Q3 2020 Toronto-Dominion Bank Earnings Call

[music].

By your confidence is ready to begin good afternoon, ladies and gentlemen, welcome to the key Bank Group Q3, Twentytwenty earnings Conference call.

During the meeting over to gets Jillian batting. Please go ahead of us money.

Thank you operator.

Good afternoon, and welcome to TD Bank group third quarter 2020 Investor presentation.

We will begin today's presentation with remarks from parents is Ronnie the bank CEO after which relies on that the bank CFO will present, our third quarter operating results.

And while they chief risk Officer will then offer comments on credit quality after which we will invite questions from prequalified analysts and investors on the phone.

Also here to answer your questions today, our Terry Curry group had Canadian personal banking, Greg Braca, President and CEO TD Bank America's most convenient bank and Bob Dorrance group had wholesale banking.

Please turn to slide two.

At this time I would like to caution or listeners that this presentation contains forward looking statements that there are risks that actual results could differ materially from what is discussed and that certain material factors or assumptions were applied and making these forward looking statements.

Any forward looking statements contained in this presentation representative use of management and our presented for the purpose of assisting the banks shareholders and analysts in understanding the bank financial position objective and priorities and anticipated financial performance.

Forward looking statements may not be appropriate for other purposes.

I would also like to remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results to assess each of its businesses and to measure overall bank performance.

The bank believes that adjusted results provide readers with a better understanding of how management use the banks performance Barrett, we'll be referring to adjusted results in his remarks.

Additional information on items of note the banks reported results and factors and assumptions related to forward looking information are all available in our Q3 2020 report to shareholders with that let me turn the presentation over to merit.

Thank you Julianne and thank you everyone for joining us today.

Well the last six months DDS 90000 colleagues that worked tirelessly to keep the been fully operational through the quarter 19, graces delivering for our 26 million customers when they needed us most.

Whether working from home or does that give you location score or other locations.

Good hard work and dedication has been inspiring.

Very proud of the tremendous efforts often under difficult circumstances and I thank them for their contributions.

PD is a bank, but we are also community we cared for each other and our customers six months into this crisis, our culture and our people remain among our most important advantages.

What we'll see us through this period of turmoil and I'm confident they will enable us to emerge even stronger in the months ahead.

Cobot 19 has affected us all in ways, none of us could have imagined.

The last few months it has become clear that some communities are being disproportionately impacted to address this PDL made important financial commitments and introduce new programs to support support recovery and community resilience across our footprint.

This includes allocating $10 million through the team to the annual TD ready challenge to organizations that.

Developing innovative and measurable solutions to address the inequities exasperated by the pandemic.

We're also taking steps to confront more longstanding injustices this quarter as deep lack racism and racism in all its forms moved to the forefront of the global conversation in response to the further elevated our longstanding commitment to the active advancement promotion and sell it.

Ratio of inclusion and diversity within the bank and across the cycle.

We announced concrete targets and important initiatives to grow black indigenous and minority executive representation.

Vest an organization organizations that fight racism and promote inclusion to introduce new training and development across the bank and to contribute directly to a future where everyone can thrive and achieve their goals.

This past quarter thousands of TD colleagues participated in virtual events to better understand the power of inclusion to elevators to elevate us all to celebrate pride and indigenous history to join the effort and make a direct contribution.

While we may be apart physically we are in many ways closer than ever stronger than ever as a purpose driven bank. This important work is fundamental to who we are what we stand for and what we strive to achieve.

Let me turn now to the current environment and outperformance.

TD entered this crisis will position of strength and through prudent financial and risk management practices, we remain well capitalized with a high quality balance sheet and strong liquidity.

This quarter, we saw encouraging signs of activity across our footprint is economies progress with reopening plans.

People started to return to their workplaces firms stepped up hiring consumer and business spending picked up and applications for loan deferrals of declined significantly.

We know the road to recovery won't always be smooth the unprecedented actions taken by the bank our industry governments central banks and regulators they've been critical in helping stave off a deeper crisis and these measures cannot be sustained indefinitely, but they have served is a powerful bridge.

Sustaining households, and businesses as the global search for a vaccine or effective treatment proceeds the resumption the resumption in activity now underway attest to that.

The longer term outlook is still uncertain and a measure of caution is warranted, but so to some cautious optimism given the positive signs, we're seeing as a bank and as a society, we must remain prudent but also flexible ready to adapt in real time as the situation.

Changes on the ground that's exactly what we again did in Q3 and what will continue to do.

Last quarter I talked about how quickly we were able to reshape our operations took stay connected to our customers and support them through the depth of the crisis. Thanks to the investments we've made and continue to make in technology training and capabilities.

Those investments groove, they're worth again this quarter as activity accelerated across our businesses.

Digital applications have been enhance with new features self service capabilities and other improvements, resulting in a continued high level of successful online and mobile transactions and engagements.

In the US we continue to process tens of thousands of small business loans under the Triple B program in record time, helping support the backbone of the economy.

Our new Canadian TD ready advice program is bringing personalize and timely digital content to millions of customers in real time and advisors in our branches in our TD ready advice centre and on the phone are reaching out to customers to help them think through their financial options. During this difficult period.

We declared our chat bots is providing seamless no contact information to thousands of customers a week freeing our PD bankers to provide crucial financial advice with those who needed most.

And thousands of contact center core colleagues are providing expert guidance most enabled from home.

We're also investing in the future.

We continue to modernize our technology infrastructure, including migrating to the cloud to leverage at scalability security and speed.

We're also enhancing our customer and colleague facing applications to deliver better experiences for our customers in a more flexible and productive work from home environment for our people.

As customers become more digitally enabled we're working to increase the safety and security of customer enable data sharing through the launch of SPX in Canada, and other ventures with industry participants.

And we were delighted this month to introduce our updated suite of TD Aeroplan visa cards following year Canada's announcement of the new Aeroplan program.

While we know it's early for many Canadians to be thinking about travel we will be ready when they are we're excited to deliver this new benefits, which further differentiate our position as the number one credit card issuer in Canada.

We also continue to invest in our people.

Through future ready in Canada and be legendary in the US we're empowering our colleagues to provide customers with the advice they need to navigate these uncertain times with confidence.

We're also investing in our colleagues experience and career development always central to Tds culture. This is important more than ever today, where possible. We are helping our colleagues manage the demands of work in home life, and we are helping them develop their capabilities and advance their careers to redeployment opportunities as well.

As training through TD thrive, our self serve learning platform, which now has 60000 users.

And for colleagues working at a TD location branches store, we continued to take precautions to protect their and our customers well be.

Our financial results this quarter reflect these investments as well as the gradual economic reopening that is underway.

In Q3, we delivered earnings of $2.3 billion and EPS of $1.25 much improved from last quarter as continued volume growth moderating provisions for credit losses, and strong Welton wholesale revenue helped offset ongoing margin and fee pressure in our personal and commercial.

Banking businesses in addition.

Our PD one ratio climbed to climb a point in a half to 12.5% lifted in part by the transition of our use non retail portfolio to RMB.

In Canadian retail, we saw strong quarter over quarter earnings growth led by our wealth and insurance businesses net asset growth elevated trading activity and a fourfold increase in online account acquisition drove record wealth revenue.

Insurance revenues climbed on a volume driven premium growth and strong take up of our enhanced digital capabilities and we maintain good momentum in personal and commercial banking with strong volume growth on high levels of customer engagement and the continued acceleration in consumer spending and the new account growth.

A new account growth throughout the quarter as economies began to reopen.

In the U.S. US retail bank earnings improved significantly from last quarter, we continue to work with our customers through this difficult period and the results are evident in strong loan growth and peer leading deposit growth.

Together with flat expenses, this helped offset the impact of lower margins and fee income.

At the segment level TD Ameritrade made a strong contribution to earnings Boyd, where heightened trading activity and we still expect the Charles Schwab transaction, which remains subject to certain conditions to close this calendar year, making TV and important shareholder in an industry leader with the strength and scale.

Needed to compete and grow in a highly competitive market.

Wholesale banking delivered record revenue of $1.4 billion and record earnings of $442 million this quarter on strong trading and Klein underwriting activity, including several marquee deals.

We will joint book runner on Air Canada was 1.6 billion dollar share offering and private placement of convertible notes.

We also served as Bookrunner on Horizons 1.3 billion Maple issue as our U.S dollar strategy continues to gain traction.

And we built on our leadership in the Sss space acting as joint lead manager on eight US dollar benchmark trades, including a three year $1 billion over 19 response bond to support the private sector in Latin America, and the Caribbean Cds first book run a role for I'd be and Wes.

Our third quarter results reflect the resilience of our diversified business model and the power of our customer centric strategy. Our model is a powerful enabler, allowing us to support customers through these volatile and uncertain times, while continuing to make strategic investments to serve them even.

Better in the future.

I'll now turn it over to Rias to review the numbers in more detail Rias.

Thank you Bart and good afternoon, everyone. Please turn to slide eight.

This quarter at the bank reported earnings of $2.2 billion and EPS of $1.21.

Adjusted earnings were $2.3 billion and adjusted EPS was $1.25.

Revenue increased 2%, reflecting volume growth across our businesses and record wealth and wholesale revenues, partially offset by margin compression and lower fee income as a result of reduced customer activity in the personal and commercial banking businesses.

Provisions for credit losses decreased by 32% quarter over quarter to $2.2 billion.

The decrease was mainly attributable to lower performing pcls, reflecting a smaller increase to performing allowance for credit losses this quarter.

And expenses decreased 1% on a year over year basis.

Please turn to slide nine.

Canadian retail net income was $1.3 billion down 33% year over year, reflecting higher credit losses, lower revenue and higher insurance claims on an adjusted basis net income also decreased 33%.

Revenue decreased by 2%, reflecting lower margins, partially offset by volume growth and higher wealth and insurance revenues.

Average loans rose, 3%, reflecting growth in both personal and business volumes.

Deposits rose, 18%, reflecting double digit growth in balances across all businesses.

Health assets increased 4%, reflecting new asset growth and market appreciation.

Margin was 2.68% a decrease of 15 basis points from the prior quarter, reflecting lower interest rates.

Total PCL decreased by 18% quarter over quarter, primarily reflecting lower performing PCL.

Total PCL as an annualized percentage of credit volume was 0.86% down 21 basis points quarter over quarter.

Expenses were flat year over year on a reported and adjusted basis.

Please turn to slide 10.

You asked retail net income was us $490 million.

Yes, retail banks net income was $260 million down use $487 million, reflecting higher pcls and lower revenue.

Average loan volumes increased 11 year over year, reflecting growth in the personal and business customer segments, including record mortgage originations.

Deposit volumes, excluding the TD ameritrade sweep deposits were up 24%, including 25% growth in core consumer checking.

TD Ameritrade sweep deposits were up 37%.

Net interest margin was 2.50% down 43 basis points sequentially, primarily reflecting the impact of lower deposit margins and higher cash in deposit balances.

Total PCL, including only the banks contractual portion of credit losses in the strategic cards portfolio was use $655 million down 20% from the prior quarter.

The U.S. retail net PCL ratio was 1.51% down 52 basis points from last quarter.

Expenses were flat year over year, reflecting productivity savings, partially offset by higher legal provisions and cost to support government programs.

The contribution from TD is investment in TD Ameritrade was use $230 million up 5%, primarily reflecting higher trading volumes, partially offset by reduced trading commissions lower asset based revenue and higher operating expenses.

Please turn to slide 11.

Net income for wholesale was $442 million, an increase of $198 million, reflecting higher revenue, partially offset by higher PCL and higher expenses.

Revenue was $1.4 billion up 53%, reflecting higher trading related revenue and higher underwriting fees.

PCL was $123 million down 67% from the prior quarter on lower impaired and performing PCL.

Expenses were $669 million up 13%, primarily reflecting a higher accruals for variable compensation.

Please turn to slide 12.

The corporate segment reported a net loss of $130 million in the quarter compared with a net loss of $173 million in the third quarter last year.

The decrease primarily reflects the positive impact of tax items, which are held in other adjusted net loss or $76 million compared with an adjusted net loss of $109 million in the third quarter last year.

Please turn to slide 13.

Our common equity tier one ratio ended the quarter at 12.5% up 144 basis points from Q2.

The primary driver of the increase was a decline in credit risk RW, a which added 92 basis points to capital this quarter.

72 basis points of those 92 was attributable to the transition offer us non retail portfolio from standardized to be methodology.

We were pleased to be able to bring forward. This transition, which we had hoped to implement by year end into the third quarter.

The remaining 20 basis points reflect lower volumes reduce line usage and parameter updates.

The us non retail ERP transition coupled with the increase in performing allowances this quarter eliminated the expected loss shortfall capital deduction.

Created an expected loss excess which added to our transitional arrangement for expected loss.

Credit loss provisioning in aggregate. These contributed 31 basis points to our Cetone ratio.

Other factors included a 15 basis point increase attributable to organic capital generation, and then 11 basis point increase later to the issuance of common shares under our dividend reinvestment plan.

The increase in our capital ratio this quarter. The bank has decided that beginning with the dividend declared today and until further announcements there'll be no discount to the shares issued under our dividend reinvestment plan.

Our less leverage ratio was 4.4% this quarter and our LCR ratio as 150%, both well above regulatory minimums.

I will now turn the call over to Jane.

Thank you realize and good afternoon, everyone. Please turn to slide 14.

Gross impaired loan formations were stable quarter over quarter at 23 basis points.

Marelli, reflecting a decrease in the us and Canadian consumer lending portfolios and the wholesale segment driven by lower formations in the oil and gas sector.

Largely offset by higher formations in the us and Canadian commercial lending portfolios.

Please turn to slide 15.

Gross impaired loans ended the quarter at 3.8 billion of 51 basis points up four basis points quarter over quarter, driven by the us and Canadian commercial lending portfolios and the Canadian resolute portfolio largely due to the cessation of info.

Excellent activities to resolve impaired loans in response to cope with 19.

Partially offset by the impact of foreign exchange.

Please turn to slide 16.

Recall that our presentation reports PCL ratios, both gross and net of the partner's share of the us strategic card credit losses.

We remind you that credit losses recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income.

The banks Pcls in the quarter were 2.19 billion or 117 basis points, decreasing 1.3 billion of 59 basis points quarter over quarter.

Although pcls have decreased across all segments quarter over quarter PCL remains elevated from prequel with 19 levels, primarily due to the ongoing pandemic.

Please turn to slide 17.

The banks impaired PCL decreased 138 million quarter over quarter as reflected in the wholesale segment, largely driven by less oil and gas related credit migration.

Performing PCL decreased 894 million, reflecting a small increase to the allowance for credit losses this quarter.

Please turn to slide 18.

The allowance for credit losses increased 1.3 billion this quarter, primarily related to higher performing allowances due to the impact of corporate 19 and incorporates our economic outlook for Canada, and the us reflecting a slower pace.

Recovery than forecast in the previous quarter.

Our allowance for credit losses increased across all segments and all major asset classes with the largest contribution by asset class reflected in the business and government portfolios across a broad set of industries.

Over the past two quarters in response to the covert 19 pandemic. The bank has added $3.9 billion in allowance, increasing our allowance coverage by 50 basis points to 124 basis points.

The potential for further changes to our allowance coverage will largely depend on the magnitude and duration of the ongoing Colgate 19 pandemic.

Please turn to slide 19.

Let me now take a moment to touch on the banks deferral programs.

Loan balances under banked led deferred programs decreased 14 billion from the second quarter.

Deferrals have been largely concentrated in our wrestle auto and commercial lending portfolios.

From the inception of these programs in March deferral requests peaked in April and have been steadily declining since then.

As expected deferral programs and government stimulus have been effective in helping our customers manage through the pandemic to date.

While it is too early to see any meaningful impairment in deferred populations, we will continue to monitor and assess them closely over the coming quarters as both the deferral and stimulus periods and.

Now, let me briefly summarize the quarter.

We continue to operate through challenging and uncertain conditions.

Given the unprecedented impact from the covert 19 pandemic and have added allowances for credit losses Accordingly.

Im satisfied with the banks allowance coverage, which reflects our current economic outlook and our portfolio and geographic mix.

To conclude we remain well prepared to manage through these difficult times with that operator, we're now ready to begin the QNX session.

Thank you well now take questions from the telephone lines. Instead of a question then you're using speakerphone. Please lift your handset before making your selection.

Your next question. Please press star one on your telephone keypad.

Anytime you wish to cancel your question. Please press the pound Sterling.

Please press star one at this time instead of a question there will be brief.

Time other participants were just for questions Ken. Thank you for your patience.

Yeah.

We have their first question from piece can you from eight capital. Please go ahead. Your line is open.

Yes, thanks, good afternoon, everyone.

Wanted to start of the question on learning in PMC expenses, Terry I was looking back and this is the first time I think I can see PMT ranking.

Including the wealth and insurance component has had expenses down or flat since way back in 2016, and clearly these are extraordinary times, but can you give a bit of an outlook around how much you think you can or will want to remain expenses over the next few quarters is flat to down something would you contemplate here relative to the the project.

In the spend you want to undertake euromax few quarters.

Okay.

Well I think to the question.

So.

We have continued to manage our expenses quite actively and I would say pretty easily.

And as you mentioned for PMC, they were down sequentially and year over year, despite actually absorbing hoping related cost involving rewards for our folks.

In the field as well as.

In enhanced cleaning protocols and safety and security enhancements.

I would say that.

Talked about over quite a period of time, the levers that are available to us.

We will always invest.

For the future.

We will always been back to ensure that protection and compliance requirements are match.

And at some of the leverage that were available to watch this quarter or some sequencing and prioritization of more discretionary activities.

As well as some marketing expense that just didn't make sense in light of the context externally.

Well not certainly in a position right now to give guidance because theres. So much uncertainty going forward, but what I can tell you when we will continue to prioritize investments to ensure.

We need protecting complied me investor business strategies and that we.

Also consider discretionary investments to build business.

Given many of the investments we've made in the past that we're leveraging including our number one digital positioning Canada.

Pretty confident that.

We're in a pretty good place.

Well the crude.

Should we think about Q4 as all in on the past.

Before the Boulder is a bit of a lumpy quarter in terms of expenses is that we've got a headwind for for this year at all.

There are lot of moving parts and if you go back to add to that beginning at the year. One thing that I had commented on was the shape of our expenses last year in terms of first half second half.

Notwithstanding a lot has changed including cogent and we will still have to cobot expenses in Q4.

Just the nature of that first half second half.

Probably would it would see.

Decent shape for expenses in Q4 outlets things being equal.

Okay, and just by way of a quick follow up quite good.

A very small individual loss incorporate whereas I think you said that was driven by tax item I am I reading that right, but that's about 30 million this quarter.

That was the change in the expenses at this quarter end, there would be about roughly right.

Okay. Thank you.

Thank you. The next question is from Gabriel Duchaine from National Bank Financial. Please go ahead. Your line is open good afternoon.

Can I ask a a.

Couple of questions here on the credit stuff.

First.

2.2 billion, a provision, but 60% of that is performing provisions.

Wondering if you can maybe ballpark how margins are performing was due to model adjustments and how much was due to.

Our management overlay.

I will read all of these days.

Yes. Thanks, Thank you for the question.

If I look at the last two quarters.

Jordi, Okay, and what I'm, saying majority is very highest over 85% of outperforming allowance over the last two quarters is modeled so the overlay is.

Basically about 15%.

Over the past two quarters, so maybe about the same no big no skewed no difference on rescue this quarter.

Well I would say the overlays are coming down because there's more on the macro output gotcha.

Then.

Wondering if you can quantify this for me.

And you talked about what conditions and need to arise for you to make adjustments to your Hcl just wondering what would your easier look like or what kind of increase are we talking about.

You were to shift.

Hundred percent that the pessimistic sooner.

Yes, good question, but thats not a number we were disclosed I think you know that our probability.

Weighted Hcl is greater than our base is yellen. If you look at our numbers that difference has actually increased which is telling you we're putting a greater weightage that we have in prior quarters on on the downside and the additional data point and willing to share with you is that.

On the downside were actually using a w. shape.

Okay. So you're.

You're waiting on the downside is greater than you're waiting on the base case.

No I am saying my waiting on my downside is increased quarter over quarter. Okay.

Thank you have a good the rest of your summer.

Thank you.

Thank you as the next question is from many chromium from Scotiabank. Please go ahead. Your line is open.

Hi, Good afternoon, just a question.

On the sale as well a up again.

9.2.

Billion I'm, just wondering I appreciate a lot of it is driving being driven by models, but in terms of sort of that management overlay piece.

But the point is Hcl too high in your view can there be such a thing and.

On a related question, what kind of coverage ratios do you prefer to look at and and.

What's your perspective on that question of.

When I look at it to you could say it just looks too high.

Yes.

Second question.

See I don't have a target coverage ratio this not the way we work like every quarter, we look at what the forward looking scenarios are.

You know will assess we'll do a bottom up assessment as well, we triangulate all the data.

Then we'll take call as to what's most appropriate for our.

Book of business I think you don't know wearing very uncertain times, the shape of the reopening who knows what's going to happen things could plateau.

In a few months. So we're taking that into account were being appropriately prudent now with respect to overlays like typically I don't want to see too many overlays I'd like to see it you know all in our model output, but you have to appreciate we are in unprecedented times. These models are trained on historical data that's.

Quite different okay. So there should be an expectation that we would use experts judgment and that will do an overlay, but over time I expect the overlays to come now.

Thanks for that and maybe approaching in a different way just as a follow up I mean, it definitely makes sense at some banks are more conservative than others, but.

I guess the question is is there something in your business that.

He is making you more concerned that maybe we wouldn't have we wouldn't see is there a particular issue that.

That is impart driving this conservatism.

Yes, so well thanks for the question. So my answer is no our allowance reflects our geographic mix. It reflects our product mix and very importantly, it reflects the times where in.

Hi, yes, being appropriately prudent.

So theres no.

More than that.

Thanks Roger.

Okay.

Thank you and the next question is from Ebrahim Poonawala from Bank of America Securities. Please go ahead.

Good afternoon.

I think it does this first I wanted to follow up well on the comment you made about the leading on the downside increased quarter over quarter.

I get why that would be the case in the U.S. weird things, Bob Wilson them keep it since Twoq results could you tell us like was on the outlook for Canada. The Canadian economy to keep you updated that would cause you to in keys that meeting the downside, but the Canadian retail segment.

Yes, I know, it's a good question, but let's let me kind of Telly Awards.

What's driving the numbers up it's just not it's just not the downside case, what's driving the numbers is that even our base case, which was earlier. This week is now reflective of a very gradual recovery. So if you go to our disclosures you will see for Canada for instance, our unemployment number.

As a higher our GDP numbers are lower and our H.B. I numbers are also lower that's what's driving our allowance numbers up it's less took yesterday at a more weight on the downside, but if you look at the difference there. It's not just the downside is driving our numbers. We believe we are an uncertainty.

Times, it's the time to be prudent and our economic outlook reflects that.

Understood and I guess core question that own capital.

I guess he gave on John significant date.

Yes.

As you look out it seems like we should still see the top positions the tire and I I saw news at nine talking about though.

Thank you be opportunistic on M&A is just talk to us it on outlook on capital and just comes from a management standpoint, I use Eddie is an opportunity what to come to over the coming months.

Do kind of salt pursue.

Strategic M&A.

Sure I am so this is a bear.

So couple of points I mean, if you look at a you pointed out the wanted to have announced presents I say historically and traditionally TD. Our view as you know having strong capital is always a good thing regardless of the environments are you seeing a bit of that play out.

Secondly, I think you just Jay just as the three or four questions and all of them carried the theme off that did though.

We are in a uncertain times in our this crisis is unprecedented yes. You know we are seeing green shoots we're seeing it will gradual reopenings, we're seeing somewhat of a normalization in certain jurisdictions in which we operate but we also recognize that this things could change wed dramatically it could.

Change because there's a spike in infections or whatever the case might be SCUSA reopening, so who knows what's going to happen four weeks from now so the bank you know is appropriately prudent and cautious about it and when youre in that situation to have very strong capital numbers. There's also a good thing we think that's not the where traditionally PD would.

Great and then I get to the point that you are asking.

This is an unprecedented crisis I think there's an over uses the word unprecedented which is an appropriate phrase is an appropriate freeze will describe what we've seen the environment.

And without a doubt.

The in a before this ends there are going to be opportunities, we feel that if and when they were to present themselves. A then TD as we have as we did in the global financial crisis and most of the other downturns, we've we've experienced in our lifetime.

That we want to we prepared if there are compelling opportunities we want to make sure.

We look at them seriously and if that makes sense from a risk perspective return perspective timing perspective, cultural perspective, then we want to be ready to act and our capital levels provides us with the flexibility.

And then Bob just on that he's been a big believer in retail distribution both sides of the border does the crisis and that adoption of digital among customers make you feel differently about bank M&A.

It's hard to say I think there are different angles to look at from an M&A perspective, I think our belief in distribution has been more omni oriented.

I think this environment is showing that in our view on omni rather than digital only has turned out to be correct.

I think every channel of ours as long as we providing goes personalize connected.

And seamless experience is another served us well and so I wouldn't want to.

So totally discount.

Bank M&A from it I think a situation is such that you know we would look at any opportunity, but we would only do a deal that made sense from a risk and the financial and strategic perspective.

Well it and he has no fair to assume that calculations retire from yet.

[music].

Yes, I think as I had mentioned on the call last time that we've been converting our.

Books from a standardized to advanced approaches for some time now and the U.S. non retail portfolio.

Was almost the last one well the last one major portfolio to be converted so I think we're through that piece and I expect our capital from here to be more reflective of our.

Organic.

Variables as well as potential migration effects if conditions get worse.

Got it thank you.

Thank you.

Next question is from Sohrab Movahedi from BMO capital markets. Please go ahead.

Yeah, Thanks [laughter] [noise].

Two quickies one if I can just maybe ask RJ.

Maybe it's a bit of redundant question what is in past calls you kind of reminded us that there is seasonality.

And the provisioning levels with the with the cards.

Partnership.

And that tends to kind of have that historically had spikes kinda towards a Christmas timeframe and coming out of state. So Q4 in Q1.

There is obviously lots and lots of reserves you put up here right now, but is there still going to be some seasonality, we should be thinking about when it comes to the cards portfolio and your share of pets going into Q4 in Q1 up next year.

Yes.

The simple answer is yes, Q4 in Q1, so you see the.

Pcls build up because of seasonality in Q4 in Q1, two you will see seasonality, but what you should also keep in mind is that card balances generally have come down. So so you're not the seasonal impact may not be as great as it was previously.

Okay. Thank you and maybe a quick question Paul around maybe not real quick I didn't know for Apple Bob.

Bob that.

Obviously, having the diversification benefits if youre your segment was quite helpful. In this quarter.

I Wonder if you could just paint a picture of SAP, where you think you can take the business from here.

And what sort of fair additional resources, you may need both people call it expenses and debt and capital or balance sheet that resources, and what sort of fab, what's sort of expectations you want to set for us for the next couple of years.

Okay.

For the question.

I think as I've been talking about in the last number of years that we have been investing.

Particularly in our U.S. dollar strategy similar both in the U.S. region, but in the $1 globally.

And that has.

Let's turn the that's turned out to be a very good investment I think you saw some.

Some of the benefits of that and so far this year and the last couple of quarters.

So that that will sort of continued to be the focus or how do we continue to build though.

US dollar capabilities in those areas, where we choose to compete where we think we have competitive advantage and where we think we can make.

Strong returns.

And so in particular.

The corporate sector.

Ooh lots of opportunity, especially in in the U.S.

Significantly grow on our U.S. franchise in terms of corporate lending.

We are building it out.

Oh.

A greater on the investment grade side, but we're also going up in non investment grade side as well and this.

Endemic crisis, so far as lot of three opportunity to move clients as well as to upturn clients.

On the corporate lending side, that's the investment part and from that.

So we've been able to them to increase or wallet share it with respect to.

The capital markets transactions asset securitization yield offerings foreign exchange hedging et cetera, et cetera, So building the a product lines integrated with the client relationship.

On the.

Government side globally with the we have lots of opportunities still.

We had built up our SSD business fairly significantly in in dollars.

Were top five.

Dollar.

Market sure there.

That being said, there's just feel a more opportunity Susan will be a lot more financing in the government side, not just necessary, but in a provinces and.

Federal governments are in agencies et cetera. So we see continued opportunity there and we've also a branch stone and from dollars then we're doing Sterling and we're.

Started.

Roads into euro as well.

And then if you look at the other institutional client base be of hedge fund a real money.

Central banking.

We've expanded our product suite.

In order to both help on the origination focus but also to.

Build a client and product relationships there so prime services commodities foreign exchange.

Various structured product businesses that we're building in the U.S.

On equities et cetera. So.

I think what we will do is a unit and we haven't been as we've tried to make those investments.

You know partly of adding that people, but also partly of looking at where we need to find synergies in order in productivity in order to fund and and we're finding that as well it because you will know.

There's been a lot of electronification of many of the business opportunities and that leads to a productivity.

Allows us money to to invest so I think on average we want to.

Continue to grow the franchise.

There aren't a lot of opportunities in our marketplace to do you know significant out acquisitions, but we have added teams and we'll continue to look for that.

And then we'll add people and will integrate and build franchises and moves we have in Canada, which still remains an important market as well.

Very helpful. Thank you. Thanks.

Thank you for the next question is from Paul holding some JBC. Please go ahead. Your line is open.

Thank you good afternoon.

Ask you fear perspective around timing for potential timing under your base case for actual loan impairment.

What we've heard from someone the other banks is first scrapped obviously see these loans referrals roll off which is kind of end of Q4 for partway through Q4 van and.

And then sort of impairment, peaking.

20.

I'm wondering if that's consistent with your view or how are really again.

Given the timing on it there.

Yeah, well thanks for the question so as you know.

Both the differ programs and all this stimulus provided either to corporations auto individuals have been very beneficial so.

I'm not seeing a lot of impairments in the near term.

Amarins to me will pickup when some of the stimulus.

Programs and and in my judgment that will be.

In 2021, I can't pinpoint a quarter, but my gut tells me will be more the second half of 2021.

Interesting okay.

Thank you for that and then second question would be with respect.

And.

Retail banking and just wondering.

How you're viewing potential market share opportunities today.

Across mortgages and other personal lending products.

Given the covert uncertainty is if you pull back a bit in terms appetite to gain market share or is that more.

Steady course in terms of what you want to do from market share perspective.

Okay. Thanks to the question Terry that's I'll talk a little bit about rattling them into the business. So overall so.

This quarter are at sequential volume growth would have been third relative to our main competitors at that.

Like I think about the corner, we were competing in some sense with one I'm tied behind our backs as of August 24.

We have fewer branches opened them three evercore tough competitors and I think we spend a.

A lot more conservative with our safely opening.

He said that you know by the end of September Oh, we would have that the majority of branches open Oh everything being equal was 13 vitamin Shoppe felt comfortable next month.

And so if I just step back and look at a reasonable.

I feel really great about how well positioned for growth.

You may recall that in 2018, we implemented our feature ready strategy and those distribution changes were an adjustment for her colleagues in branch banking in particular.

Adjusted to the modeling in particular, the Handoffs, Tim as more complex deals to the mobile markets, especially when we entered this year.

We really saw an uptick that kinda, 40% volume year over year increase to clean coal that a branch banking activity and so.

We went into coated with that flattening of the current activities and the closure of the branches. We have seen a branch origination come off the bat and then from mobile market specialist.

We went into the cobot period.

Change to have customers signing with mobile mortgage special.

Quite a little better set up.

Quickly sort of got ourselves in a place where that capability. It's there that caused us a little bit of drag in the early part of the quarter. We really saw significant increases by July and our third party volumes were I'm very strong.

In July and our branch originations are picking up so with the investments we've made in distribution operations in automation in training and with the network open.

I feel like we're well positioned to grow the business and our attention that's very strong up 60 basis points in the quarter.

From a risk perspective, because that was a component of your question.

You know we continue to have grown this business kind of mid single digits over a number period.

And have been able to do that within our policies and our risk appetite.

Great. That's very helpful color had thank you.

Thank you next question, there's some Nigel machines now for a very tough investment research. Please go ahead.

Good afternoon, I just had two questions for you and the first if I could turn to risk weighted assets.

And when I looked at credit risk.

Hold on asset quality that was a benefit this quarter I was wondering speak to what drove that I assume it's a retail a exposures and maybe.

Yeah, I think probably didn't tells us how that split between residential secured versus a qualifying revolving credit.

Yes, so the asset quality.

Improvement is really coming from two things it's lower.

Lower utilization of lines, so lower utilization part of it would show up on the volume, but when you are low utilization of piece of which shows up as basically quality because the probability of default is less so a part of that benefit as we attribute it to quality and then the second part of that.

It is we did update our non retail.

<unk> parameter for 19 data and as you know 19 was relatively benign so we've got.

Some benefit from that so overall those two things sort of offset any credit are definitely increase because of migration.

Okay. So just a follow up on that it doesn't mean that the non retail R.W.A. updates are gonna lagged a bit or through the cycle is or how should I interpret it or under the retail is gonna be more sensitive and notably way or a third we look at it.

Yes, so retail.

I would say does lag because what what happens in retail as you go to wait for the Bureau scores to get updated and that's sort of feeds back into the R.W.A. The other thing that you have to keep in mind also is there's a charge off we charge of retail much much faster, so theres a bit of like because of because of retail.

I think the other very important point is that generally you know direct gap calculations are quite different than higher first night right IRS nine as forward looking if it's more volatile because a macro factors because of probability weight.

Our W is all backward looking it's a through the cycle view and generally that view because it's through the cycle it changes very slowly.

Yeah, that's very helpful and just a last quick question. If I may on your deferral book No specifically on small business in commercial I know, it's too early to talk about impairments, but could you maybe just provide some color on geographic mix and second mix effect or deferred book just so we have some insights on what the composition is.

Yes, so that that deferred book on the commercial side.

Really goes back to what are the impacted industries and you'll notice.

We have a new slide I believe it slide number 29, where we sort of call out what the industries.

Focus our and part of those industries are focused include commercial real estate.

And there's some riskier segments within commercial real estate. For example, you know retail accrete to the extent you you have nonessential retailers on your rent rolls that there's some risk there there's some risk associated with you know with hotels.

Some with office three you know the other segment I'd call out it's just a retail segment in a restaurant and again coming back to non essential retailers.

Then this transportation and within transportation transportation and cruise lines, though exports is fairly small they're a bit in health and social services as well. So then if I come back to deferrals and who took the deferral really along the lines of the impacted industries. So some of the biggest users of deferrals aren't coming.

Actual real estate you know our in retail because these are the sectors that are most impacted by covert 19.

I hope that helps.

That's very very insightful. Thank you for the color.

Yes.

Thank you at the next question is from Scott Chen from Canaccord Genuity. Please go ahead. Your line is open.

Good afternoon, just on the U.S. retail side I think in your prepared remarks, you talked about a record U.S. mortgage originations and I was wondering if you could provide.

Perspective on a on kind of the outlook on U.S. mortgages and perhaps on cards in autos are and how its progress through Corbett.

Sure It's Greg Scott. So thank you for the question. So first I would just give you a little bit of a backdrop that you know over the last five plus months or so we've definitely seen a slowdown in general activity starting in March.

And then progressing through various parts of the footprint in the U.S.

Certainly.

You saw a lot of slow down in the mid Atlantic in particular in New York, New Jersey in Pennsylvania markets. As those are the hotpoint for covert that would translate to lower card spend a lower retail credit line spend.

And and certainly we saw that that play out in the mid Atlantic States as we got into late.

Spring and then into early summer and mid through mid summer really the focus of of the pandemic in the U.S. shifted to the southeast really down through the Carolinas in Florida, and you would've seen a lot of that slowed down where retailers, both large and small consumer spending patterns would have slowed down.

And you know you would've seen that while some of the more hard hit markets earlier on we are starting to reopen up on the mortgage front.

The way that translates is you know with weight. So low you certainly saw a shift from a percentage from purchase volume to much more refinance volume.

And but what we're certainly seeing real time right now is record volumes that we're taking in.

And right now for a refinance in some purchase volume that is still holding up.

There's a lot of activity tivity right outside the major cities in the suburbs and a and we're seeing really record activity up and down the footprint from mean to Florida as I said, so mortgages are up given what we've talked about more muted growth than we've traditionally had over the last year or two on auto and certainly depressed.

Card spend translating to less.

Card balances, let's get to what you want to Scott.

That's perfect and maybe just a follow up on that just.

Just on margin on the U.S. side down 43, beeps quarter over quarter. Yeah me can you maybe kind of talking about the outlook there the bottomed and then maybe from accounting perspective as well.

Alright, well, let me start then I'll turn it over to Terry So, yes, certainly you called it right 43 basis points quarter over quarter, and then 77 basis points year over year, but for the quarter over quarter number. What you saw it was a little bit of a lag in linerboard didn't come down immediately with 150 basis points from rate cuts that took effect in March right away you still had.

Widening credit spreads in the market because of you know all that was going on at that point and then certainly a lot of that LIBOR spread came down as you got into Q3 to more normalized levels, given where fed funds were.

And that placing a you know a great focus on our own margins.

And you see some of that in addition to us.

We had very very strong deposit growth. So the way I'd give you the quarter over quarter walk and year over year look as well is its rate certainly, but the volume and mix of the business because the volume that we're taking in this is certainly being reinvested a far lower rates than would have been traditionally on the book.

So that's kind of a the view, we're not really updating the outlook.

Given.

So a lot of uncertainty over the next couple of quarters as we think about this but I'd say the general trend, given where long waits or you could see further pressure on a bit on on margins as you look out.

And next carried to pick up on the similar seems you know about a half the rate cuts I would've worked their way through in Q2 and they've been fully.

That's true in Q3, there will be at stones downward pressure in the near term.

Lower cards in the asset mix would be one contributor to that and then you know over time tracking repricing will play a role.

Yeah, well moving parts, but certainly more modest compression we would think.

Thank you very much.

Thank you.

Once again, please press star one it's have any question.

The next question is from Gabriel to Shine from National Bank Financial. Please go ahead are you know Oh I forgot how to retract my question not only to ask anything [noise].

Good to hear from you gave [laughter] just wondering here on the record [laughter] hope you're doing well [laughter]. Thanks. Thanks.

All right accident.

Thank you.

In that case, there are no more questions in queue. At this time I would like to turn the meeting over back to Mr. Darren.

Much money for closing remarks.

Thank you operator, and thank you all for joining us a this afternoon I'd say in overall quite happy with how the quarters turned out a given the environment in which we.

All living through a you know the performance has been good or businesses are doing you know what do you expect us to do from TV and very strong capital levels and we talked about that on the call is also a good advantage for the bank or to have so overall happy very happy with how things are turning out.

Happy from a relative perspective, I guess it off with the environment Nobody's happy and hopefully you know the next 90 days Oh, we are into a different situation.

I would like to take the opportunity to think my duty colleagues around the world I mean, they've done just a masterful job and adjusting to a very difficult environment and they've been there to deliver.

Our customers and for the communities in which we live and work. So so a big thank you to 90000 strong TD bankers around the World. You know you you make us feel proud as to what do you do day in India.

With that again, thanks for joining us today, and we look forward to having another discussion 90 days from now thank you very much but Mike.

Okay.

Thank you. The conference has now ended please disconnect your lines at this time, let me. Thank you for your participation.

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Good afternoon, ladies and gentlemen, welcome to the TD Bank Group Q3, Twentytwenty earnings Conference call I'd now like during a meeting over to Miss Gillian Manning. Please go ahead mismanaged.

Thank you operator, good afternoon, and welcome to TD Bank Group third quarter 2020 Investor presentation.

We will begin today's presentation with remarks from Barrington as Ronnie the bank.

After which relies on that the bank CFO will present, our third quarter operating result.

Hi, David Wallis Chief Risk Officer will then offer comments on credit quality after which we will invite questions from prequalified analysts and investors on the phone.

So here to answer your questions today, our Jerry Curry group had Canadian personal banking, great Broccoli, President and CEO TD Bank America's most convenient bank, Bob Dorrance group had wholesale banking.

Please turn to slide two.

At the time I would like to caution listeners that this presentation contains forward looking statements that there are risks that actual results could differ materially from what it disgust and that certain material factors or assumptions were applied in making these forward looking statement.

Any forward looking statements contained in the presentation representative use of management and our presented for the purpose of assisting the bank shareholders and analysts and understanding the bank financial position objectives in priorities and anticipated financial performance.

<unk> looking statements may not be appropriate for other purposes.

I would also like to remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results to assess each of its business isn't to measure overall bank performance.

The bank believes that adjusted results provide readers with a better understanding of how management views the banks performance.

We'll be referring to adjusted results in his remarks.

Additional information on items of note the banks reported results and factors and assumptions related to forward looking information are only available in our jewelry 2020 report to shareholders with that let me turn the presentation over there.

Thank you again and thank you everyone for joining us today.

Well the last six months D 90000 colleagues that worked tirelessly to keep the being fully operational took over 19 crisis.

Delivering 26 million customers when they needed as well.

Well the working from home or is it the location score rather location.

Their hard work and dedication has been inspiring.

I'm very proud of the tremendous effort.

It under difficult circumstances, and I, thank them for their contributions.

D is a bank, but we are also a community we get for each other and our customers.

I wanted to this graces culture in our people remain among our most important advantages.

What we'll see us through this period of <unk> and I'm confident they will enable us to emerge even stronger in the months ahead.

Well with 19 has affected us all in ways, none of us could've imagined.

The last few months he does become clear that some communities that are being disproportionately impacted to address that PDL made important financial commitments and introduce new programs.

Support support recovery and community resilience across our footprint.

This includes allocating $10 million through the deep to the annual TD ready challenge the organizations that are developing innovative and measurable solutions to address the inequities exaggerated by the pandemic.

We're also taking steps to confront more longstanding injustices.

This quarter and de black racism and racism in all its warm moved to the forefront of the global conversation in response to the for the elevated longstanding commitment to the active advancement promotion and celebration of inclusion and diversity within the bank and across the cycle.

We announced concrete target, it's an important initiatives to grow black indigenous and minority executive representation that that's an organization organizations that fight racism and promote inclusion introduced new training and development across the bank and to contribute directly to a future.

Everyone can thrive and achieve their goals.

This past quarter thousands of TD colleagues participated in virtual event.

Better understand the power of inclusion elevators to elevate us all to celebrate right an indigenous history to join the airport and make a direct contribution.

While we may be apart physically we are in many ways closer than ever stronger than ever as a purpose driven bank. This important work is fundamental to who we are what we stand for and what we strive to achieve.

Let me turn out to the current environment and outperformance.

Entered this growth is well positioned a threat and through prudent financial and risk management practices, we remain well capitalized with a high quality balance sheet and strong liquidity.

This quarter, we saw encouraging signs of activity across our footprint is economies progress with reopening plan.

People started to return to their workplaces forms stepped up hiring consumer and business spending picked up and applications for long before the decline significantly.

We know the road to recovery will always be smooth the unprecedented actions taken by the bank our industry governments central banks and regulators have been critical in helping save up a deeper graces and these measures cannot be sustained indefinitely, but they have served as a powerful bridge.

Sustaining households, and businesses as the global search or a vaccine or effective treatment proceeds the resumption the resumption in activity now underway attest to that.

The longer term outlook is still uncertain and a measure of caution is warranted, but so do.

I'm cautious optimism given the positive signs we have seen as the bank and as a society, we must remain prudent but also flexible ready to adapt in real time as the situation changes on the ground. That's exactly what we again did in Q3 and what we will continue to do.

Last quarter I talked about how quickly we were able to reshape our operations.

Stay connected to our customers and support them to the depth of the graces. Thanks to the investments we made and continue to make in technology training and capabilities.

Those investments prove that worth again this quarter as activity accelerated across our businesses.

Digital applications have been enhance with new features self service capabilities and other improvements, resulting in a continued high level of successful online and mobile transactions and engagement.

In the U.S., we continue to process tens of thousands of small business loans under the Triple B program in record time, helping support the backbone of the economy.

Our new Canadian TD ready advice program is bringing personalize and timely digital content to millions of customers in real time.

Advisors in our branches DD ready advice centre and on the phone are reaching out to customers to help them think through their financial options. During this difficult period.

He declared our chat, but is providing seamless nor contact information to thousands of customers a week freeing our PD bankers to provide crucial financial advice with those.

Needed most.

And thousands of contact center colleagues at providing expert guidance most enable from home.

We're also investing in the future.

We continue to modernize our technology infrastructure, including migrating to the cloud to leverage it scalability security and speed.

We're also enhancing our customer and colleagues facing applications to deliver better experiences for our customers and a more flexible and productive work from home environment for our people.

Its customers become more digitally enabled we're working to increase the safety and security of customer enable data sharing through the launch of Fdx in Canada, and other ventures with industry participants.

And we were delighted this month to introduce our updated suite of pediatric led visa cards following year, Canada. The announcement of the new Aeroplan program.

Well, we know it's early for many Canadians to be thinking about travel we will be ready when they are we're excited to deliver this new benefits, which further differentiate our position as the number one credit card issuer in Canada.

We also continue to invest in our people.

Future ready in Canada and be legendary in the US we're empowering our colleagues to provide customers with the advice they need to navigate is uncertain times with confidence.

We're also investing in our colleagues experience and career development always central to Tds culture.

This is important more than ever today.

Where possible we are helping our colleagues manage the demands a work in home life.

We are helping them develop their capabilities and advance their careers to redeployment opportunities as well as training through TV thrive our self serve learning platform, which now has 60000 users.

But colleagues working at a DD location branches store, we continued to take precautions to protect their and our customers well be.

Our financial results this quarter reflect these investments as well as the gradual economic reopening that is underway.

In Q3, we delivered earnings of $2.3 billion EPS of $1.25 much improved from last quarter as continued volume growth moderating provisions for credit losses, and strong wealth and wholesale revenue helps offset ongoing margin and fee pressure in our personal and commercial.

Banking businesses.

In addition, our PD one ratio climbed to a decline a point in a half did well in a half percent lifted in part by the transition of our use non retail portfolio.

Okay.

In Canadian retail, we saw strong quarter over quarter earnings growth led by our wealth and insurance businesses.

Net asset growth elevated trading activity and a fourfold increase in online account acquisition drove record wealth revenue.

Sure as revenues climbed on a volume driven premium growth and strong take up of our enhanced digital capabilities.

We maintain good momentum in personal and commercial banking with strong volume growth on high levels of customer engagement and the continued acceleration in consumer spending and the new account growth.

A new account growth throughout the quarter as economies, we get reopened.

In the U.S.U.S. retail bank earnings improved significantly from last quarter, we continue to work with our customers through this difficult period and the results are evident and strong loan growth and peer leading deposit growth.

Together with flat expenses, this helped offset the impact of lower margins and fee income.

At the segment level TD Ameritrade made a strong contribution to earnings Boyd, where heightened trading activity and we still expect the Charles Schwab transaction, which remains subject to certain conditions to close this calendar year, making TD and important shareholder in an industry leader with the strength at scale.

Needed to compete and grow in a highly competitive market.

Wholesale banking delivered record revenue of $1.4 billion and record earnings of $442 million this quarter on strong trading and client underwriting activity, including several marquee deals.

We have a joint book runner on Air, Canada, 1.6 billion dollar share offering and private placement of convertible notes.

We also served at book runner on Horizons, 1.3 billion Maple issue as our US dollar strategy continues to gain traction.

And we built on our leadership in the Sss base acting as joint lead manager on eight U.S dollar benchmark rates, including a three year $1 billion over 19 response bond to support the private sector in Latin America, and the Caribbean duties first book runner role were IB and Wes.

Our third quarter results reflect the resilience of our diversified business model and the power of our customer centric strategy. Our model is a powerful enabler, allowing us to support customers through these volatile and uncertain times, while continuing to make strategic investments to serve them even.

And better in the future.

I'll now turn it over to realize will review the numbers in more detail rias.

Thank you Bart and good afternoon, everyone. Please turn to slide eight.

This quarter the bank reported earnings of $2.2 billion, an EPS of $1.21.

Adjusted earnings were $2.3 billion and adjusted EPS was $1.25.

Revenue increased 2%, reflecting volume growth across our businesses and record welcome wholesale revenues, partially offset by margin compression and lower fee income as a result of reduced customer activity in the personal and commercial banking businesses.

Provisions for credit losses decreased by 32% quarter over quarter to $2.2 billion a.

The decrease was mainly attributable to lower performing pcls, reflecting a smaller increased to performing allowance for credit losses this quarter.

<unk> expenses decreased 1% another year over year basis.

Please turn to slide nine.

Canadian retail net income was $1.3 billion down 33% year over year, reflecting higher credit losses, lower revenue and higher insurance claims on an adjusted basis net income also decreased 33%.

Revenue decreased by 2%, reflecting lower margins, partially offset by volume growth and higher wealth and insurance revenues.

Average loans rose, 3%, reflecting growth in both personal and business volumes.

Deposits rose, 18%, reflecting double digit growth imbalances across all businesses.

Health assets increased 4%, reflecting new asset growth and market appreciation.

Margin was 2.68% a decrease of 15 basis points from the prior quarter, reflecting lower interest rates.

Total PCL decreased by 18% quarter over quarter, primarily reflecting lower performing PCL.

Total PCL as an annualized percentage of credit quality was 0.86% down 21 basis points quarter over quarter.

Expenses were flat year over year on a reported and adjusted basis.

Please turn to slide cat.

US retail net income with us $490 million.

Yes, retail bank net income was $260 million down use $487 million, reflecting higher pcls and lower revenue.

Average loan volumes increased.

Year over year, reflecting growth in the personal and business customer segments, including record mortgage originations.

Deposit volumes, excluding the TD ameritrade sweep deposits were up 24%, including 25% growth in core consumer checking.

TD Ameritrade sweep deposits were up 37%.

Net interest margin was 2.50% down 43 basis points sequentially, primarily reflecting the impact of lower deposit margins and higher cash in deposit balances.

Total PCL, including only the banks contractual portion of credit losses in the strategic card portfolio was you at $655 million down 20% from the prior quarter.

The U.S. retail net PCL ratio was 1.51% down 52 basis points from last quarter.

Expenses were flat year over year, reflecting productivity savings, partially offset by higher legal provisions and cost to support government programs.

The contribution from TD is investment in TD, Ameritrade was us $230 million up 5%, primarily reflecting higher trading volumes, partially offset by reduced trading commissions lower asset based revenue and higher operating expenses.

Please turn to slide 11.

Net income for wholesale was $442 million, an increase of $198 million, reflecting higher revenue, partially offset by higher PCL and higher expenses.

Revenue was $1.4 billion up 53%, reflecting higher trading related revenue and higher underwriting fees.

PCL was $123 million down 67% from the prior quarter on lower impaired and performing PCL.

Expenses were $669 million up 13%, primarily reflecting a higher accruals for variable compensation.

Please turn to slide 12.

The corporate segment reported a net loss of $130 million in the quarter compared with a net loss of $173 million into third quarter last year.

The decrease primarily reflects the positive impact of tax items, which are held in other adjusted net loss or $76 million compared with an adjusted net loss of $109 million in the third quarter last year.

Please turn to slide 13.

Our common equity tier one ratio ended the quarter at 12.5% up 144 basis points from Q2.

The primary driver of the increase was a decline in credit risk RW, eight which added 92 basis points to capital this quarter.

72 basis points of those 92 was attributable to the transition of our us non retail portfolio from standardized.

And our energy.

We were pleased to be able to bring forward. This transition, which we had hoped to implement by year end into the third quarter.

The remaining 20 basis points reflect lower volumes reduce line usage and parameter updates.

The us Nonretail abbvie transition coupled with the increase in performing allowances. This quarter eliminated the expected loss shortfall capital deductions and created an expected loss excess which added to our transitional arrangements for expected loss that credit loss provisioning.

In aggregate these contribute at 31 basis points to our Cetone ratio.

Other factors included a 15 basis point increase attributable to organic capital generation, and then 11 basis point increase later to the issuance of common shares under our dividend reinvestment plan.

The increase in our capital ratio this quarter. The bank has decided that beginning with the dividend declared today and until further announcements there'll be no discount to the shares issued under our dividend reinvestment plan.

Our less leverage ratio was 4.4% this quarter and our LCR ratio as 150%, both well above regulatory minimums.

Ill now turn the call over to Jane.

Thank you realize and good afternoon, everyone. Please turn to slide 14.

Gross impaired loan formations were stable quarter over quarter at 23 basis points, primarily reflecting a decrease in the us and Canadian consumer lending portfolios and the wholesale segment driven by lower formations in the oil and gas sector.

Largely offset by higher formations in the us and Canadian commercial lending portfolios.

Please turn to slide 15.

Gross impaired loans ended the quarter at 3.8 billion of 51 basis points up four basis points quarter over quarter, driven by the us and Canadian commercial lending portfolios and the Canadian resolute portfolio largely due to the cessation of info.

Excellent activities to resolve impaired loans in response to covert 19.

Partially offset by the impact of foreign exchange.

Please turn to slide 16.

Recall that our presentation reports PCL ratios, both gross and net of the partner share of the us strategic card credit losses.

We remind you that credit losses recorded in the corporate segment up fully absorbed by our partners and do not impact the bank's net income.

The banks Pcls in the quarter were 2.19 billion or 117 basis points, decreasing 1.3 billion of 59 basis points quarter over quarter.

Although pcls have decreased across all segments quarter over quarter PCL remains elevated from prequel with 19 levels, primarily due to the ongoing pandemic.

Please turn to slide 17.

The banks impact PCL decreased 138 million quarter over quarter as reflected in the wholesale segment, largely driven by less oil and gas related credit migration.

Performing PCL decreased 894 million, reflecting a small increase to the allowance for credit losses this quarter.

Please turn to slide 18.

The allowance for credit losses increased 1.3 billion this quarter, primarily related to higher performing allowances due to the impact of covert 19 as incorporates our economic outlook for Canada, and the us reflecting a slower pace.

Recovery that forecast in the previous quarter.

Allows for credit losses increased across all segments and all major asset classes with the largest contribution by asset class reflected in the business and government portfolios across a broad set of industries.

Over the past two quarters in response to the over 19 pandemic. The bank has added $3.9 billion in allowance, increasing our allowance coverage by 50 basis points to 124 basis points.

The potential for further changes to our allowance coverage will largely depend on the magnitude and duration of the ongoing corporate 19 pandemic.

Please turn to slide 19.

Let me now take a moment to touch on the banks deferral programs.

And balances under banked, let differ programs decreased 14 billion from the second quarter.

Furrows have been largely concentrated in our resolute auto and commercial lending portfolios.

From the inception of these programs in March deferral requests peaked in April and have been steadily declining since then.

As expected different programs and government stimulus have been effective in helping our customers manage through the pandemic to date.

While it is too early to see any meaningful impairment in deferred populations. We will continue to monitor an assistant closely over the coming quarters as both the deferral and stimulus periods and.

Now, let me briefly summarize the quarter.

We continue to operate through challenging and uncertain conditions, given the unprecedented impact from the over 19 pandemic and have added allowances for credit losses Accordingly I.

Im satisfied with the banks allowance coverage, which reflects our current economic outlook and our portfolio and geographic mix.

To conclude we remain well prepared to manage through these difficult times with that operator, we're now ready to begin the QNX session.

Thank you.

We'll now take questions from the telephone lines. Instead of a question then you're using speakerphone. Please lift your handset for making your selection.

In Keller question. Please press star one on your telephone keypad.

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Please press star one at this time extend the question there will be brief.

Time on the participants register for questions. Thank you for your patience.

We had our first question from piece can you from a capital. Please go ahead. Your line is open.

Yes, thanks, good afternoon, everyone.

One the start of the question on line and see expenses.

I was looking back and this was the first time I think I can see PNC bank will.

Excluding the wealth and insurance component has had expenses down or flat since way back in 2016, and clearly these are extraordinary times, but can you give a bit of an outlook around how much you think you can or will or want to rein on expenses over the next few quarters is flat to down something we contemplate here relative to the Apollo.

Yes in the spend you want to undertake last few quarters.

Couple of years.

Thanks, a lot thanks to the question.

So we have continued to manage our expenses quite actively and I would say prudently.

And as you mentioned for PMC, they were down sequentially and year over year, despite actually absorbing cobot related cost involving rewards for our folks.

In the field as well as.

In enhanced cleaning protocols and safety and security enhancements.

Say that.

Talked about.

For quite a period of time believers that are available to us.

We will always invest.

For the future and we will always going back to ensure that protection and compliance requirements are match.

And at some of the levers that were available to us.

Quarter, or some sequencing and prioritization of more discretionary activities as well as add some marketing expense that just didn't make sense in light of the context externally.

What sort of in a position right now to give guidance because theres. So much uncertainty going forward, but what I can tell you when we will continue to prioritize investments to ensure.

That we need protecting complied, we invest in our business strategies and that we.

Also consider.

Generic investments to build business.

Given month many of the investments we've made and panel.

We're leveraging including our number one digital position in Canada.

So pretty confident that.

We're not putting in place.

Well the quote.

Should we think about Q4.

On the past.

We thought about it as a bit of a lumpy quarter informative expenses flat without a headwind for for this year at all.

There are lot of moving parts and if you go back to the beginning at the year. One thing that I had commented on with the shape of our expenses last year in terms of first half second half.

Notwithstanding a lot has changed including Covenant, we will still have cobot expenses in Q4.

Just the nature of that first half second half.

Probably would it would see.

Decent shape for expenses in Q4 hours things being equal.

Okay, and just by way of a quick follow up if I could.

A very small going into a loss incorporate rather I think you said that was driven by tax item I am I reading that right, but that's about 30 million this quarter.

That was the change in the expenses at this quarter and down would be about roughly right.

Okay. Thank you.

Thank you. The next question is from Gabriel Duchaine from National Bank Financial. Please go ahead. Your line is open good afternoon.

A.

A couple of questions here on the credit stuff.

First.

$2.2 billion provisions about 60% of that is performing provisions.

Wondering if you can maybe ballpark how margins are performing was due to model adjustments and how much was due to.

Our management overlay.

Recall that these days.

Yes. Thanks, Thank you for the question.

If I look at the last two quarters.

Jordi, Okay, and what I'm, saying majority is very high is over 85% of outperforming allowance over the last two quarters is modeled so the overlay is.

Basically about 15%.

Over the past two quarters, so that'd be about the same no big no skewed no difference on rescue this quarter.

Well I would say the overlays are coming down because there's more on the macro outlook gotcha.

And then.

Wondering if you can quantify this for me.

And you talked about.

What conditions and need to arise for you to make adjustments to your Hcl just wondering what would your easier look leg or what kind of increase are we talking about.

You were to shift the 100% that the pessimistic scenario.

Yes, that's good question, but thats not a number we were disclosed I think you know that probability.

Good.

Is greater than our base is yellen. If you look at our numbers that difference has actually increased which is telling you. We are putting greater weightage that we have in prior quarters on on the downside and the additional data point, they're willing to share with you is that.

The dollar site, where actually using a w. shape.

Okay. So you're.

You're waiting on the downside is greater than you're waiting on the base case.

No I am saying, we're waiting on my downside is increased quarter over quarter. Okay.

Thank you have a good rustier summer.

Thank you Gary.

Thank you have the next question is from many from from Scotiabank. Please go ahead. Your line is open.

Hi, Good afternoon, just a question.

On the sale as well up again to 9.2.

Billion I'm, just wondering I appreciate a lot of it is driving being driven by models, but in terms of sort of that management overlay piece.

At what point.

Well too high in your view can there be such a thing and.

On a related question, what kind of coverage ratios do you prefer to look at and and.

So what's your perspective on that question have we.

When I look at it to you could say could just looks too high.

Yes.

Second question.

Honestly I don't have a target coverage ratio thats not the way we work like every quarter, we look at what the forward looking scenarios are.

We'll assess we'll do a bottom up assessment as well we triangulate all the data and then we'll take call as to what's most appropriate for our our book of business I think you're going nowhere and very uncertain times the shape of the reopening.

Who knows what's going to happen things could plateau.

In a few months. So we're taking that into account were being appropriately prudent now with respect to overlays like typically I don't want to see too many overlays I'd like to see it all in our model output, but you have to appreciate in unprecedented times. These models are trained on historical data that's quite.

Deferred okay. So they shouldn't be an expectation that we would use experts judgment and that will do an overlay, but over time I expect the overlays to come down.

Thanks for that and maybe approaching the differently just as a follow up I mean, it definitely makes sense that some banks are more conservative than others, but I.

I guess a question is is there something in your business that.

Is making you more concerned that maybe we wouldn't have we wouldn't see is there a particular issue that.

That is impart driving this conservatism.

Yes, well thanks for the questions on my answer is no. Our allowance reflects our geographic mix. It reflects our product mix and very importantly, it reflects the times where in.

Hi, yes, being appropriately prudent.

So theres no.

There's nothing more than that.

Thanks Roger.

Okay.

Thank you and the next question is from Ebrahim Poonawala from Bank of America Securities. Please go ahead.

Good afternoon.

Yes. It does this first I wanted to follow up on the comment you made about the leasing on the downside increase quarter over quarter.

I get why that would be the case in the U.S.

Thanks, Bob Wilson multi bits in Twoq results could you tell us what on the outlook for Canada. The Canadian economy to keep you updated that would cause you gain teams that were meeting the downside, but the Canadian retail segment.

Yes, it's a good question, but let me kind of Telly Awards.

What's driving the numbers up it's just not just of the downside case, what's driving the numbers is that even our base case, which was earlier.

Is now reflective of a very gradual recovery. So if you go to our disclosures.

You'll see for Canada for instance, our unemployment numbers are higher at GDP numbers are lower and HP I'd numbers are also lower that's what's driving our allowance numbers.

It's less took yes, there's little more weight on the downside, but if you look at the difference there. It's not just at the downside is driving on numbers.

We believe we are an uncertain times, it's the time to be prudent and our economic outlook reflects that.

Understood and I guess, so called question around capital as I guess.

John significant date I guess.

As you look out it seems like we should still see the calculations is higher and I saw new that line talking about.

You think you'll be opportunistic on anymore, just talk to us it on outlook on capital and just comes from a management standpoint are you ready if an opportunity what to come to over the coming months.

To kind of fall pursue.

Strategic M&A.

Sure I am so this is there.

So couple of points I mean, if you look at a you pointed out the one a 12% so I'd say historically and traditionally TD. Our view is going to having strong capital is always a good thing regardless of the environments are you seeing a bit of that live.

Secondly, I think you just Jay just as the three or four questions and all of them carried the theme off that ditto.

We are in the uncertain times in our this crisis is unprecedented.

Yes, we are seeing green shoots we're seeing it a gradual reopenings, we're seeing somewhat of a normalization in certain jurisdictions in which we operate but we also recognize that this things could change wed dramatically. It could change because there is a spike in infections or whatever the case might be SCUSA reopening.

So who knows what's going to happen four weeks from now so the bank is appropriately prudent and cautious about it and when you're in that situation to have very strong capital numbers is also a good thing we think thats, the where traditionally PD would operate and then I get to the point that you are asking.

This is an unprecedented graces I think there's an over use of the would unprecedented which is an appropriate phrase is an appropriate freeze will describe what we've seen the environment.

And without a doubt.

The in a before this ends there are going to be opportunities, we feel that if and when they were to present themselves.

Then TD as we have as we did in the global financial crisis, and most of the other downturns weve.

We experienced in our lifetime.

That we want to we prepared if there are compelling opportunities we want to make sure.

We look at them seriously and if that makes sense from a risk perspective return perspective timing perspective, cultural perspective than we want to be ready to act and capital levels provides us with that flexibility.

And then Mark just on that it is been a big believer in retail distribution both sides of the border does the crisis and that adoption of digital among customers make you feel differently about bank M&A.

It's hard to say I think there are different angles, we looked at from an M&A perspective, I think our belief in distribution has been more omni oriented.

I think this environment is showing that in our view on omni rather than digital only has turned out to be correct.

I think every channel of ours as long as we providing those personalize connected.

And seamless experience is another served us well and so I wouldn't want to.

So totally discount.

Bank M&A from it I think situation is such that we will look at any opportunity, but we would only do a deal that made sense from a risk and the financial and strategic perspective.

Well it and we are fair to assume that capitalization supplier from yet Needham.

Yes, I think.

I had mentioned on the call last time that.

We've been converting our.

Looks from standardized to advanced approaches for some time now and the us non retail portfolio.

That was almost the last one well the last one major portfolio to be converted so I think we're through that piece and I expect our capital from here to be more reflective of.

Organic.

Variables as well as potential migration effects if conditions get worse.

Got it thank you.

Thank you.

The next question is from Sohrab Movahedi from BMO capital markets. Please go ahead.

Yes. Thanks.

Two quickies one if I can just maybe ask RJ.

Maybe it's a bit of redundant question what is in past calls you've kind of reminded us that there is seasonality.

In the provisioning levels with that with the cards.

Three ships.

And that tends to kind of have that historically at spikes kind out towards the Christmas timeframe and coming out of that so Q4 in Q1.

Theres, obviously lots and lots of reserves you put up here right now, but is there still going to be some seasonality, we should be thinking about when it comes to the cards portfolio and your share of fit going into Q4 in Q1 up next year.

Yes.

Simple answer is yes, Q4 in Q1, so you see the.

Got pcls build up because of seasonality in Q4 Q1 to you will see seasonality, but what you should also keep in mind is that card balances generally coming down so so.

Seasonal impact may not be as great as it was previously.

Okay. Thank you and maybe a quick question or maybe not so quick I don't know for Apple Bob.

Bob.

Obviously, having that diversification benefits if youre your segment was quite helpful. In this quarter.

I Wonder if you could just paint a picture of staff, where you think you can't take the business from here and what should affair.

Additional resources, you may need both people call, it expenses and debt and capital or balance sheet that resources and.

What sort of said, what's sort of expectations you want to set for us for the next couple of years.

Okay. Thank you for the question.

I think as I've been talking about in.

Number of years that we have been investing.

Particularly in our U.S. dollar strategy, so thats, both in the west region, but in the $1 globally.

And that has.

Let's turn the that's turned out to be very good investment I think you saw some of the benefits of that and so far this year in the last couple of quarters.

So that that will continue to be the focus how do we continue to build out.

US dollar capabilities in those areas, where we choose to compete where we think we have competitive advantage and where we think we can make.

Strong returns.

So in particular.

In the corporate sector.

Uhhuh lots of opportunity, especially in in the us.

Significantly grown our U.S. franchise in terms of corporate lending.

We are building it out.

Yes.

Greater on investment grade side, but we're also building up in non investment grade side as well and this.

Pandemic crisis, so far as the other three opportunity to move and clients as well as to upturn clients.

On the corporate lending side Thats, the investment part and from that.

Uhhuh, we've been able to them to increase or wallet share it with respect to.

Capital markets transactions asset securitization yield offerings foreign exchange hedging et cetera, et cetera, So building the product lines integrated with the client relationship.

On the.

Government side.

Globally with the we have lots of opportunities still.

We had built up our SSD business.

Significantly in in dollars.

Were top five.

Dollar.

Market share there.

That being said, there's still a more opportunities Susan will be a lot more financing in the government side, not just unnecessary but in provinces in.

And federal government agencies et cetera. So we see continued opportunity there and we've also branched out and from dollars and we're doing Sterling and we're.

Started solid inroads into euro as well.

And then if you look at the other institutional client base be of hedge fund.

Money.

Central banking.

We've expanded our product suite.

In order to both help on the origination focus but also to.

Build the client and product relationships, there so prime services commodities foreign exchange.

Various structured products businesses that we're building in the U.S.

On equities et cetera. So.

Yes, I think we'll we will do is at noon and we have been as we've tried to make those investments.

Currently out of adding net people, but also partly of looking at where we need to find synergies in order in productivity in order to fund.

And we're finding that as well I think as you will know.

There's been a lot of electronification of many of the business opportunities in that leads to productivity.

Allows us money to to invest so I think on average we want to.

Continue to grow the franchise.

There aren't a lot of opportunities in our marketplace to do.

Significant acquisitions, but we have added teams and we'll continue to look for that.

And then we'll add people and will integrate and build franchises and moves we have in Canada, which still remains an important market as well.

Very helpful. Thank you. Thanks.

Thank you for the next question is from Paul Holden KBC. Please go ahead. Your line is open.

Good afternoon.

Ask you fear perspective around timing for potential timing under your base case for actual loan impairment.

What we've heard from someone the other banks is first graft obviously CBS.

Loan deferrals.

All off which is kind of end of Q4 for partway through Q4 van.

And then sort of impairment, peaking mid 21.

And if that's consistent with your view or how really I guess, how you view and the timing on apparel.

Yes, thanks for the questions. So as you know.

Both the differ programs and all this stimulus provided either to corporations auto individuals have been very beneficial so.

Im not seeing a lotta impairments in the near term.

Payments, Tony will pickup when some of the stimulus.

Programs and and in my judgment that'll be.

In 2021, I can't pinpoint the order, but my gut tells me it will be more the second half of 2021.

Okay.

Thank you for that and then second question.

With respect to Canadian.

Retail banking and just wondering.

How you're viewing potential market share opportunities today.

Across mortgages and other personal lending products.

Given the covert uncertainty is if you pull back a bit in terms of appetite to gain market share or is that more.

Steady course in terms of what you want to do from market share perspective.

Thanks.

Thanks for the question sorry, that's I'll talk a little bit about razzle in them into the business overall.

So in this quarter, our sequential volume growth would have been third relative to our main competitor.

I feel like it's I think about the quarter.

Competing in some sense with one tied behind our backs as of August 24.

We have fewer branches opened three or four top competitors and that includes Ben.

More conservative with our safely opening.

So that by the end of September.

I would have that the majority of branches open all other things being equal as Fred environment Shakes out we'll go next month.

So if I just step back and look at a reasonable.

Really great about how we're positioned for growth.

You may recall that in 2018, we implemented our feature ready strategy and those distribution changes were an adjustment for our colleagues in branch banking in particular.

The adjusted to the model one in particular, the Handoffs, Tim as more complex deal to the mobile mortgage specialist, but when we entered this year.

We really saw an uptick that 40% belong in Europe, we are increasingly coal bed.

Inch banking activity.

So.

As we went into coated with the flattening of the current activities and the closure of the branches. We had seen branch originations come off the bat and then from mobile market specialists.

As we went into the cobot period.

The change to have customers signing with mobile mortgage special required a little bit of setup, we quickly sort of got ourselves in a place where that capability was there that caused us a little bit of drag in the early part of the quarter. We really saw significant increases by July and our third party volumes.

Were very strong.

In July and our branch originations are picking up so with the investments we've made in distribution operations in automation in training and with the network open.

Feel like we're well positioned to grow the business and our retention is very strong up 60 basis points in the quarter.

From a risk perspective, because that was a component of your question.

We continue to have grown this business kind of mid single digits over a number of period and have been able to do that within our policies and our risk appetite.

Great Thats very helpful. Natal ahead. Thank you.

Thank you next question is from Nigel Dischinger from Veritas investment Research. Please go ahead.

Good afternoon, I just had two questions for you and the first if I could turn to risk weighted assets.

And when I looked at credit risk.

Build on asset quality that was a benefit this quarter I was wondering to what drove that I assume its retail exposures and maybe.

I think probably until they have been how that split between residential secured versus a qualifying revolving credit.

Yes, so the asset quality.

Proven is really coming from two things it's lower.

Lower utilization of lines lower utilization BARDA with would show up on the volume, but when you are lower utilization of piece of it shows up as basic quality because the probability of default is less so a part of that benefit as we attribute it to quality and then the second part of that.

It is we did update our non retail BD parameter for 19 data and as you know 19 was relatively benign so we've got.

Some benefit from that so overall, those two things sort of offset any.

Our does increase because of migration.

Okay. So just to follow up on that doesn't mean that the non retail R.W.A. updates are going to lag of that through the cycle.

How should interpret it or under the retail is going to be more sensitive and R.W.A. or a third we look at it.

Yes, so retail retail I would say does lag because what what happens in retail is you've got to wait for the bureaus cause to get updated and that sort of feeds back into the R.W.A. The other thing that you have to keep in mind also there's a charge off the charge of retail much much faster, so theres a bit of lag.

Because of because of retail I think the other very important point is that generally direct GAAP calculations are quite different than higher first night right I have heard as nine as forward looking if it's more while it added because a macro factors because of probability weight.

Our W is all backward looking through the cycle.

And generally that new because it's through the cycle changes very slowly.

That's very helpful and just a last quick question if I may on your deferral book.

Specifically on small business on commercial I know, it's too early to talk about impairments, but could you maybe just provide some color on geographic mix and second mix, a fat or deferred book just so we have some insights on what the composition.

Yes, so that that deferred book on the commercial side.

Really goes back to what are the impacted industries and you'll notice.

We have a new slide I believe it slide number 29, where we sort of call out what the industries.

Focus our and part of those industries of focus include commercial real estate.

There's some riskier segments within commercial real estate for example, in our retail accrete to the extent you you have nonessential retailers on your rent rolls.

Yes, there's some risk there's some risk associated with with hotels.

Some with office three.

The other segment that call out it's just the retail segment in a restaurant and again coming back to non essential retailers.

In this transportation and within transportation transportation and cruise lines, though exports is fairly small they're a bit in health and social services as well. So then if I come back to deferrals and who took the deferrals really along the lines of the impacted industries. So some of the biggest users of deferrals are encumbered.

Actual real estate Adrienne retail because these are the sectors that are most impacted by covert 19.

I hope that helps.

That's very very insightful. Thank you for the color.

Yes.

Thank you as the next question is from Scott Chen from Canaccord generic. Please go ahead. Your line is open.

Good afternoon, just on the U.S. retail side I think in your prepared remarks, you talked about record.

You asked mortgage originations and I was wondering if you could provide.

My perspective on.

The outlook, our newest mortgages and perhaps on cards in autos on how its progress through Corbett.

Sure It's Greg Scott. So thank you for the question. So first I would just give you a little bit of a backdrop that over the last five plus months or so we've definitely seen a slowdown in general activity starting in March.

And then progressing through various parts of the footprint in the U.S.

Certainly.

You saw a lot of slow down in the mid Atlantic in particularly in New York, New Jersey, and Pennsylvania markets as those will hotpoint for covert that would translate to lower card spend lower retail credit line spend.

And and certainly we saw that that play out in the mid Atlantic States as we got into late.

Spring and then into early summer mid through mid summer really the focus of of the pandemic in the U.S. shifted to the southeast really down through the Carolinas in Florida, and you would've seen a lot of that slow down where retailers, both large and small consumer spending patterns would have slowed down and you would've seen that while.

So some of the.

More hard hit markets earlier on we're starting to reopen up on the mortgage front.

The way that translates is.

You know with weight. So low you certainly saw a shift from a percentage from purchase volume to much more refinance volume.

And but what we're certainly seeing real time right now is record volumes that we're taking in.

And right now for a refinance in some purchase volume that is still holding up.

There's a lot of activity tivity right outside the major cities in the suburbs.

And and we're seeing really record activity up and down the footprint from mean to Florida as I said, so mortgages are up.

Given what we've talked about more muted growth and we've traditionally had over the last year or two on auto and certainly depressed card spend translating to less.

Card balances, let's get to what you want to Scott. So that's perfect and maybe just a follow up on that.

Just on margin on the U.S. side down 43, beeps quarter over quarter, yes.

Can you maybe kind of talking about the outlook there as it bottomed and then maybe from the cunneen perspective as well.

All right you are well, let me start then I'll turn it over to Terry. So, yes, certainly you called it right 43 basis points quarter over quarter, and then 77 basis points year over year, but for the quarter over quarter number. What you saw it was a little bit of a lag in linerboard didn't come down immediately with 150 basis points of rate cuts that took effect in March right away you still had.

Widened credit spreads in the market because of.

All that was going on at that point, and then certainly a lot of that LIBOR spread came down as you got into Q3 to more normalized levels, given where fed funds were.

And that placing a great focus on our own margins.

And you see some of that in addition to us.

We had very very strong deposit growth. So the way I'd give you the quarter over quarter look and year over year look as well is its rate certainly.

But the volume and mix of the business because the volume that we're taking in is certainly being reinvested a far lower rates than would have been traditionally on the book.

So that's kind of the view, we're not really updating the outlook.

Given.

So a lot of uncertainty over the next couple of quarters as we think about this but I'd say the general trend given where long rates are you can see further pressure on a bit on on margins as you look out.

And next carried to pick up on the similar seen CNO about a half the rate cuts would have worked their way through in Q2 and they've been fully.

At work through in Q3.

There will be at stones downward pressure in the near term.

Lower cards in the asset mix would be one contributor to that and then over time tractor repricing will play a role.

But a lot of moving parts, but certainly more modest compression we would think.

Thank you very much.

Thank you.

Once again, please press star one if you have any question.

And the next question is from Gabriel to Shine from National Bank Financial. Please go ahead.

Our.

Forgot how to retract my question not only to ask anything.

Good to hear from you gave.

Just wondering you on the record.

[laughter] hope you're doing well [laughter]. Thanks. Thanks.

Part of the accident.

Thank you.

In that case, there are no more questions in queue at this time I would like to taking meaning over back to Mr. Barry.

Mesclun for closing remarks.

Thank you operator, and thank you all for joining US. This afternoon I'd say in overall quite happy with how the orders turned out to given the environment in which we.

All living through.

Performance has been good or businesses are doing what do you expect us to Lu from TV and with strong capital levels and we've talked about that on the call is also a good advantage for the bank or to have so overall happy very happy with how things are turning out.

Happy from a relative perspective, I guess it off with through the environmental Nobody's happy and hopefully you know.

Next 90 days.

We are into a different situation.

I would like to take the opportunity to thank my duty colleagues around the world I mean, they've done just the masterful job and adjusting to a very difficult environment and they've been there to deliver for our customers and for the communities in which we live and work. So so a big thank you to 90000 strong PD bankers around the World you you make us feel proud.

As to what you do they in India.

With that again, thanks for joining us today, and we look forward to having another discussion 90 days from now thank you very much bye-bye.

Yes.

Okay.

Thank you. The conference has now ended please disconnect your lines at this time and we thank you for your participation.