Q1 2021 Toronto-Dominion Bank Earnings Call
Thursday
Dead dead dead dead dead.
This conference is being recorded.
All participants you're meeting is ready to begin. Good afternoon. Ladies and gentlemen, welcome to the TD Bank group q1 2021 earnings conference call. I would now like to turn the meeting over to mr. Manning, please go ahead and smiling.
Thank you operator. Good afternoon, and welcome to TD Bank group's first quarter 2021 investor presentation. We will begin today's presentation with remarks from Bharat. Masrani the bank CEO off at the bank CFO will present our first quarter operating results Chief risk officer. Will then offer comments on credit quality after which we will invite questions from pre-qualified investors on the phone.
Also present today to answer your questions are Terry Curry group head Canadian personal banking Craig Brock president and CEO TD Bank. America's most convenient bank involved or group had Wholesale Club, please turn to slide to
At this time, I would like to caution our 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 reply of making these forward-looking statements.
Any forward-looking statements contained in this presentation represent the views of management and are presented for the purpose of assisting the bank's shareholders and analysts and understanding the bank financial position objectives and priorities and anticipation 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 business is in to measure overall Bank performance, the bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Barrett will be referring to adjusted results in his remarks off additional information on items of note the banks reported results and factors and assumptions related to forward-looking information are all available in our queue 121 report to shareholders with that. Let me turn the presentation over to bed.
Thank you, Julian, and thank you everyone for joining us today.
Don't have an impact on the world around us and our own results. I'm proud of how the bank is managed to this. And the resilience and commitment shown by our 90,000 colleagues around the globe.
Did you started the year strong as we continue to execute on our strategies in an uncertain environment? First quarter earnings were three point four billion dollars an EPS $1,000 83 up 10% from a year ago. Probably Provisions for credit losses declined significantly reflecting an improving economic Outlook as well as the impact of ongoing fiscal and monetary support for the economy and the sizable addition to our allowance for credit losses last year while spending and payment volumes in our banking business has remained below pre-crisis levels of Swing compressors East and deposit growth remains strong and our wealth insurance and wholesale businesses had another Banner quarters reflecting continued high levels of customer engagement and Market activity.
it's been almost a year since the COVID-19 pandemic transform Our Lives as he
These strong results further bolstered our balance sheet with a CD One ratio climbing fifty basis points to 13.6% and our liquidity coverage ratio ending the corner at 139% overall a powerful Testament to the strength of our Diversified business model.
We Believe banking serves a higher purpose and we continue to fulfill hours and reaching the lines of our customers colleagues and communities from the depth of his last spring the recovery that is now emerging we've empowered our people to execute with purpose and impact on behalf of our customers and clients. We have helped facilitate government programs that remain a Lifeline for so many households and businesses and we are providing ongoing support for our communities.
We know the recovery is not yet on Solid Ground COVID-19 and his new variants remain a reality many households are still struggling and businesses. Especially small businesses would need additional support after this long months of disruption. It is too early to predict when we will see a full recovery, but we are encouraged by the progress on vaccinations globally long as it proceeds accompanied by effective testing and improving treatments the foundation for a sustained recovery will continue to take hold we're seeing the evidence already enrolled in consumer and business confidence increasing customer activity levels in a steepening yield curve while we expect that households will maintain their high level of savings in the near-term. There is significant pent-up demand to spend after these long months of inactivity as well as the capacity to do so and we will be there to advance the recovery supporting our customers in good times as we did last month.
During those most difficult circumstances. In the meantime. We remain Vigilant across the bank. We are maintaining an enhanced.
Measures to protect and serve our customers and colleagues adding new digital and advise capabilities to deliver the financial services. They need while supporting the recovery and all of our markets. We are also investing in a better future. We know that healthy economies require healthy communities and that an inclusive and sustainable recovery only path to long-term Prosperity. That's why last fall we launched an ambitious climate action plan to support the global effort to achieve net zero emissions by 2050. We're also anticipating our focus on diversity inclusion in India racism working to remove barriers and create opportunities for everyone to try as well as continuing our internal conversation about what each of us can do most recently through our Black History Month events and initiatives.
And in every Community across our footprint with investing in new program bringing our financial resources talent and know how to help solve problems and partnering with Community organizations to build their results this quarter that included providing ten million dollars in Grants to Fifteen organizations to the TD ready challenge to help them develop innovative solutions to address the inequities laid bare by the pandemic and through the DD randii commitment. We continue to make progress toward our Target of 1 billion dollars in giving by 2030 collectively. We're putting the power of proven business model in the service of a better future for everyone.
We also transforming the way we work today, That's led to accelerate the change across our business and our footprint shifting customer demand calling aspirations and economic realities are creating a new grading new challenges and opportunities and we are meeting them head-on with new Investments to improve the Speed and Agility of our operations nurture and develop talent and grow our business has this forward Focus Investments are already delivering concrete outcomes across the bank strengthening our connections to customers and clients and suggesting the next phase of our growth. Let me show you highlight from each of our businesses.
A Canadian Regional segment earned two billion dollars this quarter in the personal bank. The power of our omni-channel strategy was on full display as we generated very often mortgage originations and checking account growth while maintaining our digital leadership. Making out took top spot for customer experience engagement and adoption according to a Panthers score and Levant is Epiphany respectively and we made further enhancements this quarter integrating into the app into recently launched use cases eligible to receive personalized proactive advice based on the transaction patterns, including low balances and upcoming payments providing further support for their financial well-being.
a businessman continue to be the number one feeble and
Nearly ten billion dollars in loans funded as of January 31st. We also Advance our growth strategy this quarter announcing an agreement to acquire Wells Fargo's Canadian Direct equipment by birth operation the transaction which we expect will close in the first half of calendar 2021 subject regulatory approvals and closing conditions will expand our mid-market presence in a ski business line and add scale in new geographies now wealth of business. We do not strong order for customer acquisition and generated a record twelve billion dollars in retail net asset growth across the franchise in TD direct investing customers are responding to the enhancements. We made to our industry-leading webbroker platform, including except that you occasionally resources to help them build their investing knowledge
Addressing the growing demand for sustainable investing Asset Management. Also added three New Year's gets to its product line up and in our insurance business wage direct-to-consumer digital first offering continue to drive strong customer acquisition and premium growth
A US retail bank earn 615 million this quarter call consumer checking growth remained exceptionally strong up more than 30% from a year ago off its customers continue to choose for their Banking and savings names reflecting our commitment to the small business recovery. We continue to facilitate access to the triple P program accepting over 25,000 applications representing two billion US dollars in funding is round two of the program got underway delivering more of the Bangkok nine million plus commercial and consumer customers is Central to our continued success in the US market to that end. We merged our corporate and Specialty banking teams with the commercial organization this quarter to strengthen our competitiveness in key industry verticals and drive further portfolio growth combining corporate and Specialty banking expertise in priority growth areas like birth.
Lending equipment Finance Healthcare and Commercial Real Estate with a commercial Banks capabilities in middle-market community and small business lending will help us scale our core businesses and off the Commercial Bank of your future.
We were all so proud to see TD Auto Finance in the US received the highest ranking in dealer satisfaction among National non-captive lenders with prime credit according to the JD Power 2012 us dealer financing satisfaction study.
And we booked our full share of net income from Schwab this quarter it contributed a hundred and sixty 1 million dollars in earnings bringing us retail segment earnings to seven hundred million dollars or 1 billion Canadian Dollars are wholesale segment is another strong quarter earning $437 million dollars investment. We made to broaden and deepen our client base and product capabilities enabled us to do more business across our Global platform.
No Canadian.
Business we were proud to be the lead left bookrunner on Air Canada's 912 million dollars a share offering in the US. We advise NASDAQ when it's two point eight billion US dollar acquisition from verision.
And from our new dublin-based we acted as joint lead manager on the European Union second Shore issuance you entrench five year and thirty-year transaction with total volume of fourteen billion. Euros is the largest s s a transaction TD Securities is underwritten to date and highlights our continued growth and success serving our European blind. Overall. I'm very pleased with regard to fiscal 2021 as I look ahead to the balance of the year. I'm encouraged by the Gathering evidence of a faith in our ability to make the most of it. My confidence is reinforced by the power of our model the clarity of our purpose and the strength of our people.
Island by thanking them or people are our greatest assets through a challenging year. They were there for each other and our customers sustaining and strengthening of winning cultures together. We've come a long way for the past year. And as one TD, we are well-positioned to meet every Challenge and continue to Build The Better Bank with that same things over to really thank you Veron and good afternoon everyone. Please turn to slide eight this quarter the bank reported earnings of 3.3 billion dollars and EPS $5,000.70 adjusted earnings were three point four billion dollars and adjusted EPS was a dollar eighty-three cents.
Revenue increase 2% reflecting volume growth in the personal and Commercial Banking businesses and hire wealth insurance and wholesale revenues partially offset by lower margins in the retail business.
Provision for credit losses with $313 down $604 sequentially mainly reflecting lower performing ecl.
Expenses increased 6% year-over-year primarily reflecting an increase in the retailer program Partners net share of the profits from the US strategic card portfolio from lower PCM and Us store optimization costs. Please turn to slide 9.
Regan retail net income with two billion dollars up 14% year-over-year on an adjusted basis net income increased 12% year-over-year Revenue in a 1% reflecting higher wealth and insurance revenue and higher loan and deposit volumes partly offset by lower margins. Revenue was up reflecting higher transaction on June 12th, Revenue higher Insurance revenue and higher loan and deposit volumes partly offset by lower margins average loan volumes Rose 4% reflecting Growth Spurt of business and personal including record regular donations averaged deposits Rose 21% reflecting double-digit growth across all businesses. Well assets increased 5% reflecting Market appreciation and new asset growth.
margin
2.65% a decrease of 6 basis points from the prior quarter reflecting changes in asset mix and the impact of lower rates.
A decline of ten basis points quarter-over-quarter reported expenses increased 1% and adjusted expenses increased 2% Please turn to flight 10.
U.s. Retail segment reported net income was us seven hundred Seventy-Six million dollars the US retail Banks net income was $650 million dollars down 14% primarily reflecting lower revenue and higher expenses partially offset by lower PPL Revenue decreased 5% reflecting lower deposit margins agency partially offset by volume growth and income from SBA triple P loans.
Average loan volumes increased 5% year-over-year mainly reflecting growth in business loans relating to Triple P origination deposit volumes, excluding sweet deposits were up 28% including 33% growth in core consumer checking and sweep deposits were up 38% net interest margin was 2.24% down three basis points sequentially including only the banks contractual portion of credit losses in the Strategic card portfolio was 103 million dollars down 76% from the prior quarter.
The U S three Tales ratio is 25 basis points down 76 basis points from last quarter expenses increased 9% primarily reflecting US 36 million dollars in costs associated with a closure of approximately eighty stores announced during the quarter the bulk of the closures will occur in Q2 and will result in approximately off at 60 million in additional cost next court.
Contribution from TD's investment in Schwab. Was you at $161 compared with the contribution of $152 million from TD Ameritrade a year ago.
Amortization of acquired intangibles and acquisition and integration integration related charges associated with the swap with the swap transaction are recorded in the corporate segment. Please turn off light it up.
Wholesale net income was $437 million dollars an increase of 56% reflecting higher Revenue partially offset, by higher non-interest expenses. Revenue was one point five million dollars up 25% primarily reflecting higher trading related revenue and higher loan underwriting and advisory fees PCL increased by $26 sequentially reflecting an increase in impaired PCL relative to recoveries in the prior quarter expenses are up 9% primarily reflecting higher variable compensation package, please turn to slide 12
Corporate segment reported a net loss of $197 in the quarter compared with a net loss of $227 in the first quarter last year a year-over-year decrease through Thursday, the higher contribution from other items partially offset by acquisition and integration charges related to the swap transaction the increase in other items primarily reflects higher revenue from Treasury and balance sheet management activities Discord true and an unfavorable adjustment related to hedge Accounting in the same quarter last year net corporate expenses were flat compared to the same quarter last year adjusted net loss for the quarter was 94 million dollars paired with an adjusted net loss of $168 in the first quarter last year.
Please turn to slide.
1381 ratio ended the quarter at 13.6% of fifty basis points from Q4. We had strong organic Capital generation. This quarter wage at 8:37 basis points to see if you one actually has an employee benefit plans added 9 basis points and unrealized gains when fair value through security added another five basis points.
Five basis points increase in 51 attributable to lower our w a net effect a function of lower credit and Market risk. Are wa
It's noted last quarter of these transitional adjustments for expected credit losses reclassified from here to to CET one Capital was previously subject to a 70% scalar Factor wage declined to 50% for twenty Twenty-One Effectiveness quarter. This reduced our city one ratio by 14 basis points leverage ratio was 4.5% this quarter and the same ratio is 139% both. Well above regulatory minimums now turn the call over to
Thank you and good afternoon everyone, please turn to slide 14.
No formations was 16 basis points.
Steve water at cyclically low-level selecting the ongoing impact of Banks and government economic support program.
He's starting to slide fifteen.
Loans for 3.06 billion of 42 basis points table order over quarter.
Please turn to slide 16 recall that our presentation reports both gross and net of the partners share of the US strategic card credit losses.
Remind you that credit losses recorded in the corporate segment are fully absorbed by our partner and do not impact the Banks net income.
Thanks be sales in the quarter was 316 million Seventeen basis representing a 15-year low reflecting the ongoing. It's back-to-back two photos and government economic support program and it performing allowance relief.
Talk to site 17.
Thanks Kim. PCL increase 106 million quarter-over-quarter primarily reflected in the US credit card portfolios. That's largely recorded in the corporate segment.
Decrease 711 million cold water largely due to lower provision in the commercial lending portfolios. I lost releases consumer lending portfolio.
Please turn to slide in teen allows for credit losses decrease 437 million to 8.9 billion quarter over for order rejecting impact of Foreign Exchange resolution of impaired loans in the wholesale segment and Performing allowed releases in the humor Lemon Law related to Improvement in a macroeconomic forecasts and Plan Credit attributes.
Actually on fish slash overlay to address ongoing elevated uncertainty.
I want to summarize the cooldown credit metrics including glass in bedroom formation rotten fed loans and the provision for credit losses were all dead all levels this quarter.
Going forward we may see credit results very much water as the ultimate magnitude and timing of the pandemic related credit impact remains unsolved and there is a wide range of possible outcomes.
conclude
yeah, well conditioned to manage through these challenging times given the significant addition to our alarm last year are strong Capital position home and abroad diversification across products and geography.
With that operator. We are now ready to begin the Q&A session.
Thank you. We will not take questions from the Past online. If you have a question, and using a speaker phone, please leave your handset before making your selection. If you have a question, please press star one on your devices keypad. You may cancel your question at any time by pressing start to please press star one at this time. If you have a question, there will be a briefing password. The participants register. Thank you for your patience.
And our first question is from Paul Holden from CIBC, please go ahead have a couple of questions for you. I guess related to expenses so long you highlighted the branch optimization in the quarter and the cost of going to run through this quarter and next quarter related to that. What I want to ask you about is what is the expected cost savings on the other side? Will that flow through will that be offset by ongoing investments in technology or otherwise, and then where do you think you can ultimately take the efficiency ratio for the US banking segment over time?
Greg you think you're on the line I am I am Paul. Can you hear me? I hope good afternoon. Good afternoon. Good. Well, thank you for the question. So yeah, I do appreciate it. But we did have a notable item obviously in the quarter for a store restructuring. And obviously it was a larger impact to the number of years that we will be closing relative to the normal pruning. We would do annually for the last several years. So we've announced that we we shutting down eighty two stores and the impact of those stores given the IFRS accounting rules for the charge for the real estate for the closure of those stores will be charged from the couple of quarters between the time it's announced wage and they're actually closed. So obviously once we announce those closures, we have a 90-day disclosure. And all sorts of regulatory, uh check boxes that we we must include and the
Stores will be most of them will be closed later in.
April so you'll also see an impact of that as you noted in the second quarter way, I think about those is is is really the view of how do we see our network box from Maine to Florida over the next several years, which are the stores that we believe were either redundant or that we could optimize with other nearby locations. And how do you think about harvesting that expensive and really making sure we're reinvesting that back into the business for further growth and as we've been talking about it for the last several quarters really for the last several years investing in digital platforms on the consumer side small business initiatives and certainly a growth in our commercial and wealth and wealth businesses. I think the one thing that's the COVID-19 is taught us is that our customers want access to us, but they want it always they do want physical and we're seeing many of our customers returned into the store and we're bullish on that and you'll see Mark above.
Future years where we continue investing from stores, but what you're also seeing is the need for investment in digital and and digital capabilities and we're doing just that.
Okay, thank you. And then the second part of the question was the longer-term outlook for the efficiency operating efficiency ratio in USA. Yeah. Yeah. Yeah, so, you know, there's obviously two parts to that and I'll let their rear as jump in if he wants to add anything to this but you know, obviously the efficiency ratio of the last several quarters is crept up but that's mostly because of the month Revenue line and as you've noticed that if you back out the noteable item here for the stores the way we like to think about it is, you know, we're running something close to break-even expensive or a year-over-year and those numbers will obviously bump around from quarter-to-quarter depending on initiative but efficiency ratio, come back down as you know, we see volumes come back up and down and as we see any relief on the right side or or we continue to grow out of it from a volume perspective. I think if you went back three
And I don't know if you have anything else you want to add to that.
No, you're covered it Greg. I think Paul has we see rates starting to normalize again. I I think it's entirely possible to get back into the low 50%
Thank you. And the next question is from many gromen from Scotiabank, please go ahead good afternoon. When I do the straight math on your p t p earnings. It looks like it was down 4% year-over-year, but I'm wondering how you think about it specifically and curious about the impact of this strategic hard work phone. No on this calculation and also on the the leverage ratio.
Yeah, thank you Manny. Look, I think there are three things that you should look at when looking at PTP and operating leverage first name the currency impact. So if you simply take our expenses for the segment from Canadian dollars to Source currency, that would be the first adjustment. May I suggest would be worth looking at? Secondly, I think the store closure cost that Greg just mentioned, you know to to the extent that one can think of those as one time. I don't think they should in our view figure into PTP.
And then the Strategic card portfolio, which I'll just walk through in a second component of the payment that we make to the retailers that goes to change in PCL should also perhaps be adjusted out of those calculations to the extent to the extent that we're trying to figure out what pre-tax provisionals are. So I think when one looks at it on that basis on a year-over-year basis rptp actually grew by just under 5% and on a quarter of a quarter basis the growth is mid 6% So quite a bit better than what the headlines would look at and on at the top of the house in the way you look at it. I think on the matter of the Strategic card portfolio and and the PCL relating to that page on page twenty-six of our flight where we have for the last few quarters laid out an example that if you had a credit card portfolio for a billion dollars that earned a revenue of birth
Fifty million dollar and yellow fifty million dollars so that the risk adjusted profit were a hundred and if the sharing Arrangements were such that we retained 20% of the risk-adjusted prove it and pay to the retailers 80% of that and from a gap perspective that we would record Revenue in the financial statements of 150 TCL or 50,000 non-interest expenses for the portion that we pay to the to our to our retailer partners of $80. So we retain 20 in the in the segment accounting firm retail. We record our net share of that. So retail Revenue would be 30 PCL would be 10:00 and net income would be twenty and in the corporate office and we record Revenue at that that are retailers enjoy from that portfolio being hundred and twenty their share of the PCL at forty and then the amount that we paid to them in non-interest expensive dog.
So if it turns out every no subsequent. Revenue are still hundred and fifty but PC L10, then what you would get in the corporate segment is revenue 120 off the retailer partner share PCL of zero, the net payment would be a hundred and twenty. So are are ignoring interest expenses would go up by $40 reflecting off the component of the you know, the retailers share of the of the PCL reduction. So in order to get an apples-to-apples comparison of Revenue to 2 a.m. To expenses on a PTP or an operating leverage basis, we would tend to add back the amount of Peace here that is important segment to our to our expense line, but I think if you look at that on that basis many which I think is the right way to look at it rptp is actually been quite strong quarter-over-quarter in your overage.
just two
The follow up on that, um, what kind of pre-tax pre-provision growth you expect to have for the year as a whole is under your calculation that 5% As you mentioned wage is is that something that can be sustained throughout the rest of the year. How do you view that physical Twenty-One? I think if you look at fiscal twenty what we have high school is the fact that we have a diversified and an integrated business model in US retail Banking and Canadian retail Banking. And so we're in Canada Life in particular margin have compressed. We have seen the benefit of that coming through the wealth and insurance Revenue because we position our bank against the our Canadian retail customer, you know, you know holistic way that somebody may have it, you know, checking and savings accounts with and and credit cards and mortgages with Terry and they may have wells products with Leo and they also may be dead.
And your home and auto insurance from us. So we were thrilled with the fact that 220 Canadian retail Nyack grew by 12% year-over-year, which is just a stunning accomplishment in my view. I have a customer our customer acquisition engine is working and then of course we had very strong wholesale revenues in. When interest rates have been very low and customers have been taking advantage to complete their financing and their activities. So I think we really should highlight the diversification our business model and it's customer centricity.
Thank you. Next question is Gabrielle Edition from National Bank Financial, please go ahead. So the quick clarification here with the idea agreement with Schwab. I think the new fee structure kicked in at the end of last quarter. So this would be the full effect reflected any results this quarter wage. Yes, that would be correct because the transaction closed on October 6th. Yeah, okay and then starting July 1st. That's when Schwab get started sweeping those deposits under ten thousand a year for their balance sheet. But since the the amount of deposit is so much higher. It's much longer path to get to that $50 billion off minimum level, I guess is that is that how we should be looking at it now? Yes, that's right. I think from the time that we announced the transaction to the time that we closed. There was a dead.
And increasing idea balances so you are right to which that those balances from closing would be 250 million dollars will will happen will I become longer and so in this first. On July 1st after closing Schwab can take back if they wish the amount of the balance off of closing - - + 1 billion. So the difference between the difference between the balance is 210 billion minus. The amount of closing is what they can take in July one.
Okay.
Follow up on that but I got just a bit now question for Greg the you know, obviously the US said the New York Administration now, they have a new head of the cfpb as well. And I'm just wondering what you're thinking of these days when it comes to potential regulatory actions that it could have a negative impact on your your your fee income line similar to you know, what we saw up to the the financial crisis if there's any Whispers of wage taking place there and even if there's not are you you know taking another look at that how you your your fee structures in the US and and how you're charging for certain Services there and and how that might evolve over the next next year cuz yeah.
Gabrielle thank you for the question and certainly a lot going on in the days that we all continue to watch. But what I would you know just remind everyone is that you know, whether it was the last Administration or eight years before that or even before that, you know, we found a way to continue to grow the bank and they had customers and grow revenue and grow the bottom line and continue most importantly to take share and service on both numbers and stack up. The JD Power was that we saw like love behind my desk and do those sorts of things and that's you know, our continued plan regardless of the environment. I think one of the things that we get called out for is is some of you know our our fee income drivers and one of the things we're keenly focused on giving the maturity of the bank that we're building real times is how do we find all the wrong ways to grow fee income in the good news is we believe we have terrific upside across the u.s. And across segments certainly in wholesale certainly in our wealth business that we're dead.
You know collaborating on with Leo and and how do we leverage this new partnership with Schwab? How do we do more in our in our traditional everyday Middle Market and Commercial Banking offices and small business and treasury management. So yeah, I mean, they'll be puts and takes with every change that occurs but we do believe we will find ways most importantly to ease new households and new customers that will blunt any one particular area.
Our next question is from Ibrahim poonawala from Bank of America Securities, please go ahead.
Hey, good afternoon. I have a question around credit card lending one. If you can just talk to your expectations on when credit card growth comes back both in the US and Canada and secondly talk to us around the risk from these buy now pay later companies which are emerging your apartment with targan, but targets kind of partnered with one of them called a firm. So just trying to get a sense of Iraq. Like do you see these new completed the risk to credit card lending into your business and to what extent do you see that risk? Think you bought a brand this is Barret and I'm going to pass it on to Terry to talk about the Canadian business and then Greg perhaps can comment on the US and then I'll come back and provide you an overall view the terrorists. So let me start with sort of the strength of the cards business in Canada. So obviously in the more immediate term we've seen dead.
Customer liquidity resulting in Pay down if we've seen the COVID-19 packed of lockdowns, and then January is seasonally.
Lower volume up. Having said that you know, I look at a couple of aspects in thinking about the business and its potential to capture pent-up demands once economy reopen an activity resume, you know from an acquisition standpoint. If you think about the Canadian cards business in a sort of think about half of our country are based as travel and luxury and half of the base as other categories of spend such as every day spend in cash back, you know, we invested over the last number of years and have a merry strong line-up against cash back in that performing. Well year-over-year despite the circumstances and you know in light of the circumstances, we've got a very strong partnership with Amazon that is paying, uh, you know, big dividends for us and our customers, you know, since the launch about partnership and there's more opportunity there and then obviously dead.
Larger ticket purchases in the travel and luxury space have the opportunity to come back and we have our fantastic partnership that we only launched in November with Air Canada. And in fact in January are planning student visa card was named the best airline card in Canada. And so that along with our proprietary dog offering positions us I think across the board incredibly well as demand Returns the other piece to think about that is while we have been a minus site now into the economic circumstances some of the acquisition strategies that we had on pause in 2020. We've resumed and those will allow us to build a balance has even I would say during a period where the activity has not returned. So overall when I look across the ranks of our offering obviously we do
The timing of the rebound but I believe we're well-positioned for the afternoon. Maybe it's a comment and buy now pay later, you know, we have in our home being a portfolio post-purchase, uh capabilities in terms of customers being able to put in installment plans and there are in the u.s. And maybe I'll pack a point-of-sale capabilities in this regard.
Terry thank you. I would just say we've certainly saw you know balance has come down from their peaks a year ago Abraham and you know as the economy begins to bring it back up and things begin to open back up and we're certainly hearing a lot of anecdotal data from that not only from the folks that are on the economic side, but also our customer directly in businesses and there's certainly, you know, pent-up demand to you know, go a little bit back more to normal and as that activity picks back up again, we'd certainly expect to see them know card volumes, you know, follow suit as folks can get out and about again, especially from a travel and Leisure standpoint certainly from a restaurant standpoint in some geographies what not. Just attack on to the buy now pay later. We're already in that business effectively and we have a business called retail Card Services as part of our portfolio. It's a couple of billion dollar portfolio and we partner with birth
You know retailers and provide point-of-purchase Finance. So it's a business. We're certainly staring down and
And but it's it's a business. We're already in.
Hey Brian, this is Barret. I mean I you know, there's no need for me to add more than what you've already heard is a key business for us. It's a very important business then we thrilled with you know, how our business has evolved in Canada is you know, what we've become yes. We are heavily traveled oriented which you know, when we get off this pandemic may turn out to be an advantage again and some of the other work the teams have done, you know, Terry is done is to err on the cash back card as well, which has been very very useful to this. And you know, our business is very much. Yes, we have this partnership deals, but you know what Greg it is not really working on is a bank card offering and that is growing, you know, quite quite well. This is latini branded cards, you know, I talked to a retail Network there. So overall a very important product. Yes. It's evolving the whole payment space is evolving very fast, but rest assured we're keeping up with all those friends and very appropriate. We're making the
Basement to make sure that we do have those capabilities and given our brand, you know, expect us to have our fair share of the market.
Thanks for taking my question.
Thank you. And the next question is from from the Channel, please go ahead.
Hi, good afternoon. I guess this question is going to be for Terry just that has like I mentioned it in his remarks just the strength in in the wealth and the insurance side was was was very noteworthy. And it looks like I would have expected the P&C Insurance to have a really good quarter given everything that we've seen and do some a publicly-traded, that we can look at but it looks like the wealth business was actually the bigger contributor and we start I'm just hoping you can dig a little bit more into what you saw maybe if you can parse out some of the pieces that would be helpful. Certainly. Thanks for the opportunity. So, you know, let me start with insurance since you started there, you know, we spend investing in this business and you know, we have a both both the phone capability but probably industry-leading end-to-end capability in this business that we've been investing in and so we've had strong business growth, you know quarter wage.
For the year-over-year a good claimed experience and you know, we've been able to manage also, you know helping customers as we they've gone through this difficult find out what I would say is that, you know, the other element of this business that you make is our collision centers across the country. So it's in the auto business when our customers do have an accident. There are often times, you know TV Ventures that can help make that a better experience for those customers. So we've been investing in our capabilities. We are off doing a great job as an online ensure we have I think the business model and capabilities and customer experience for the future and into one. We had record earnings in that business office on the westside. Obviously just a strength across the board. We did have, you know, the highest levels on record across videos in my business birth.
and mutual funds results were very strong and obviously trading levels at
Continue to be at record levels. It's possible that some of that trading activity could become more normalized. Although I think uh, you know, we do continue to see New York actors in this space and I believe we've got, you know, best-in-class capability not only for them to understand what they're doing our education and learning capabilities that people take up or helping our investors to understand what they're doing and and we feel strongly about that capability being available for them. But also just their ability to interact with a digitally with their advisory or as a handoff from our Branch colleagues was feel like we've got great capability there we've been adding advisor for wealth em in my business in the personal bank and through TD ready advice strategy. We really work hard as one TV to yep.
Our customers who are often at right now sitting on more liquidity than they had planned for to invest with this for the long term and and to help them do that in a way that they feel confident and you know, we have goal assist available for self-directed investors to look at setting up, you know, a low-fee solution to their goal planning. So it was very comprehensive one of the real strengths of t v as mentioned is our one TV approach and I can tell you that with COVID-19 needed. How many colleagues can be in our retail branches, you know the colleagues in both Leo real growth business and told business banking business. Can't wait to get back into our stores with our Branch Bankers because that's where the magic happens.
And there is just a puppy you don't you've never broken out how much your online brokerage business contributes to? Well, I would imagine that's where a lot of strength came through or the broker a broker business office to clearly they online trading which is reported in our wealth segment was a strong contributor, but Leo and and we all pay close attention to the other parts of his business and they're grown nicely as well.
Okay, and then Greg just on the little bit stronger than I would have thought. Is there anything unusual in there? Like how do you see this unfold and I know there's some prepayments in the PPP has having an impact if he can provide a little color, that would be helpful. Thanks. Sure. So it is good to see that stabilized and but like we've been saying I mean the pressure that has been on is because the rates but it's also the mix of the ignition we believe we're growing good fundamental deposits and we're going to continue to do that and we want to take sharing that deposit based business when I would add onto your question though more directly. Yeah, you've got some PPP that's in that Nim number which contributes a little bit to it. But you also seeing positive margin on a loan outside and positive margins on on the on the logs. We are putting on the books is also helping so good news story on that front.
Thank you. Once again, please press star one on your devices keypad if you have a question.
Our next question is from Nigel de Sousa from a very best investment research, please go ahead good afternoon. I wanted to touch on wholesale Banking and it looks like you had another strong quarter for trading net interest income and I was wondering if you could provide some color of how you think that would perform in a rising yield investment. So is this evening if the yield curve do you see that as a Tailwind a headwind or is that neutral or not that material for trading and I I in that segment Bob. Are you on the line? I say I am Burt. Hi Nigel. I would say it's you know, there's pluses and minuses on it. Steamy yield curve definitely helps on the on the
On the corporate and I and other things related thereto securitization Etc it can it can have temporary.
Negative impacts on some of the short-term trading businesses, but net-net, I think it would be more neutral.
Okay, that's helpful. Thanks for the caller. Thanks.
Thank you. Our next question is from Scotch n from canaccord. Genuity, please go ahead good afternoon. Maybe great just a clarification question. So is there going to be did you state that there's an additional sixty million in cost to hit the p&l on the on the branch closures that you announced today?
Correct, and that'll that'll that'll take effect into to you to okay. And and as you did this exercise in the u.s. Canadian Branchburg has been pretty stable out over over the past two years. Is there any opportunities you know with to rationalize off the branches in in the Canadian Network very yes. So let me talk about branches. Obviously our operating context. Thank you Scott am very different US versus Canada and we like Greg wood every on an ongoing basis. Look at the network and think about where we that's where we importantly would open new locations or relocate its branches. What I would say in Canada, I mentioned the strength of one TV, and also Greg mentioned this Thursday.
Customers every channel managed to our customers and you know, you will see some more modest activity in Canada more analogous to what you would see from us on an ongoing basis. Our Branch network is majoritively urban in priority Urban markets. We have just over a hundred and seventy billboard locations that drives strong brand recognition and the ability for to house our partners to meet customers needs across their TV channel and business needs and again, you know, they are the home to 1 a.m. And through the pandemic even at times like we're experiencing with lockdowns customers are coming into the branch and we're meeting their needs and so we would see it as a, you know, pretty well positioned as we think I had
Thank you. Once again, please press star one on your devices keypad. If you have a question, and our next question is from Ibrahim from Bank of America Securities Banks. Go ahead.
Hello again, I guess just another question part in terms of my name and just sitting on a pile of capital at 13% We seen transactions happen in the US and the banks and non-bank space but generally historically been active and very opportunistic in terms of capital allocation. Just talk to us in terms of when you look at the US market today. What's your appetite in terms of acquisition? And does that all have to wait till we get the green light from the from the office free to actually deploy capital?
Thanks for the question Abraham, you know no change in our Outlook. I think I've I've said this many times before, you know, we certainly are, you know open to Acquisitions in the US market and in the Canadian Market as well and my dad and the way we think about it is obviously in anything we do has to make strategic sense Financial sense. I mean sense that sucks. So we are open and if a compelling opportunity to present itself, you know, we will look at it very seriously, as you said, you know, we have flexibility because of our a strong balance sheet and capital levels suck etcetera. So, you know, we we would seriously look at anything that we thought was compelling but you know, the important point is that you know, we are not strategically challenged us businesses on a scale. I know we are in the market we want to be in with the size and and reach and the brand recognition that we have. There's not as you know that we sent me off.
Hola. I'm thinking about you know, how do we go and spend our Capital looking for Acquisitions? But on the other hand if there is something that makes strategic sense in financial sense, then obviously we look at it very seriously wrong.
Go ahead and would you thank you. All right. Thanks.
Thank you. And the next question is from Mario and Blanca from TD Securities, please go ahead good afternoon if we could just fast-forward three months off and um, I listen to your explanation for the partnership really carefully and if we apply that information to 3 months from now.
Would it be correct to say that the partner share increased significantly what we saw this quarter in terms of the difference between operating leverage a month pretax provision earnings growth will be it'll be it'll it'll be far more significant next court specifically because of the significant increase in wage earning loan PCL in Q2 2020 related to the partners.
Are we just sort of?
Set up for another really uncomfortable looking headline number unless unless we're willing to go to the mental gymnastics of this Partners card again. I just set up for another really tough tough headlight number.
Yes Mario, you'd be correct about that. And as I highlighted in my remarks, the reason we call out strategic card portfolio is just always try to keep reminding you of that but you know on page twelve of our subpac where we show you the corporate segment to resolve. I mean the pcl's there are virtually all in relation with a partner share of the of in the credit card portfolio and then you can see the expenses that move with that so that it it gives you a decent explanations of every every quarter long as we think about PTP and operating leverage. I think to my point earlier that in a diversified model when margins come back perhaps other income and wealth and Cetera might be