DBRS Confirms TD at AA and R-1 (high), Trends Stable

DBRS has today confirmed the ratings of The Toronto-Dominion Bank (TD or the Bank) at AA and R-1 (high). All the trends are Stable.

The ratings are supported by TD’s leadership position in Canadian personal banking, low business risk profile and strong credit risk profile. Over the last two years, TD has been executing on its U.S. growth strategy while generating increased levels of profitability in its Canadian retail banking (Canadian P&C) franchise. DBRS expects TD’s Canadian P&C franchise to provide ongoing earnings stability given its low business risk profile. TD has been successful in growing its Canadian retail market shares, including credit cards, insurance, small business and commercial banking.

DBRS believes the privatization of TD Banknorth Inc. should provide TD with more flexibility toward implementing future organic growth strategies at TD Banknorth Inc. (see the DBRS press release dated November 20, 2006, for more details). Larger acquisitions made since the initial purchase of 51% of Banknorth Group Inc. have increased integration risk, but not profitability. Management stated it needs to prove its organic development skills, with support from Canada, before further acquisitions are made. TD Banknorth Inc. has also been challenged to find acquisitions at reasonable prices.

DBRS believes successful integration and execution of an organic growth strategy at TD Banknorth Inc. are necessary to achieving acceptable return on invested capital in the medium term.

In October 2006, DBRS introduced a new global rating methodology for banks. TD’s long-term deposits and senior debt rating, at AA, is composed of its Intrinsic Assessment at AA (low) and its Support Assessment at SA2 (reflecting the expectation of systemic and timely external support by the government of Canada). The SA2 results in a one-notch rating benefit to the Intrinsic Assessment.

TD’s core activities are divided into four lines of business: Canadian Personal and Commercial Banking (TD Canada Trust), U.S. Personal and Commercial Banking (TD Banknorth Inc.), Wealth Management (TD Waterhouse and TD Ameritrade) and Wholesale Banking (TD Securities), representing 57%, 7%, 17% and 18% of net income (excluding intangible amortization and corporate) in 2006, respectively.

Headquartered in Toronto, Canada, The Toronto-Dominion Bank has a full-service banking operation in retail and wholesale banking and wealth management in Canada, U.S. retail banking and global discount brokerage. In Canada, TD has one of the largest personal banking operations, with ten million customers.

Note:
All figures are in Canadian dollars unless otherwise noted.
DBRS ratings also apply to TD Mortgage Corporation, TD Pacific Mortgage Corp. and The Canada Trust Company, which are unconditionally guaranteed by The Toronto-Dominion Bank.