Q3 2022 Toronto-Dominion Bank Earnings Call
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Good afternoon, everyone and welcome to the TD Bank Group Q3, 2022 earnings Conference call I would now like to turn the meeting over to MS. Brooke Shields Pease go ahead Michelle.
Thank you operator, good afternoon, and welcome to TD Bank group's third quarter 2022, Investor presentation. We will begin today's presentation with remarks from Barrett Ms. Ronni, the bank's CEO after which Calvin Tran the bank's CFO will present, our third quarter operating results Adria Bumble Wiley 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 present today to answer your questions are Michael Roach Group head Canadian personal banking, Paul Douglas Group head Canadian business banking, Raymond China Group head wealth management and insurance Leo So long President and CEO TD Bank America's most convenient bank and react on that group had wholesale banking, please turn to slide two.
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 were applied in 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 in understanding the bank's financial position objectives 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 such as 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 views the bank's performance.
I will be referring to adjusted results in his remarks.
Information on items of note the bank's use of non-GAAP and other financial measures. The bank's reported results and factors and assumptions related to forward looking information are all available in our Q3 2022 report to shareholders with that let me turn the presentation over to Barrett.
Thank you Bruce and thank you everyone for joining us today.
Q3 was a good quarter with Didi earnings increased 5% to $3 8 billion and EPS rose 6%.
<unk> revenue grew 8% year over year, reflecting increased customer activity and the benefits of a deposit rich franchise.
Credit quality remains sound and we continue to build the bank of the future with investments in frontline colleagues and data and mobile capabilities.
The bank's common equity tier one ratio ended the quarter at 14, 9%.
<unk> robust organic capital generation and the activation of the drip discount last quarter.
Our long track record of delivering consistent earnings growth.
<unk> D D. Two closed two strategic acquisitions, what's the horizon and Cowen while remaining strongly capitalized we expect Tds common equity tier one ratio to be comfortably above 11% post closing both transactions.
Overall I'm pleased with our results this quarter reflect the benefits of our diversified business mix and North American scale, while maintaining our risk discipline.
Let me now turn to each of our businesses and review some highlights from Q3.
Our Canadian retail segment earned $2 3 billion with record revenue of $7 billion in the quarter.
Personal bank performed well, we saw industry, leading market share gains in non <unk> or non term deposits contributing to 8% growth in personal deposits year over year.
And our real estate secured lending business.
<unk> were up 3% from Q2.
Our second quarter, a very good sequential loan growth demonstrating momentum.
Investments across frontline sales channels operations and account management.
We remain confident in the quality and mix of our real estate secured lending book supported by prudent underwriting practices.
Our cards business continued its strong run with loan volume up 10% year over year on record spin.
Last quarter, we spoke spoke about the next evolution of work.
Or new for short.
The new model enables us to deliver innovations faster deploy technology more efficiently and continue to meet and exceed the rapidly evolving expectations of our customers.
The Canadian personal being delivered several key initiatives. This well this quarter leveraging the new model, including migrating migrating its flagship mobile application entirely to the public cloud, enabling our teams to drive customer centric innovations at the speed of the market.
The next evolution of work also powered enhancements for a neutral Canada customers, where we delivered our strongest quarter to date in new account acquisition.
In business banking, TD again achieved double digit loan growth driven by strength across Canada, and verticals, including commercial real estate agriculture middle market dealer financing and small business banking, demonstrating our commitment to grow with our clients over the long term.
And our wealth business TD asset management already the number one Canadian institutional asset manager grew its market share and remain focused on delivering for its clients with 90% of managed funds.
Ranked in the first or second quartile in three year performance.
And TD direct investing was recognized as the number one online broker in Canada and money send some magazines 2022 review.
In our reinsurance business, we opened at 24th location of a best in class auto centers further extending our ability to provide superior customer experiences through a one stop shop, while managing claims costs in the face of inflationary pressures.
Turning to the U S. Our U S retail bank had record earnings of $913 million for the quarter.
Commercial loan volumes, excluding PPP runoff accelerated their momentum, increasing 3% quarter over quarter, reflecting growth in middle market and specialty lending, we saw robust personal loan growth of 8% year over year, driven by increased customer activity and modern.
Waiting paydowns.
Deposits also grew 8% year over year as customers continue to entrust TD Bank America's most convenient bank.
Their business.
To further enhance the customer experience this quarter the U S retail being launched D. D workshop, which combines a fully functional store with space designated design for researching collaborating and bringing the community together the information collected a D. D workshop will help inform how TD evolves.
Its interaction store formats, and the financial services offered to our customers.
Our retail card services business established financing partnerships with home furnishings, Brian R. H, formerly restoration hardware and jewelry retailer Blue Nile to launch a private label credit card programs.
In addition for the third year in a row did he auto finance received the highest ranking in the J D power U S dealer finance satisfaction study.
With the contribution from our investment in Schwab.
226 million U S dollars segment earnings were $1 1 billion U S dollars this quarter.
Before we leave the U S retail segment I want to provide an update on our acquisition of course horizon.
We're pleased that our commitment to the communities. We serve was reflected in the support we heard for the transaction at the joint public meeting held by the Federal Reserve and the OCC on August 18, we are excited about the benefits that our combined banks will deliver for all of our stakeholders and.
To expect the transaction to close in the first one.
First fiscal quarter of 2023.
Turning to our wholesale banking business net income for the quarter was $271 million a decrease of 18% compared to the third quarter last year, reflecting continued investments in our U S dollar strategy, including the hiring of banking sales and trading and technology Professor.
<unk> revenue was roughly flat year over year as the impact of weaker underwriting environment was offset by strength in other parts of our business, including higher trading and net interest income again, reflecting the benefits of our diversified business model.
This quarter TD Securities was named the Canadian FX service quality leader for corporates in 2022 by the coalition Greenwich study for the third consecutive year as the wholesale being continues to lead in the Canadian market.
As I said on a call earlier this month the acquisition of Colin will build.
Tvs do you disagree with this strong foundation.
This combination will further accelerate.
Our growth in the U S and position TD Securities as an integrated North American dealer with global reach we're incredibly excited about this opportunity and we've heard from many TD securities in Cowen clients and colleagues that they are equally excited about the the combined offering added scale and capabilities.
We are delighted with the enthusiastic support for this strategic transaction.
Already started work on our integration plans ahead of the anticipated closing in the first calendar quarter of 2023.
Three quarters into fiscal 2022 we have made significant strategic progress and seeing positive momentum in our businesses as we enter the final quarter of the year, we continue to navigate heightened uncertainty in a volatile environment, we will maintain a prudent approach and focus on bill.
<unk>, our business for the future and delivering long term value for our shareholders United by our purpose to enrich the lives of our customers colleagues and communities.
That purpose comes to life in our business and in how we engage with all of our stakeholders. We continue to strengthen our brand as an employer of choice attracting fantastic talent to the bank this quarter TD Bank America's most convenient bank was recognized by Forbes as one of America's Best.
Employers for women.
And in partnership with the Black professional professionals in Tech network, DD recently announced the launch of.
Well C D Academy, and engineering, bootcamp or black individuals to help them build careers in technology.
We will hire program graduates in cohorts over the next three years.
We are also committed $1 million to organizations working here and overseas to assist refugees to help them settle in Canada.
In addition to these financial commitment does hiring arising Ukrainians fill roles at the bank, helping to provide meaningful employment stability upon arrival in Canada.
TD colleagues are committed to the communities in which we live and work recently, our digital and research teams volunteer their skills and customer experience and design to help the world Spring cancer support Foundation created virtual platform for families dealing with cancer.
He has supported wellspring for 30 years and now we are helping guide them through their digital transformation.
TD Securities underwriting Hope campaign is another long standing example of our commitment celebrating its 25th anniversary this year.
Colleagues raised almost $2 million in support of children's charities in June bringing the total raised since inception to nearly $25 million.
At TD.
We are privileged to serve more than 27 million customers around the globe. This month, we launched TD. Thanks, you our signature annual North American program that recognizes and celebrates TD customers spotlighting their contributions and helping them continue to make an impact.
What did you do follow these inspiring stories online.
To wrap up I would like to thank all of our TD bankers, we're living our shared commitments every day I'm very proud of what we have accomplished together and I look forward to a strong finish to the year.
With that I'll turn things over to Kelvin.
Thank you Barak and good afternoon, everyone. Please turn to slide 11.
This quarter the <unk>.
Reported earnings of $3 $2 billion and earnings per share of $1 75 ton bulk.
Both down 9%.
Reported earnings include the net loss from mitigation of interest rate volatility to clothing capital on first horizon acquisition.
Adjusted earnings were $3 $8 billion, and adjusted EPS was $2 and Einstein.
Up 5% and 6%.
Respectively.
Reported and adjusted revenue increased 2% and 8% year over year, respectively, reflecting.
Reflecting margin and volume growth in the personal and commercial banking businesses.
Reported revenue also include the net loss for mitigation of interest rate volatility to closing capital on first horizon acquisition.
Provision for credit losses was $351 million.
Reported expenses increased 9% year over year.
Reflecting higher employee related expenses and higher spend supporting business growth.
Adjusted expenses increased 8%.
Absent the retailer partners share of the profits from the U S strategic card portfolio.
Expense growth was nine 9% year over year or eight 7% ex FX.
Consistent with prior quarters Slide 26 shows how we calculate total bank P. T P P and operating leverage removing the impact of the U S strategic card portfolio, along with the impact of foreign currency translation and the insurance fair value charge.
Reported total bank PTP P was down 5% year over year before these modifications and adjusted P. T. P. P was up 6% after these modification.
Please turn to slide 12.
Yes.
In Asia retail net income for the quarter was $2 3 billion up 6% year over year.
Revenue increased 7%, reflecting volume and margin growth higher.
Higher fee based revenue in the banking business and higher insurance volumes.
Partially offset by lower transaction and fee based revenue in the wealth business.
Average loan volumes rose, 9%, reflecting 8% growth in personal volumes and 15% growth in business volume.
Average deposits rose 7%.
<unk>, 8% growth in personal deposits, 4% growth in business deposits and 8% growth in wealth deposits.
Wealth assets decreased 3%, reflecting market appreciation.
Partially offset by net asset growth.
Net interest margin was two 7%.
Up eight basis points compared to the prior quarter.
Primarily due to higher deposit margins, reflecting the rising interest rate environment, partially offset by lower loan margins.
Total PCL of $170 million increased $110 million sequentially.
Total PCL as an annualized percentage of credit volume was point, 13% up eight basis points sequentially.
Insurance claims decreased 1% year over year, reflecting favorable prior year claims development and the impact of a higher discount rate, which resulted in a similar decrease in fair value of investments supporting claims liabilities reported in non interest income.
Partially offset by higher current year claims.
Noninterest expenses increased 8% year over year, reflecting higher spend supporting business growth, including technology and employee related expenses.
Please turn to slide 13.
Yeah.
U S retail segment reported net income for the quarter was $1 1 billion dollar U S up 7% year over year.
Adjusted net income was $1 1 billion dollar U S up 8% year over year.
U S retail bank reported net income was $898 million U S.
Up 1%, reflecting higher revenue, partially offset by higher PCL in noninterest expenses.
U S retail bank adjusted net income was $913 million up 2%.
Revenue increased 11% year over year, reflecting higher deposit margins and volume, partially offset by lower income from PPP and lower low margin.
Average loan volumes were flat year over year.
Reflecting an 8% increase in personal loans and a 7% decline in business loans.
Business loans increased 2%, excluding PPP loans due to strong origination new customer growth higher commercial line utilization and increased customer activity.
Average deposit volumes include excluding sweep deposits were up 5% year over year.
Personal deposits were up 8% and business deposits were up 2%.
Sweep deposits declined 2%.
Net interest margin was 262%.
Up 41 basis points sequentially as higher deposit margins, reflecting the rising interest rate environment and positive balance sheet mix were partially offset by lower PPP loan forgiveness and lower loan margins.
On slide 30, we've continued our disclosure on the impact of the PPP program.
This quarter <unk>.
P. P revenue contributed approximately $16 million you asked to net interest income and two basis points to the NIM.
Total PCL was $83 million an.
An increase of $98 million sequentially.
The U S retail net PCL ratio, including only the bank's share of PCL for the U S strategic cards portfolio.
As an annualized percentage of credit volume was 2% higher by 24 basis points sequentially.
Reported expenses increased 8% year over year, reflecting higher employee related expenses and business investment and acquisition and integrated integration related charges for the fourth horizon acquisition, partially offset by productivity savings.
Adjusted expenses were up 6% year over year.
The contribution from Td's investment and Schwab was $226 million.
Up 40% from a year ago.
Reflecting higher net interest income, partially offset by lower trading revenue.
Please turn to slide 14.
Wholesale.
Our bank net income for the quarter was $271 million.
A decrease of 18% year over year, reflecting higher non interest expenses and PCL.
Revenue was $1 $1 billion down 1% year over year.
Starting lower underwriting fees and markdowns in certain loan underwriting commitments from widening credit spreads, partially offset by higher trading related and global transaction banking revenue.
DCF for the quarter was $25 million compared with a recovery of $9 million in the prior quarter.
Expenses increased 9% year over year.
Primarily reflecting the continued investments in wholesale banking U S dollar strategy, including the hiring of banking sales and trading and technology professionals, partially offset by lower variable compensation.
Please turn to slide 15.
The corporate segment reported a net loss of $752 million in the quarter compared with reported net loss of $205 million in the third quarter last year.
The year over year increase primarily reflects the net loss for mitigation of interest rate volatility to closing capital on first horizon acquisition.
Higher net corporate expenses and a lower contribution from other items.
Adjusted net loss for the quarter was 100 $175 million compared with an adjusted net loss of $122 million in the third quarter last year.
Please turn to slide 16.
The common equity tier one ratio ended the quarter at 14, 9% up 22 basis points sequentially.
We had strong organic capital generation this quarter, which added 42 basis points to CET, one capital excluding the net loss from the mitigation of interest rate volatility to closing capital on the first horizon acquisition.
Which decrease.
CET, one by 10 basis points.
We also saw a 12 basis point increase in CET, one related to the issuance of common shares under our dividend reinvestment plan.
These additions were partially offset by an increase in our WMA.
<unk> increased one 4% quarter over quarter, reflecting higher credit risk and market risk RW way.
Credit risk <unk> increased $5 $1 billion or 1%.
Mainly reflecting higher volumes in all of our businesses, partially offset by a decrease in equities.
Market risk <unk> increased $1 $1 billion or 5%, reflecting widening credit spreads.
The leverage ratio was four 3% this quarter and the LCR ratio was 121% both well above regulatory minimum.
Turning to slide 17.
As we mentioned on our call related to the relating to the Cowen acquisition earlier this month.
As part of our ongoing capital management activities.
And in light of heightened volatility and interest rate reduction in our net interest income sensitivity with rising rates.
And continued uncertainty in the macroeconomic environment.
During the third quarter, we established a strategy to mitigate the CET one ratio impact of further rate changes on goodwill in connection with the first horizon acquisition.
The bank already has a large portfolio U S investment securities many of which are hedged using interest rate swaps.
As a result, TD was able to implement our strategy to mitigate interest rate volatility without entering into new any new transaction.
Now as interest rate change certain interest rate swaps, which were designated from their previous hydro counter relationships against Td's existing U S investment were mark to market through P&L.
Mitigate the capital volatility due to interest rate changes and goodwill amount for the first horizon acquisition.
We recorded an item of note of $505 million after tax.
Which primarily reflect that the mark to market loss of these swaps as of July 31st.
At quarter end was yesterday.
Given the change in rate.
You will no longer see a loss, but actually a gain so that shows the extent of our interest rate volatility during this time.
The sensitivity will also change over time as a result of a number of factors.
Including first horizon's interest rate risk management.
And balance sheet composition.
As well as macroeconomic factors like the degree of the rate change in the shape of the interest rate curve.
Based on changes in interest rates, we expect that the amount allocated to goodwill and intangibles.
Will increase by $1 5 billion dollar U S. Upon close.
I will now turn the call over to RJ.
You, Kevin and good afternoon, everyone. Please turn to slide 18.
Gross impaired loan formations were 12 basis points stable quarter over quarter.
Please turn to slide 19.
Gross impaired loans decreased two basis points quarter over quarter to a new cyclical low of 28 basis points, reflecting reductions in both the Canadian and U S retail segments.
Please turn to slide 20.
Recall that our presentation reports PCL ratios.
Both gross and net of the partner's share of the U S strategic card Bcl's.
We remind you that <unk> recorded in the corporate segment.
Fully absorbed by our partners and do not impact the bank's net income.
The bank's PCL was 351 million or 17 basis points, increasing $324 million quarter over quarter.
Largely related to.
Prior quarter performing allowance release, coupled with nominal performing provisions in the current quarter.
Please turn to slide 21.
The bank's impaired PCL was $340 million, increasing by 26 million quarter over quarter.
Driven by a modest increase in the U S consumer lending portfolios.
Overall impaired provisions remained at cyclically low levels.
Performing PCL was $11 million compared to a recovery of 287 million last quarter.
Current quarter performing provision reflects an nominal increase to the allowance for credit losses.
Please turn to slide 22.
The allowance for credit losses were stable quarter over quarter at $6 9 billion.
As the impact from deterioration in our economics forecasts was largely offset by the release of overlays previously set aside for economic uncertainty.
The banks allowance coverage remains elevated.
Count for ongoing uncertainty that could affect the economic trajectory and.
Credit performance.
In summary.
The bank continued to exhibit strong credit performance this quarter as evidenced by continued low gross impaired loan formations gross impaired loans and <unk>.
While these key credit metrics are at or near cyclical low levels economic risks remain elevated reflective of persistent inflation and rising interest rates and the increasing risk of a recession.
TD, however remains well positioned given we are adequately provisioned, we have a strong capital position and we have a business that is broadly diversified across products and geographies.
With that operator, we are now ready to begin the Q&A session.
Thank you we will now take questions from the telephone lines. If you have the question and Youre using a speakerphone. Please lift your handset before making your selection.
We have a question. Please press star one on your devices Keypad you may cancel your question at any time by pressing star too. So please press star one at this time, if you have a question and there will be a brief pause while the participants register we thank you for your patience.
First question is from Ebrahim <unk> from Bank of America. Please go ahead.
Hey, good afternoon.
I guess, maybe just to start out Kevin.
I can just follow up I just want to make.
Should we understand you correctly on the interest rate swaps.
So you had existing swaps against the fixed into bulk you de designated tend towards the goodwill to mitigate that impact.
Where does that leave the fixed income book do we see.
Hittite that that impacts capital over no.
No. So the fixed income is not going through OCI and does not impact capital. So you don't mark to market of fixed income.
And is that because the fixed income.
In health maturity, Yeah, it's held to collect correct.
Okay, that's clear.
Yes.
Two other questions one Bob just around the deal you mentioned you went through the public hearing.
Last week it seems like you still feel comfortable in terms of the timing of the close.
Is there any risk like in terms of deal delay and then the U S regulators have been fairly vocal in terms of.
Thinking about.
Liquidity requirements around T lack within the U S hubs.
Regional banks.
Just give us a sense of your comfort around that like do you see any changes you might need to do in terms of your funding to get the deal over the finish line.
No.
We don't Ebrahim.
Just to clarify and maybe lever will comment on the public meeting. We just had because you know quite happy with how that turned out and are consistent with you know T d's commitment to the communities in which we live and work just on your point you know there is a lot of speculation on you know what what might be the requirements to get approvals.
Our deal continues to progress in the normal course of Ah Theres nothing out there to suggest that you know that is different this time around.
A lot of discussions on T lack, yes, without a doubt, but just to clarify that point and who knows what the ultimate requirement will be or will not be.
T D. We've been compliant on all suites mandated T Lac requirements since.
Since the date of inception of that requirement.
And as a G SIB T.
Tds U S intermediate holding company.
Is already subject to internal T lag requirement with or without first horizon with the compliance date of January one 2023, and we expect to meet that requirement on that day. So I just wanted to clarify that because I know I've heard. This morning, you know there was a lot of discussion on you know.
What does this mean for TD well I. Just told you is a G. SIB you know an intermediate holding company in the U S is subject to internal day lag as of January and we expect to meet it.
That's helpful. And then just one last one Kelvin in terms of the NIM expansion, both in Canada, and the U S should we expect a similar or greater expansion in the fourth quarter compared to what you saw in the third.
That's our highest call then as you know with the NIM there are a lot of moving parts.
But everything remaining equal.
You call. If the forward rates are a realized that we expect our margin to continue to expand.
Got it okay.
Thank you next question is from Doug Young from additional Bank capital markets. Please go ahead.
Hi, Good afternoon, I, just have a few hedge questions as well just the mechanics of deeper horizon hedge that similar to others.
And that <unk> swaps, and obviously rising U S.
Interest rates increase and give a portfolio matched duration U S. Treasuries do I have the mechanics correct.
Or is there a different structure you've used yeah, you have to structure correct. So the way I would look at it is that you could do this and to stop or you do it in one step two.
To start would be you you you raised funding by the investment portfolio and then match it with a swap and then the swap mark to market with a with.
Offsetting opposite direction of the impact of goodwill.
So you do it and to stop right by that perfect match portfolio, and then having to swap mark to market, but because we already have a portfolio in place we don't need to do the first step we do the second one so it'll be the same that's correct.
Okay.
And then have you hedged more of the interest rate sensitivity for for your U S business versus last quarter and the reason I ask is or is has this hedge had any impact on your sensitivities because when I look at your interest rate sensitivities for the U S Division. It looks like it has declined by a noteworthy amount as per your disclosure that might be normal course or just one.
If there was anything else in there.
Yeah. So it's more AD number one that doesn't have an impact on internet I liked this transaction that we just talked about it does not and it has to do with lower it's just like differences in data overtime.
So as you know the sensitivity is that net of our whatever you earn on rising rates.
Minus the rate that you pass on to the customer and with the rising rates. The next 100 basis point move the.
The beta increases and so that's why that sensitivity is lower.
Okay, So theres no collection and I'm sorry.
But this one but can you talk a bit about why you put the hedge in place because obviously when you announced the deal you didn't I know you did the Cowen transaction subsequently to you like.
I'm just curious as to your thought process as to what pushed you to to move that took out in this direction. Yeah. That's a great question.
So so far as I.
You recall, we have a significant sensitivity to interest rates. So in a way we have a natural offset.
As rates rise, we will earn more through net interest income.
But what we just talked about is actually irrelevant because as rates rise. The next 100 basis point, we would have we would be less sensitive. So if you think back into Q1, our net was $2 billion 400 basis point mode.
And when the first hundred basis point already below the next hundred basis, why would be lower than you see in Q2, it declined to $1 five and then rates rise again. So the next 100 basis point is lower and so now the Dennis is lower so as rates continue to rise the natural hedge of the net interest income.
Sensitivity becomes less effective.
And then secondly interest rate has been much more volatile since we made the announcement and like what I. Just said earlier just even between July 31st and yesterday, our rates have moved so much that the swap was in a loss position to now a small gain so.
The combination of those factors are what I would lead us to put on this hedge.
Okay I appreciate the color. Thank you.
Yeah.
Thank you next question is from Gabriel <unk> National Bank Financial Please go ahead.
Good afternoon, just a you know.
Slide showing the.
The.
Structure of a hedge there look like when you put on the hedge your you know the goodwill are tied to the acquisition itself.
Uh huh.
But.
Just the Oh.
No.
I was just going to sit on the balance sheet and probably around another 20 basis points.
Capital hit from the acquisition.
Not.
Classified as a credit mark or anything like that is just pure goodwill right.
Yeah. So so.
Rates have risen.
And since we made the announcement right and so because of that the fair value of the fixed rate loans have declined.
And on an after tax basis, we have to hold one $5 billion more in capital right and that.
This discount you call that there's like a fair value Mark.
And that once the transaction closed that fair value Mark would come back into income over the life of the loans at higher net interest income.
Okay.
But one 5 billion increase in goodwill will be.
That's going to come back into income over time.
So that's why we said it's a timing issue. So on closing we have to hold more capital because of higher goodwill, but then we earn more earnings over time and so we are building more.
So it all comes back as higher capital over time over the life of the loan got it.
You get to 'twenty.
Correct me, if I'm wrong, it's about a 20 basis point hit on close but then.
You know you earn that back over I don't know what the duration is two three years or something like that.
So, it's a little bit higher than that and the loans are about four to five years got it okay.
I'm just wondering.
Historically, you've been the <unk>.
Factors term has come up with a T D and how you are investor liquidity I'm wondering what you're doing these days.
You know flat or inverted yield curve, depending on the day.
Have you shortened duration of your liquidity management.
No materially we haven't changed our strategy is still the same we look at the permanence of the deposits are and as we feel comfortable with the terminals or the deposit we would put the detractors on.
Uh huh.
I'll just ask a broad question with a lot of NIM expansion this quarter.
It's been in the U S, Canada as well on top of the house.
Can you give me a sense of.
Is this what was what we saw this quarter is sustainable.
Probably Q4, but beyond that I don't know.
The thing that I'm thinking of or you know, obviously deposit betas when can that start to eat into NIM expansion, but I also believe you raised a lot of wholesale funding.
This past quarter or in the current quarter I forgot one, but you know what.
Would that be something that starts to weigh on the the <unk>.
Margin or dilute a little bit of what we saw this quarter.
And then over the next next few in and why did you raise all that wholesale funding is it like pre funding from first horizon stuff.
A lot of questions in there sorry, it'll be my life.
Lot of questions for Calvin I want to make sure that somebody else got a that's the answer.
Let somebody else answer yeah.
Yeah. So maybe I can just give my take and then I'll pass it on to my calling Leo for any additional thoughts sure. As you know we have a strong deposit franchise and as expected. When you look at our net interest income sensitivity with rising rates, we were at a margin would expand.
As we discussed earlier when rates.
Rates rise. The next 100 basis point, you would expect beta to increase and therefore, you would have that.
Lots of expansion, but it's still expanding.
It's important to understand.
No at a certain point it would be that the beta would plateau, but we're not at that point yet.
And I would say in the U S and Canada, the dynamics, a little bit different in the U S. We have a lot of excess deposits.
And so when we're growing loans, we don't need to add additional funding and youll, replacing securities, while lower yielding securities with higher yielding loans. So that just the balance sheet mix would also add to your NIM expansion.
In Canada we.
We don't have excess deposits over loans and so as we grow the <unk> portfolio and our other assets then we would raise funding and so we've continued to look at our balance sheet. How is the best way to optimize the funding whether it is through our wholesale funding or is it through.
Our franchise.
That's something that we continuously evaluate our my call maybe I can pass on to you to see what do you have anything to add and then to the deal.
Yeah, telling me just two points one when it comes to our core depository accounts, we're seeing betas that are generally consistent with what we've seen before in the past and so nothing terribly different a couple of things that I would just emphasize.
One is if you just look at our core checking account balances.
These continue to grow and our acquisition engine remains very very strong. So there's some mix shifts happening here and there, but we're actually still very pleased with what's happened with core checking accounts, both balances and new account acquisition, our new account acquisitions up nicely on a year over year basis, and consistent with our pre pandemic levels are.
The second item impacting NIM and this one's a bit more subtle.
I have noticed that our card balances grew nicely on a year over year basis were up 10% for $1 billion sequentially.
Great.
But our silver evolving mix is still relatively low compared to historic standards and so youre not seeing the income from those increased our cards coming to NIM, but instead, you're actually seeing it come through fee income our.
Fee income has been quite strong it's a combination of the net spread on each transaction plus FX season in a couple of other things and so that's kind of how I paint the picture for the Canadian retail bank.
And maybe turning to the U S. Gabriel.
Obviously, a very good quarter from a NIM perspective, NIM came in at $2 62, and that was up 46 basis points year on year. If you look at the drivers obviously higher deposit margins drove the bulk of it but we also saw.
Improvements as a result of balance sheet mix higher asset growth and improved Treasury investment returns. So it was a it was a good solid quarter to your point around sustainability, we haven't yet seen the full impact of the third quarter rate increase and so that will flow through in the fourth quarter and likewise.
To the point that Calvin raised earlier, if Ford rates do realize we will see some sort of increase associated with that so I would expect our nims to continue to drift upwards as we look to the fourth quarter and early into into next year I do want to stress, though calvin's point that we do expect net interest income sensitivity.
To wane a little bit.
Haven't seen any significant price sensitivity in the book, yet our retail deposit on a quarter on quarter basis.
<unk> essentially flat, but I do expect that we're going to see that just the amount of the increase we've seen in short term rates will mean that we'll see some movement to either Cds or other money market solutions and or other investment wealth products over time so.
And we're really pleased with the performance I think our book is performing the way we would expect in the way you would expect television to perform in this environment.
And I think we can sustain some of the NIM expansion that we've seen this quarter.
Alright, well enjoy the rest of your summer.
Thank you Gabriel.
Thank you next question is from many Roman from Scotiabank. Please go ahead.
Hi, good afternoon, I wanted to stick with margin and just focusing on the Canadian P&C.
Margin, which for you was up seven basis points sequentially when compared to the peer group. So far is that the bottom end of the peer group M. That's not a ranking I would've expected.
Given your deposit AR balances. So Michael you talked about business mix is is that all it is and and you know Furthermore, if I compare the sequential margin expansion in Q3, it was actually a little bit lower than what we saw in Q2, so I'm trying to figure out.
If theres anything off.
Offsetting some of that margin expansion, that's maybe going to go away anything beyond business mix here.
So I mean look I think it's a combination of business mix.
Kelvin touched on earlier explore growing at a faster rate than deposits.
Some competitive pricing dynamics that are at play, but I don't want to kind of overemphasize that one too too much.
I would go back to this this dynamic on the card business, where like our card loans aren't attractive same type of net interest income that you would normally get from that type of expansion and that's very very meaty type returns when you actually do get the revolving balances.
But like I.
Leo wrapped up by saying he feels very good about where we are I feel good about where we are in the Canadian personal side, but also.
I think it's going to play out well on a go forward basis.
Just on the card side are the revolvers do you have any sense like you know early in Q4 can you start to see those revolvers picking up whats the timeline that youre thinking from from that perspective.
Dynamic we're seeing in our book and everyone's portfolio is probably can be a little different but we have a very heavy mix of trans doctors, particularly the affluent travel and sourcing spend levels on a year over year basis, which are quite attractive we're up about 23% on a year over year basis for spend levels.
And and so we're still seeing consistent high transaction activity and less borrowing activity and I don't think we've seen that that shift happened yet.
Thanks.
Yes.
Thank you next question is from Paul Holden from CIBC. Please go ahead.
Thank you good afternoon couple of questions for a re <expletive> two to start.
First one is with respect to the growth in our wholesale funding book.
Moving to slide deck says it was up 21% year over year. So good growth there and highlighted growth, particularly in the U S. So maybe you could talk a little bit which sectors.
That's coming from.
And if there is any sort of read through in terms of.
Lending capacity and appetite in terms of how it might flow through to the Cowen transaction when that when that does close.
Yeah. Thanks for that Paul that growth that you are outlining is principally in the U S and it is in areas, where we have traditional strengths and communication media and technology are fairly wide variety of diversified industries.
As well as in our power and utility areas and so it's actually a fairly attractive area for us to just continue to increase and our client base and now.
Deepen our client relationships as we just continue to pursue our long held U S dollar strategy.
I think as we look forward to welcoming our colleagues from Cowen to the TD Securities family as you know the areas of strengths are in include.
Health care, a wide their sectors and in the health care side, which which will bolster onto our health care practice as well as on the.
Technology side, and they have a fair bit of.
<unk> diversified coverage as well so I think that there is a very good fit there and should bode well not only to continue to.
Add to our client base, but also to serve them with a wider set of products.
And in services.
Okay. Okay.
And then second question for you guys.
I mean, it was also highlighted that.
You're continuing to make investments in our U S wholesale business with the hiring of banking sales and trading technology professionals.
I'm, just a little bit maybe surprised or ramping up organically.
That aggressively ahead of the Cowen acquisition.
Maybe you can kind of talk through.
The logic of that the capacity to grow.
Organically plus through the acquisition.
Yeah, I think Paul it should really just sort of look at that more in a timing context, Tim and the growth in the U S. Dollar strategy started some nine years ago and has been picking up momentum as we grew our corporate lending and then the treasury products fixed income.
Commodities and currency side of the business and if you look at our Ftes, you'll see that in the last year. We added about a 350 ftes in there fairly broadly across the across the platform or in our global markets and corporate and investment banking.
And technology and business operations and so with the addition of <unk>.
17, <unk> hundred colleagues from Cowen I expect that some of our organic additions wearable a slow here a little bit there in the next two years as we look at our.
The integration so it's mostly I would say Paul and the timing of how are the organic AD came together with the acquisition opportunity with count got it.
Alright that makes sense and last one for me.
Just in terms of expenses so well.
When I look at that professional advisory and outside services line is up.
40% for the quarter and also roughly up 40% year to date, it's a pretty material number two by my calculations for on an extra $446 million of spend.
Year to date.
Maybe you can talk about some of the drivers of that if there's particular projects that's being directed towards and maybe some of that's M&A related you can tease that out as well if you can thank you.
Hi, it's Kelvin.
So like when we talked about in the past is that the way we manage expenses, it's not quarter to quarter, but we have a few.
Key principles right like businesses that are spend business spends that are just core.
That operational imperatives that we would spend than there are more of the longer term.
Investments and then theyre more of that discretionary piece and.
Using outside professional services with enabled us to dial up and down those resources when we see the opportunity and we're seeing good opportunities to invest in technology.
If you want some examples.
We talked about that is like the <unk>.
Platforming the contact center.
Leveraging our AI capabilities to better serve our customers on the insurance front.
Also we're looking at mm mm implementing the platform for.
For our commercial banking business in Canada several years ago, we've done in the U S. We're doing that in Canada.
So these are really good opportunities for us to optimize our spend and at the same time, serving our customers and in terms of the benefit we see that in real time, and maybe I can just pass it on to Ray to spend a few minutes on the contact center for insurance.
Thanks, Calvin I mean, what we've done in the last quarter is actually launched a new state of the art telephony system.
That'll be leveraged across all of TD bank, but we started in TD insurance.
And and we are.
Launching new capabilities things like for example, using AI, you know being able to actually.
Identify the client what they hold using our data and getting that client to the right advisor with the right skills first time to actually be able to fulfill those capabilities also we're introducing now with the new platform Omnichannel capabilities, where we can help customers through that our star.
Being digitally.
That actually then need assistance through a chat capability and so in the buying moment.
We can actually help our clients and when needed to they can also then click to speak with a phone representative to support them through the process. These are all capabilities that we're starting with within TD insurance, but will be expanded to across all of our contact centers across all of our businesses in the coming years and so a significant investment on behalf of T D.
But the benefits will significant well certainly paid off alright.
Alright, thanks, Thanks for the context and that's it for me.
Okay.
Thank you next question is from LMR Pesade. Some Cormack Securities. Please go ahead.
So just before I start off here I kind of dropped off a little bit.
During the Q&A. So if my questions have been asked and answered feel free to let me know.
So I just wanted to come back to the J.
So D designation of the hedging so understanding theres just no no such thing as a free lunch what is heating up.
To reallocate these hedges to mitigating the impact of the interest rate changes changes on first horizon does that mean youre now just going to experience larger losses on the fixed income portfolio at maturity is that the right way to look at it.
No. So so let me just go back and let's look at what we're hedging.
So the rest of our hedging is not a and economic risk.
Capital timing risk.
If you recall when.
When you close on the transaction.
The accounting rules require you to fair value the balance sheet of the target in this case first horizon.
And allocate the purchase price to these assets and liabilities.
And if interest rate rise as you would have to mark these loans to a discount.
And that difference would cause higher goodwill, where you would have to hold capital.
But that is just a timing issue, it's not like it's not a real loss because these loans as you hold them to maturity.
They would be a creating back to par. So you earn that and that's all it gets earned through income. It flows through retained earnings it becomes your book capital So that capital overtime.
So it's just the timing of your holding the capital on clothing and earn that back over four or five years.
And so.
Because there is no economic risk.
You would not want to just put a swap on because if you just put a swap on youre now actually creating economic risk and so what you're trying to do is find a match portfolio that already exists or you can build a <unk> portfolio.
And enable the accounting.
Timing of the accounting to help you offset.
That goodwill.
So that you you Jan if rates rise you have a gain on the swap which would give you capital are to offset the goodwill head and then over time that swaps kind of unwind because you'll have a package the whole cash flow you still have that package there.
You're not you don't have any changes to the cash flow. It's just the timing of the recognition of the P&L is different.
Okay, a lot there, but happy to take you take your questions offline as well.
I think I understand it but if I don't tell I'll circle back on that one and then.
My next question just switching gears here some pick up in business loan growth in the U S. After a number of quarters of kind of softer results personal loan growth also look pretty good sequentially can you talk to us about.
What's driving the turnaround this quarter and looking ahead would it be fair to suggest that TD can be closing the performance gap relative to your U S peers.
Thank you very much Lamar for the question, let me, let me just break it down our lending on the commercial side. Once again, we were pleased with the performance for the quarter.
On a quarter on quarter basis commercial loans ex PPP were up two 8% and I'd say the mid market a trend that we saw last quarter continued but this quarter I'd say, we saw broader participation. So we saw many more of our specialty businesses also seeing momentum that being health care.
<unk>, our Muni education, not for profit segments, and we even saw a little bit more lift in our institutional <unk> business. So it was a broader.
Our broader performance that actually led to that growth I'd say, where we're still seeing a little bit of sluggishness is in that small business and community segments space, where originations were sound there were good but we're still seeing pay down activities.
Little bit more elevating that suggest clients being a little bit more defensive given the uncertainty that's predicting the marketplace. I also just want to spend a moment because it was not only the momentum that we saw wasn't only on the commercial lending side, but we also saw it this quarter on the on the retail side. We had if you just look at the major product categories.
Mortgage lending.
Mortgage balances overall were up 14% we saw good cards activity card sales were up 10%, resulting in a balance sheet growth of 7% and even in the auto segment that had some significant challenges from a pricing standpoint over the past four or five months, we've seen some stabilization on that price.
And we and we still managed to see good portfolio growth at five 8%. So net net I would say it was a good broad based lending performance for the U S business and at this point I would say, we do believe that sustainable we've got good momentum as we go into.
Into the fourth quarter.
I appreciate the time thanks. Thank you.
Thank you. Our next question is from Nigel D'souza from Veritas investment Research. Please go ahead.
Thank you and good afternoon I wanted to circle back on your allowances this quarter and you mentioned that.
Police have overlays.
Seth that situation in your macroeconomic outlook I'm wondering if you could size the impact that at all related to lease any sense of what you said.
Division performing loans would have been.
For Baxter overly offset.
Yes, let me, let me sort of describe what's happening and disclosed.
This goes to you were you know what I can.
So we were very thoughtful and deliberate and not sort of rushing to release reserves because we did see.
The environment changing.
So today, we find ourselves relatively well positioned already for a moderate recession as you know, we're holding $1 6 billion in reserves over pre COVID-19 levels.
Could this quarter is that you'll see from our base and not downside there was quite a bit of change.
On the macro side and I'll just describe it to you with the pace of economic growth in the base case for Canada, and the United States, It's lower.
<unk> growth numbers in 'twenty, two or lower we actually show a higher unemployment in both countries in 2023, we've used higher interest rates and you would've noticed a big change in housing again, particularly Canada, but the United States as well and then if you look at our downside case, you know, we're using a recessionary case now as.
The downside so the macro drove an increase.
But does.
That uncertainty we had already built into our allowance process by putting an overlay. So we we've actually just unwound those overlays and today if you look at our allowance.
Almost 90% of our allowance is modeled okay. So that's what's good and what's left in terms of judgmental overlays is very sort of small.
Right. So the way I would summarize that is I mean this is fair.
The overlay that you had on uncertainty related to COVID-19.
Now absorbed the uncertainty related to rising rates and inflation. So it wouldn't be fair to say that.
We are less likely to see substantial builds are performing.
Provisions on performing loans, given that you carried over that's the excess reserves that dependent.
That's a fair that's a fair remark, yes, we don't expect we're very well reserved we don't expect to be building any more reserves or any material amounts but of course, a lot depends on what happens with the macro the macro suddenly deteriorates a lot.
Then we'd have to really look at it but again the key point is we didn't rush to release our reserves for good reasons, we're well reserved we are well positioned for a moderate recession as a bank.
Okay, and a quick clarification on the impact to our first horizon on goes along because I understand you have to be once revisions.
I guess you wouldn't have that overlays.
I suppose I'm certain that you have in your existing book.
The license.
Incrementally.
We think suddenly higher provisions on performing loans.
Yes that would be a legal day one activity there's no first horizon reflected in these numbers.
So at the appropriate time, we'll provide you more more disclosure I think we did well.
We did indicate to you what sort of credit Mark we took at the at the outset, so at or near the top.
We will keep you informed.
Okay. That's it for me thank you.
Thank you next question is from Joe Ho Kim from Credit Suisse. Please go ahead.
Hi, good afternoon, and thanks for taking my question just wanted to go back to the U S business.
Hearing stories about U S housing market cooling off.
With that amortization is really coming under pressure.
Mortgage growth certainly didn't seem that way last quarter.
On the mortgage business.
Perhaps the outperforming other geographies and what gives you the confidence.
And he is going to continue.
Yeah. So let me let me break that down for you because it's it's both a matter of originations and significantly lower pay down activity. So on the origination front two drivers are really driving some of the growth that we saw one a new retail model that we put mortgage origination model that we put into the retail stores.
<unk>.
That basically provides almost a direct line back to our mortgage origination unit, it's providing the stores a great deal of support.
<unk> and allowing us to capture much more of that retail flow.
And secondly, we've had we had good correspondent originations in the quarter.
Up significantly versus last year high quality.
High net worth mass affluent originations and so that powered.
The growth in originations on the on the flip side, though the real story is that we're seeing much lower pay down activity.
As clients as rates have risen there's just much less refi demand and that means more of what we're originating is actually contributing to actual balanced growth and so.
Those factors I would say as you look forward on the mortgage market. There's no question that we would expect some moderation in terms of mortgage activity just given the increase in rates in the U S. But I do think we've got some opportunities based on some of these commercial strategies, we're putting in place to actually.
For them quite well and generate positive growth in the portfolio.
Okay. Thanks for that and just last one for me just on expenses.
When I look at it at the all bank level it was up about 9% this quarter.
Good to hear the commentary about you know higher employee cost and tech expenses across this segment. So just wondering how you're thinking about the pace of investments in the New York.
When could you get either.
Do people lives from here will accelerate and what that means for for expense growth from your perspective.
Right.
Hi, it's Kelvin I'll take that question, yes, so we don't.
Manage expenses quarter over quarter.
We currently see really good opportunities to invest in our distribution channels and that's why you see a FTE.
Increasing in the contact center supporting.
Insurance and wealth and then the others are areas, where we're investing is in technology.
And also in other front of mine and our.
Supporting our client roles and so I think that Oh, our focus is and our goal is to deliver positive operating leverage over the medium term.
And we'll adjust as the environment change, but right now we would continue to invest.
Great.
Okay.
Thank you. Our next question is from Darko <unk> from RBC capital markets. Please go ahead.
Hi, Thank you just two quick questions first how should I think about or have you guys given any thought around the.
The credit card competition Act in the U S.
I'll take this one darko good to hear from you.
As you know Darko, let me just talk a little bit about our cards business for a moment in terms of the things that we're focused on we've got a.
Our proprietary bank card business and our retail card services book, both of which are a major area of focus for us in terms of growth going forward, we feel quite comfortable with that business. We continue to think about expanded value proposition expansions to be able to.
Support our growth in that segment. We also have two very important co branded relationships, which has been a source historically very good growth from an overall.
Our competitive position I don't believe at this point that.
They that that act is going to be a significant change to our existing card space, but it's something that we continue to monitor and we'll certainly evaluate in terms of what the what the impact could be for fees and for other other considerations.
Okay and does it affect anything that you do with first horizon at all either or like.
I realize it has nothing to do with target nordson.
So darko very quickly on on first horizon. So first ryzen has about a million retail clients.
They have a very small cards book, so as we talked about I think last quarter. When we think about synergies one of the obvious synergies for some first horizon is actually bringing our cards capability to bear to first horizon and that's going to be one of the things that we'll do early on in terms of the union between.
The two institutions.
From our from our stand point, we see that as a growth opportunity, we don't really see a great deal of headwind there.
Great. Thank you.
Thank you.
Thank you next question is from Mike <unk> from K B W. Research. Please go ahead.
Good afternoon, I want to go back to the.
Margins in Canada, and so many point T d's locked up I guess outsized performance, which I think everyone was expecting this quarter relative to peers and I'm. Just wondering I think I heard Michael you use a term competitive dynamics and is this may be related to the reservoir portfolio. I know you had been losing market share for.
For quite a while and then that sort of turnaround last quarter I'm guessing you might've continue that positive trend into Q3.
How much of a factor would would that have been on the margins and more importantly, what about going forward. If you do continue to push and try to sort of regain some of that lost market share in Russell, how does that impact your margin going forward.
Good question and you're right to point out that we have.
Have some recent trajectory without a doubt our momentum with our <unk> business.
In fact, if you look at our sequential growth in our mortgage business, our mortgage and HELOC combined on a quarter over quarter basis. This last third quarter was the best in class since 2010.
And so we feel good about that that trajectory I would tell you we're not getting there by actually under pricing the market.
And I feel very confident about that but we're getting there by actually just manage our customer relationships better managing our operational processes more effectively but.
But it's not we're not winning two pricing and pricing under the market.
That being the case when the mortgage business is growing faster than our deposit business that will have an impact on our overall reported NIM.
Okay. Thanks for that color and then just a quick clarification on more of a numbers question, but when.
When I look at a couple of your other peers, who have a similar structure on the variable rate mortgage in Canada.
They both reported 30.
<unk> 35, plus year amortization, making up 20 plus percent of the portfolio as of Q3 and when I look at your disclosure. It still says basically zero and I'm guessing you probably calculate that differently I'm not sure how it could could not gravitate up just given the just the size of the rate hikes, and and obviously you're pushing that Ann.
For a lot of your a lot of your recent originations and any color you can offer on that.
So maybe I'll start off by describing how our product works and then how that gets reflected in the disclosures.
And so our variable rate contracts require customers at renewal to maintain their original amortization schedule and so if at some point.
Rates are going up and the amount of <unk>.
Payments towards principal goes down at renewal you basically you have to go in and sort of catch up to the original schedule and that generally means is a higher payment for the consumer so table 21 today.
I think you're referring to the table 21 in the report to shareholder reflects this dynamic.
And that is that our February contracts require customers to maintain the original amortization schedule.
Okay. So then so I guess that means when it comes to Td's trigger you do actually push a higher payment. So it is a fixed payment, but if the interest portion exceeds the original payment then that small incremental gets added to the payments you are I guess youre doing it incrementally as opposed to all at the end when when the when it's when it comes time for renewal is that does that.
A fair way to look at it.
Not exactly.
The way to think about this is if a customer hits the point, where they're no longer amortizing. The principal we will reach out to the customer and will give them options in the <unk>.
Options either increase your payment do nothing I'll make a lump sum payment things like that if they do then nothing then at that point or amortization will be kind of off the original schedule.
And so when the loan.
It comes up for renewal in a year or two years three years whenever it is at that point, you'll have to look at the remaining amortization you'll have to we'll adjust the payment at that point to reflect the remaining amortization.
Okay. Okay got it thanks for the color.
Thank you. Our next question is from Scott Chan Canaccord Genuity. Please go ahead.
Yeah. Thanks, I'll leave it to one just a time I'm switching over to asset management in your opening remarks, you talked about 90% of your AUR and top two quartile over the past three years, which which is a lot higher I think the last time I ran it for the industry and you gave some points on retail and institutional but I was wondering if you can allow.
Right on both of those client platforms.
Year to date and a potential outlook on our performance.
Ray will provide good good perspective thanks.
Thanks for the question Scott.
I'd say, maybe I'll start with just.
Just the mutual fund industry at large.
And I think everybody has seen that there has been certainly net outflows from our mutual fund perspective and for the quarter I think that's at 21 billion.
And we're definitely seeing that move money migrate to within our own house to various gic's terms and cash products due to the market volatility and we've seen this in the past where people are rebalancing.
And what what's been great news for US is that from a year to date perspective.
Our clients are or we've seen the largest.
Positive net flow our year to date and mutual fund sales amongst the big five banks and I think that's a credit to the performance that our clients are seeing.
In the mutual funds and so over a three year performance. It is at 90% and over a four year performance actually the performance number is somewhere around 90, 293%. So.
Volatile times I think our clients are gravitating towards quality and certainly as the largest.
Asset manager.
They're seeing that quality on the institutional side as all of you know we are the number one institutional asset manager and we are continuing to actually take market share in that category. It's actually been a very strong year for TD asset management on the institutional side are we continuing to see very strong positive inflows.
And one of the main reasons for that is our acquisition that we did a few years ago of greystone and the alternative investments are in favor and certainly we are seeing strong interest from institutional clients.
Sure.
For the alternative investments.
And again that is a strength for us in TD asset management, So I'd sort of say on both fronts, whether you're a retail investor or institutional investor TD asset management is performing well.
Okay. Thank you for that.
Okay.
Thank you we have no further questions registered at this time so Mr. Ms. Monnion returned opening back over to you.
Thanks, operator, and thank you all for joining us today, great questions, great engagement and <unk>.
So to take a lot of offline calls on working on the accounting around the first horizon acquisition, which is terrific.
As you heard there is no economic impact to the bank and that is a key part, but I'm sure. It scales when will explain.
All the ins and outs on that for folks who need further clarification on that once again, you know very happy with how the orders stand out.
<unk> like to take this opportunity to thank our bankers around the world. They do a great job for all of our stakeholders, including our shareholders. So thanks for that and we will see you again 90 days from now thank you.
Thank you. Your conference has now ended please disconnect your lines at this time and we thank you for your participation.