Awards for Excellence
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| © 2017 Euromoney |
| Full results |
A seventh year of record earnings in the fiscal period 2016 – and a first half of 2017 that promises another blockbuster year – saw TD Bank prove yet again that it is the franchise to beat in Canada. The firm’s unrivalled breadth and depth secure it Euromoney’s best bank in Canada award for another year. CEO Bharat Masrani, who only assumed the top job in 2015, was characteristically understated in his assessment of the bank’s most recent two quarterly results, declaring himself “pleased” with the firm’s 14% year-on-year rise in earnings in the first quarter and noting that “all of our business segments performed well” in the second quarter – which saw an even more remarkable 22% rise.
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| Bharat Masrani |
Masrani has certainly cut costs in the last two years, and the benefits of that prudence are likely to become more evident as Canada’s banking sector is buffeted by the headwinds predicted by many analysts. Private sector debt-to-GDP continues to rise, hitting 185% at the end of 2016. An explosion in house prices and worries over a mortgage bubble have prompted government moves to curb the exuberance. And the country’s key sectors of resources and energy have endured torrid times.
In May 2017, Moody’s downgraded by one notch its baseline credit assessments, long-term ratings and counterparty risk assessments (CRAs) of six Canadian banks, with the exception of TD’s CRA, which it affirmed. Of the six, TD remains the one with a double-A rating. And so far, TD is showing little sign of those headwinds hitting its performance, despite the fact that it is the most reliant of all its domestic peers on retail and commercial business. Its provisions in its Canadian and US retail businesses have ticked up slightly in the first half of fiscal 2017, but have fallen at group level.
It is still building across the border in the US, continuing a theme it has pursued for some time. In 2016, it announced it would acquire Scottrade Bank, a St Louis-based federal savings bank. Subsidiary TD Securities completed the acquisition of US broker-dealer Albert Fried & Company in January 2017.
The latter move will help to bolster the firm’s investment bank capabilities south of the border, but it is already an increasingly strong rival to RBC Capital Markets in its home market. It lags in M&A advisory, but vies with its peer for top place in equity capital markets and pushes it hard in debt capital markets, with strong showings across investment grade, high yield, project finance and Canadian dollar, or maple, bonds.
Now, more than ever, banks are aware of their social responsibilities. For TD Bank this comes pretty naturally – it has long made a priority of such work, with community service and environmental initiatives throughout the organization. The last year has been no exception, as demonstrated by its mobilization of staff and supplies to aid the residents of Fort McMurray, Alberta, in the wake of wildfire devastation in May 2016.
Promoting financial inclusion is another priority, executed through the bank’s TD Helps service that differentiates itself by going beyond the provision of simple FAQs by offering personal responses to questions in an online forum. Its TD MySpend digital offering, which launched in June 2016, is already being used by more than 850,000 customers.
The bank is also increasingly involved in clients’ non-financial lives. Its TD for Me digital concierge tells them about offers and events near them. It is not just about having fun, however. A client visiting a real estate development in a TD for Me zone could find a notification popping up on their phone that puts them in touch with a mortgage adviser. This kind of push can go two ways with clients, but for the moment it looks like TD Bank is getting the balance just right.
