Awards for Excellence 2019
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Canada has a clutch of big banks that dominate its financial services industry and competition is fierce in most segments. Few are able to compete across the whole spectrum, however. TD Bank is one that can, and the last 12 months marked another successful period for the firm, making it once again Canada’s best bank.
It had a terrific financial year 2018 across all its businesses, with revenues up 8% and return on equity hitting almost 17%. And while it again made inroads in the US market, it is its domestic business that remains the driving force of its performance.
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Bharat Masrani |
Retail banking results rose strongly and the bank retained its leading position in credit cards; it signed a deal with Air Canada to be the airline’s primary credit card for its loyalty programme. It continues to take share in private banking and shows strong growth in business loans and deposits.
Late in 2018 the bank also became the largest money manager in Canada with the acquisition of Greystone Capital Management for just under C$800 million ($610 million).
While its investment bank still lacks the scale and scope of RBC’s, its trajectory is impressive, and there are areas where the bank has made progress that could see it further threaten its rival – notably in M&A advisory and in taking domestic borrowers to the foreign currency markets.
The bank worked on a number of important deals, including advising Thomson Reuters on the sale of a 55% stake in its Financial & Risk business to Blackstone, the largest leveraged buyout in Canada. It was also a joint lead on the World Bank’s sustainable development bond, the largest sovereign, supranational and agency (SSA) deal ever issued in the Canadian market.
But there was also weakness during the challenging conditions of late 2018. In financial 2018, revenues and return on equity in the division had risen substantially, to nearly 18%, a remarkable achievement. However, the unit suffered a knock in the fiscal first quarter of 2019, when it posted a small loss, which the bank attributed to a big drop-off in client activity and much lower debt and equity capital markets volumes.
But even in the tough period, the bank added 50 new corporate relationships. And the wholesale business has recovered well since then, helping TD achieve an overall record in the second quarter.
Its work advising Goldcorp on its $12.5 billion merger with Newmont and Brookfield and CDPQ on the acquisition of a battery business from Johnson Controls were the investment banking highlights, as was securing its first euro benchmark mandate from KfW, whose €5 billion deal was the biggest SSA deal that TD has ever worked on.
The bank’s focus on a retail presence is as committed as ever. As chief executive Bharat Masrani told investors, branches are at the heart of the bank’s retail business because “customers tell us they are important to them”.
Masrani also sets great store by what he calls the bank’s “forward focus” strategy, and TD has taken strides in its enterprise cloud work over the period, as well as being involved in the launch of Verified.Me, a blockchain-based digital ID service that is set to make Canada a world leader in digital identity.
Innovative homeowner products have also long been a hallmark at TD, and the last year was no different. The bank completed the full digitalization of its mortgage offering, with customers now able to use its platform on mobile or tablet to complete the entire mortgage application process.
But for the blip in wholesale in the first quarter, the bank would have been on track for an even stronger financial 2019 full year. But even so, TD has been able to mark 12 months of progress across most of its business lines and is set fair for the future.
