Management’s Discussion and Analysis

Financial Highlights

(Canadian $ in millions, except as noted) 2017 2016 2015

Adjusted results in this table are non-GAAP amounts or non-GAAP measures. Please see the Non-GAAP Measures section.

Summary Income Statement

     
Net interest income 10,007 9,872 8,763
Non-interest revenue 12,253 11,215 10,626
Revenue 22,260 21,087 19,389
Insurance claims, commissions and changes in policy benefit liabilities (CCPB) 1,538 1,543 1,254
Revenue, net of CCPB 20,722 19,544 18,135
Specific provision for credit losses (PCL) 850 815 612
Collective provision for (recovery of) credit losses (76)
Total provision for credit losses 774 815 612
Non-interest expense 13,302 12,997 12,182
Provision for income taxes 1,296 1,101 936
Net income 5,350 4,631 4,405
Attributable to bank shareholders 5,348 4,622 4,370
Attributable to non-controlling interest in subsidiaries 2 9 35
Net income 5,350 4,631 4,405
Adjusted net income 5,508 5,020 4,681

Common Share Data ($, except as noted)

Earnings per share 7.92 6.92 6.57
Adjusted earnings per share 8.16 7.52 7.00
Earnings per share growth (%) 14.5 5.3 2.5
Adjusted earnings per share growth (%) 8.5 7.4 6.2
Dividends declared per share 3.56 3.40 3.24
Book value per share 61.92 59.56 56.31
Closing share price 98.83 85.36 76.04
Total market value of common shares ($ billions) 64.0 55.1 48.9
Dividend yield (%) 3.6 4.0 4.3

Financial Measures and Ratios (%)

Return on equity 13.3 12.1 12.5
Adjusted return on equity 13.7 13.1 13.3
Return on tangible common equity 16.3 15.3 15.8
Adjusted return on tangible common equity 16.5 16.1 16.4
Net income growth 15.5 5.1 1.7
Adjusted net income growth 9.7 7.2 5.1
Revenue growth 5.6 8.8 6.4
Revenue growth, net of CCPB 6.0 7.8 8.5
Non-interest expense growth 2.3 6.7 11.5
Adjusted non-interest expense growth 3.7 6.1 9.8
Efficiency ratio, net of CCPB 64.2 66.5 67.2
Adjusted efficiency ratio 58.4 59.2 60.9
Adjusted efficiency ratio, net of CCPB 62.8 63.9 65.2
Operating leverage, net of CCPB 3.7 1.1 (3.0)
Adjusted operating leverage, net of CCPB 1.9 2.1 (1.3)
Net interest margin on average earning assets 1.55 1.59 1.51
Effective tax rate 19.5 19.2 17.5
Adjusted effective tax rate 19.8 19.9 18.0
Return on average assets 0.7 0.7 0.7
PCL-to-average net loans and acceptances (annualized) 0.21 0.23 0.19
Specific PCL-to-average net loans and acceptances (annualized) 0.23 0.23 0.19

Balance Sheet (as at $ millions, except as noted)

Assets 709,580 687,935 641,881
Net loans and acceptances 378,218 371,751 334,024
Deposits 483,488 473,372 438,169
Common shareholders’ equity 40,114 38,464 36,182
Cash and securities-to-total assets ratio (%) 28.5 27.1 27.8

Capital Ratios (%)

Common Equity Tier 1 Ratio 11.4 10.1 10.7
Tier 1 Capital Ratio 13.0 11.6 12.3
Total Capital Ratio 15.1 13.6 14.4
Leverage Ratio 4.4 4.2 4.2

Foreign Exchange Rates ($)

As at Canadian/U.S. dollar 1.2895 1.3411 1.3075
Average Canadian/U.S. dollar 1.3071 1.3251 1.2550