Despite tough quarter, TD sees year-over-year market share gains in mortgage lending

While lender market share data isn’t publicly available, Raymond Chun, current COO and incoming President and CEO, shared that TD saw year-over-year market share gains in real estate secured lending (RESL).

Personal mortgage volumes at the bank were up 4% in Q4 compared to the previous year.

Sona Mehta, Group Head, Canadian Personal Banking, attributed part of the growth to “strong distribution and continued scaling of capabilities like TD Mortgage Direct, which is delivering conversion rates approximately three times the rate of our traditional lead programs. “

TD Mortgage Direct, launched a year ago, streamlines the mortgage application process by using online tools and direct access to mortgage specialists. Outgoing President and CEO Bharat Masrani said earlier this year that the channel “is resonating with our customers and modernizing the process for receiving personalized advice.”

Mehta explained that the bank continues to maintain a strong multichannel presence across its proprietary channels and broker relationships.

“And I’m pleased to share we’ve moved on to the next phase of execution on our specialization advice strategy,” Mehta shared. “We now have placed specialized bankers in our branches for real estate secured lending and actually as well for investing.”

She explained that as of November, these bankers now work within an ecosystem alongside the mobile mortgage sales force, adding that the bank is “already seeing strong results.”

She added that this ecosystem fosters franchise relationships as well as a “very, very good retention and profitability profiles.”

TD also reported a decline in the average remaining amortization periods across its mortgage portfolio, reflecting a trend observed with RBC a day earlier.

As one of Canada’s major banks offering fixed-payment variable-rate mortgages, which keep monthly payments steady despite interest rate changes, TD has seen its mortgage amortization periods normalize, particularly following the Bank of Canada’s recent rate cuts.

As of the latest quarter, just 8.7% of its portfolio had an amortization period of 35 years or more, a notable decrease from the 27.4% peak in Q1 2023.

Remaining amortizations for TD residential mortgages

Q4 2023	Q3 2024	Q4 2024
15-20 years	14.1%	15.4%	16.8%
20-25 years	31.5%	32.2%	33.3%
25-30 years	24.6%	27.6%	28.9%
30-35 years	1.4%	1.9%	2.4%
35 years and more	19.2%	13.3%	8.7%

TD earnings highlights

2024 net income (adjusted): $8.8 (-17% Y/Y)Q3 net income (adjusted): $3.2 billion (+8% Y/Y)Earnings per share: $1.97

Q4 2023	Q3 2024	Q4 2024
Residential mortgage portfolio	$261.3B	$269.1B	$270.9B
HELOC portfolio	$117.6B	$121.2B	$123B
Percentage of mortgage portfolio uninsured	83%	83%	83%
Avg. loan-to-value (LTV) of uninsured book	50%	51%	52%
Portfolio mix: percentage with variable rates	37%	34%	34%
% of mortgages renewing in next 12 months	13%	59%	59%
Canadian banking gross impaired loans	0.14%	0.16%	0.18%
Canadian banking net interest margin (NIM)	2.78%	2.81%	2.80%
Total provisions for credit losses	$878M	$1.072B	$1.109B
CET1 ratio	15.2%	12.8%	13.1%

Conference Call

• TD said quarter-over-quarter deposit growth outpaced loan growth, with personal deposits up 6%. “TD’s large base of stable retail and commercial deposits remain the primary source of long-term funding for the bank,” said Kelvin Vi Tran, CFO.

Updates stemming from the bank’s $3-billion AML-related fines

• TD has suspended its medium-term financial targets as it embarks on a comprehensive review of its strategies, following U.S. sanctions for failing to monitor money laundering activities.
• Due to the ongoing review, TD expects challenges in generating earnings growth, leading the bank to pause its previous targets for 7-10% earnings per share growth and 16% return on equity. Updated targets are expected in the second half of 2025.
• “We are looking at our business mix, including profitability and risk-adjusted return on capital, and where we need to invest and divest to improve. Everything is on the table,” said incoming President and CEO Raymund Chun.
• TD continues to address its AML shortcomings, with a plan to complete the majority of its remediation actions by the end of 2025.

Source: TD Q4 Conference Call

Note: Transcripts are provided as-is from the companies and/or third-party sources, and their accuracy cannot be 100% assured.

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Last modified: December 5, 2024