Wealth Management

Review of financial performance 2003

Wealth Management lost $75 million in 2003. Included in these results was $339 million relating to write downs and restructuring costs within TD Waterhouse International. The remaining Wealth Management income was higher as a result of the higher business volumes in the second half of the year and the focus on cost containment. The cash basis return on average invested capital for the year was (3.6)% compared with 3.7% in 2002. The economic loss for the year was $476 million compared with $298 million in 2002.

Total revenue increased $14 million. The increase in revenue resulted from higher business volumes across the Wealth Management businesses. Growth in revenue was hampered by the impact of the higher Canadian dollar on U.S. results and a $39 million write down related to the TD Waterhouse International joint ventures.

Cash basis expenses increased $185 million from 2002. Included in these expenses were $300 million of restructuring and goodwill impairment charges for TD Waterhouse International. The remaining expenses decreased due to the focus on cost containment. The strong Canadian dollar also contributed to the decline in U.S. expenses. The benefits of the International restructuring were already evident as TD Waterhouse International broke even in the fourth quarter.

Total assets under management (AUM) of $113 billion, increased $1 billion from October 31, 2002. Assets under administration (AUA) of $267 billion increased $33 billion from October 31, 2002 due to higher market levels, the growth in the Investment Advice and Financial Planning channels and significant referrals from the retail bank.

Review of financial performance 2002

Wealth Management reported moderately lower earnings in 2002 compared with 2001. Cash basis net income of $125 million was $11 million or 8% lower than the prior year. Fee-based revenue declined $83 million or 5%, primarily due to the significant market declines, which reduced trading volumes in our discount brokerage business and impacted asset-based fees. In addition, narrower spreads and lower margin loan balances reduced net interest income by 9% to $426 million. Cash basis expenses decreased $104 million or 5% in 2002 compared with 2001 in spite of continued investment in our Financial Planning business, rebranding TD Waterhouse Canada to include Investment Advice and Financial Planning and continued growth internationally of the discount brokerage business. Total AUM decreased by 6%, as negative markets and reduced institutional mandates resulted in ending AUM of $112 billion. Additionally, AUA ended 2002 at $234 billion down by 2% from the prior year.