Toronto Dominion 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

US set to grow faster than Canada

“it now seems clear that U.S. GDP growth is likely to outstrip Canadian GDP growth”

Same problems in Canada as the US

“low interest rates, slow personal loan growth in Canada and a demanding regulatory environment continue to affect the fundamentals of our business.”

Going to take hard work to hit earnings targets

“It will take energy and hard work to navigate these headwinds and achieve our goals for earnings growth and expense management while continuing to invest in the future, but I’m confident that with our proven strategy, strong brand and experienced team, we have everything we need to succeed.”

Slower earnings growth in US this year

“While the fundamentals of the business remain strong, earnings growth in the U.S. is expected to be modest this year, as security gains in 2014 will be materially lower than in 2013.”

We don’t think there’s an economic pause in the US

” think there is uncertainty about, is the U.S. in a pause right now, or did it just have bad weather? I think we come down that it’s in a — that it’s not in a pause. It just had bad weather, and that fundamentally, the U.S. recovery is going there, but there is a question on that. ”

A pause in the marketplace as people try to figure out the US and China

“But we may be in for the — this part of 2014, a pause in the marketplace as the market tries to figure out United States and China, where this is going.”

Can China manage this transition?

“I mean, I worry that can China manage this transition? Because it is often the case in economies like China and emerging markets where you can get to one level of GDP and you find it hard to get to the next level because it requires fairly significant institutional shifts in your economy and in your political structure.”

US has take-off momentum

“s I come down, my view is I think the United States has got, now got take-off momentum here. I think it’s reported, repaired its balance sheet. I think what’s going on in the housing market, I think, again, you could see some pullback given how fast this recovery is. It’s actually recovered faster than I think, but I’m very positive on the United States.”

Customers seem more up-beat, but slowdown in mortgages

“I’ve seen a lot of clients in the last quarter right through our footprint, Maine to Florida, and there is improving sentiment when I talk to commercial and business clients. The one area where I would say there’s obviously a slowdown is mortgages.”

All eyes on the spring selling season

“industry originations were down 58% year-over-year, and the refi boom has clearly ended. So it’ll be interesting to see what happens in the spring selling season and after the winter weather, but our goal is to continue to outgrow.”

Canadian consumer lending picking up a little

“whereas we were seeing a year-over-year slide, sort of inexorable over the last 7 or 8 quarters in personal lending growth, that actually has started to rebound a little bit. So that’s good going into the spring market. So generally, on balance, a little bit of slowing perhaps on the business side but still good market share gains and a slight acceleration perhaps on the consumer side.”

Not changing underwriting standards because of anything aggressive in the US

“We’re not changing our underwriting approaches, either for any reason or in response to anything that’s going on in the industry, and are still seeing nice growth. But it will slow down, the housing-related credit, but no changes in underwriting, and we still think we’ll outperform in terms of growth.”

Auto lending still hyper competitive though

“As far as the auto loan market in the U.S., it is still hypercompetitive. We’ve actually scaled back a little bit on both our numbers of dealers as well as our originations in the last quarter.”

Branches going from service locations to sales locations

“There is no question that the average square footage of a branch will be declining over time, and they will also changed in the nature of the transactions that happen. They’ll move much more to sales transactions versus service transactions. And we’ve seen obviously a remarkable increase in online, mobile and alternate forms of distribution growth. I would say that to date we still continue to see the vast majority of sales happening in the branches.”

Average number of households per branch

“we also have 3,200 households per store versus the industry average of 1,400.”