Toronto Dominion 2Q16 Earnings Call Notes

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The Toronto-Dominion Bank’s (TD) CEO Bharat Masrani on Q2 2016 Results

Overall credit quality remains strong

“While provisions for credit losses rose in both the retail and wholesale portfolios, this was largely a reflection of continued weakness in the oil & gas sector. Overall credit quality remains strong.”

Credit is a headwind however we’re adequately reserved

“. Overall, we’ve been saying for some time that we expected credit to be a headwind to earnings this year, given the benign PCL rates we reported in 2015. That is now materializing. However, we remain comfortable that we are adequately reserved, and losses will be manageable.”

Riaz Ahmed

Still assessing impact of wild fires

“I would like to take a moment to give you an update on Fort McMurray. We are continuing to assess the impact of the wildfires. We expect we will experience some losses in our banking businesses and higher claims in our insurance businesses in the third quarter. However, as a result of our smaller footprint in Alberta and because of mitigants [ph] including reinsurance in our general insurance business, mortgage insurance in our personal banking, and third party insurance held by our commercial banking customers, we do not expect the impact to be material.”

Mark Chauvin

Oil and gas producers are exhausting sources of liquidity

“further deterioration in the oil and gas producer portfolio occurred during the quarter, despite a recent strengthening in oil prices. This trend was expected as leverage borrowers exhaust available sources of liquidity.”

The recent increase in oil prices in not likely to have an immediate positive impact on oil impairments

” As expected, credit deterioration and loan impairment in oil impacted portfolios and regions are continuing. The recent increase in oil prices, while encouraging, is not likely to have an immediate positive impact. In the corporate and commercial segments, we are now seeing the impact of sustained low oil and gas prices, which is reflected for new impairments and related provisions in the segment this quarter. ”

Signs of deterioration continue in consumer lending portfolios but offset by better performance in rest of country

“The signs of deterioration in the consumer lending portfolios in impacted provinces seen last quarter are continuing, but to-date increases in credit losses have been largely offset by stronger than expected performance across the rest of the country.”