively low volume growth in unsecured lending which in turn had a negative impact on market share.
• Consumers responded positively to the TD Gold Travel “travel on your terms” rewards feature, as evidenced by both new account growth and increased card usage.
• Deepening relationships with existing customers, building on the Gold Travel Visa momentum and continuing to build an enhanced risk management platform will be the key initiatives in 2004.

Small business banking and merchant services

• Small business banking’s focus is on quick and efficient delivery of deposit, lending and cash management services across the breadth of the entire branch network. With longer hours, any branch banking, dedicated service tellers and a top ranked internet service, superior access and service is provided to small business customers.
• Merchant services is a premier debit and credit payment solution provider providing point-of-sale technology and 24/7 support service to over 85,000 merchant locations across Canada.
• Revenue from small business deposits grew 7% on 10% volume growth and reduced margins while lending revenue was up 7% on 6% volume growth. Lending market share improved to 16.58% from 16.04% last year.
• In 2004 focus will be on continued sales growth and retention.

Commercial banking

• Offers lending, deposit, savings and investment products to medium-sized businesses plus a full range of day-to-day banking, cash management, trade and treasury services.
• Continued momentum in the growth of commercial deposits, which increased by 16%.
• Continued expansion of web capability that began in 2002. More than 50% of clients exclusively access cash management services through the internet.
• A concerted effort to improve service quality delivered through the branch network has resulted in a substantial increase in Customer Satisfaction Index (CSI) scores based on direct customer feedback.
• Average lending volumes decreased by 10% as continuing concern about the pace of economic recovery had a negative impact on business investment plans. The sale of the commercial leasing portfolio earlier in the year also reduced lending volumes.
• Loan losses continue to be managed within acceptable limits and, based on our internal risk ratings, the overall risk profile of the portfolio has improved from one year ago.
• Focus in 2004 will be to grow relationships and revenue through a more structured and accountable sales effort as well as increased referrals from retail branches.

Insurance

Offers a broad range of insurance products through the TD Insurance and TD Meloche Monnex brands, including credit protection coverage on TD Canada Trust lending products.

TD Life Group

• Provides life and health insurance protection to 1.6 million customers.
• Insurance cross-sell success continues to improve; more than six out of every ten new credit products sold are life insurance protected.
• Premiums collected grew by 13% year-over-year.
• A key priority will be continued growth in critical illness insurance.

TD Meloche Monnex

• As the largest group insurer for home and automobile insurance in Canada, TD Meloche Monnex reached the billion-dollar level in written premiums in 2003, representing growth of 33% over last year. This milestone reflects the combined operations of the two brands TD Meloche Monnex and TD Insurance Home and Auto, representing over 600,000 individual clients. The company’s unique business model is focused on affinity agreements with professional and university alumni organizations as well as employer groups.
• Despite a difficult year for the personal property and casualty industry in 2003, TD Meloche Monnex grew net revenue by 16% over the prior year. The company also reduced its direct expense ratio to 19%, best among major insurers in Canada, resulting in further growth in underwriting profit.
• For 2004, amid uncertainties in the provincial regulatory environment, the goal is to maintain above-average growth by remaining the leader in chosen markets, maintaining a low expense ratio and continuing to offer quality service and products.

TD Insurance

• Under the TD Insurance brand, insurance products are provided to TD clients through a direct marketing approach based on e-commerce, direct mail and telephone.
• With its web-based applications firmly in place, e-commerce is now responsible for a significant part of new automobile, home, and individual life insurance sales.
• The goal for 2004 is for continued strong growth in the TD customer market and direct marketing sales, particularly benefiting from e-commerce initiatives.

 

Personal and Commercial Banking