Loans, Impaired Loans, and Allowance for Credit Losses (Tables)

3 Months Ended

Jan. 31, 2020

Summary of Gross Carrying Amounts of Loans and Credit Risk Exposures on Loan Commitments and Financial Guarantee Contracts by Internal Risk Ratings

The following table provides the gross carrying amounts of loans and credit risk exposures on loan commitments and financial guarantee contracts by internal risk ratings for credit risk management purposes, presenting separately those that are subject to Stage 1, Stage 2, and Stage 3 allowances.

Loans by Risk Ratings


(millions of Canadian dollars)																As at
		January 31, 2020								October 31, 2019
		Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
Residential mortgages^1,2,3
Low Risk	$	184,100	$	56	$	n/a	$	184,156	$	181,748	$	77	$	n/a	$	181,825
Normal Risk		44,383		292		n/a		44,675		43,988		248		n/a		44,236
Medium Risk		5,847		461		n/a		6,308		5,817		433		n/a		6,250
High Risk		1,031		1,494		279		2,804		964		1,454		366		2,784
Default		n/a		n/a		617		617		n/a		n/a		545		545

Total		235,361		2,303		896		238,560		232,517		2,212		911		235,640

Allowance for loan losses		30		28		56		114		28		26		56		110

Loans, net of allowance		235,331		2,275		840		238,446		232,489		2,186		855		235,530
Consumer instalment and other personal⁴
Low Risk		92,920		965		n/a		93,885		92,601		953		n/a		93,554
Normal Risk		46,441		927		n/a		47,368		46,878		973		n/a		47,851
Medium Risk		27,461		904		n/a		28,365		27,576		879		n/a		28,455
High Risk		7,212		2,610		571		10,393		6,971		2,435		618		10,024

Default		n/a		n/a		492		492		n/a		n/a		450		450

Total		174,034		5,406		1,063		180,503		174,026		5,240		1,068		180,334

Allowance for loan losses		698		407		185		1,290		690		384		175		1,249

Loans, net of allowance		173,336		4,999		878		179,213		173,336		4,856		893		179,085
Credit card
Low Risk		7,549		37		n/a		7,586		7,188		48		n/a		7,236
Normal Risk		10,984		85		n/a		11,069		10,807		82		n/a		10,889
Medium Risk		11,220		280		n/a		11,500		11,218		275		n/a		11,493
High Risk		4,785		1,713		383		6,881		4,798		1,670		355		6,823

Default		n/a		n/a		133		133		n/a		n/a		123		123

Total		34,538		2,115		516		37,169		34,011		2,075		478		36,564

Allowance for loan losses		743		565		367		1,675		732		521		322		1,575

Loans, net of allowance		33,795		1,550		149		35,494		33,279		1,554		156		34,989
Business and government^1,2,3,5
Investment grade or Low/Normal Risk		122,964		187		n/a		123,151		120,940		153		n/a		121,093
Non-Investment grade or Medium Risk		122,818		5,177		n/a		127,995		119,256		5,298		n/a		124,554
Watch and classified or High Risk		1,001		4,753		110		5,864		951		4,649		158		5,758

Default		n/a		n/a		912		912		n/a		n/a		730		730

Total		246,783		10,117		1,022		257,922		241,147		10,100		888		252,135

Allowance for loan losses		678		653		273		1,604		672		648		193		1,513

Loans, net of allowance		246,105		9,464		749		256,318		240,475		9,452		695		250,622

Total loans^5,6		690,716		19,941		3,497		714,154		681,701		19,627		3,345		704,673

Total allowance for loan losses⁶		2,149		1,653		881		4,683		2,122		1,579		746		4,447

Total loans, net of allowance^5,6	$	688,567	$	18,288	$	2,616	$	709,471	$	679,579	$	18,048	$	2,599	$	700,226

As at January 31, 2020, impaired loans with a balance of $140 million (October 31, 2019 – $127 million) did not have a related allowance for loan losses. An allowance was not required for these loans as the balance relates to loans where the realizable value of the collateral exceeded the loan amount.

²	As at January 31, 2020, excludes trading loans and non-trading loans at fair value through profit or loss (FVTPL) with a fair value of $13 billion (October 31, 2019 – $12 billion) and $2 billion (October 31, 2019 – $2 billion), respectively.

³	As at January 31, 2020, includes insured mortgages of $87 billion (October 31, 2019 – $88 billion).

⁴	As at January 31, 2020, includes Canadian government-insured real estate personal loans of $13 billion (October 31, 2019 – $13 billion).

⁵	As at January 31, 2020, includes loans that are measured at FVOCI of $2 billion (October 31, 2019 – $2 billion) and customers' liability under acceptances of $14 billion (October 31, 2019 – $13 billion).

⁶

As at January 31, 2020, Stage 3 includes acquired credit-impaired (ACI) loans of $290 million (October 31, 2019 – $313 million) and a related allowance for loan losses of $10 million (October 31, 2019 – $12 million), which have been included in the "Default" risk rating category as they were impaired at acquisition.

Loans by Risk Ratings – Off-Balance Sheet Credit Instruments¹

(millions of Canadian dollars)

As at

January 31, 2020

October 31, 2019

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Retail Exposures²

Low Risk

232,110

734

n/a

232,844

227,757

732

n/a

228,489

Normal Risk

69,002

581

n/a

69,583

67,245

570

n/a

67,815

Medium Risk

13,713

301

n/a

14,014

13,204

277

n/a

13,481

High Risk

1,855

879

–

2,734

1,869

854

–

2,723

Default

n/a

–

n/a

–

Non-Retail Exposures³

Investment grade

182,138

–

n/a

182,138

179,650

–

n/a

179,650

Non-Investment grade

66,868

3,916

n/a

70,784

64,553

3,397

n/a

67,950

Watch and classified

2,266

–

2,280

2,126

–

2,128

Default

n/a

297

n/a

108

Total off-balance sheet credit instruments

565,700

8,677

297

574,674

554,280

7,956

108

562,344

Allowance for off-balance sheet credit instruments

317

278

613

293

277

585

Total off-balance sheet credit instruments, net of allowance

565,383

8,399

279

574,061

553,987

7,679

561,759

¹	Exclude mortgage commitments.

²	As at January 31, 2020, includes $318 billion (October 31, 2019 – $311 billion) of personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank's discretion at any time.

³	As at January 31, 2020, includes $42 billion (October 31, 2019 – $41 billion) of the undrawn component of uncommitted credit and liquidity facilities.

Summary of Allowance for Credit Losses

The changes to the Bank's allowance for loan losses, as at and for the three months ended January 31, 2020 and January 31, 2019, are shown in the following tables.

Allowance for Loan Losses¹


(millions of Canadian dollars)		For the three months ended
		January 31, 2020												January 31, 2019
		Stage 1			Stage 2			Stage 3	²		Total			Stage 1			Stage 2			Stage 3	²		Total
Residential Mortgages
Balance at beginning of period	$	28		$	26		$	56		$	110		$	24		$	34		$	52		$	110
Provision for credit losses
Transfer to Stage 1³		6			(6	)		–			–			13			(12	)		(1	)		–
Transfer to Stage 2		(1	)		4			(3	)		–			(1	)		3			(2	)		–
Transfer to Stage 3		–			(3	)		3			–			(1	)		(2	)		3			–
Net remeasurement due to transfers⁴		(3	)		2			–			(1	)		(4	)		1			–			(3	)
New originations or purchases⁵		5			n/a			–			5			3			n/a			–			3
Net repayments⁶		–			–			–			–			–			(1	)		–			(1	)
Derecognition of financial assets (excluding disposals and write-offs)⁷		(1	)		(1	)		(5	)		(7	)		(1	)		(1	)		(4	)		(6	)
Changes to risk, parameters, and models⁸		(4	)		6			11			13			(8	)		8			11			11
Disposals		–			–			–			–			–			–			–			–
Write-offs		–			–			(7	)		(7	)		–			–			(7	)		(7	)
Recoveries		–			–			1			1			–			–			–			–
Foreign exchange and other adjustments		–			–			–			–			–			–			–			–
Balance at end of period	$	30		$	28		$	56		$	114		$	25		$	30		$	52		$	107
Consumer Instalment and Other Personal
Balance, including off-balance sheet instruments, at beginning of period	$	717		$	417		$	175		$	1,309		$	599		$	392		$	180		$	1,171
Provision for credit losses
Transfer to Stage 1³		84			(78	)		(6	)		–			83			(78	)		(5	)		–
Transfer to Stage 2		(36	)		48			(12	)		–			(29	)		39			(10	)		–
Transfer to Stage 3		(3	)		(36	)		39			–			(5	)		(52	)		57			–
Net remeasurement due to transfers⁴		(35	)		43			3			11			(34	)		40			3			9
New originations or purchases⁵		78			n/a			–			78			66			n/a			–			66
Net repayments⁶		(24	)		(8	)		(3	)		(35	)		(21	)		(7	)		(3	)		(31	)
Derecognition of financial assets (excluding disposals and write-offs)⁷		(21	)		(11	)		(5	)		(37	)		(20	)		(26	)		(15	)		(61	)
Changes to risk, parameters, and models⁸		(33	)		64			256			287			(41	)		106			222			287
Disposals		–			–			–			–			–			–			–			–
Write-offs		–			–			(342	)		(342	)		–			–			(306	)		(306	)
Recoveries		–			–			79			79			–			–			60			60
Foreign exchange and other adjustments		1			1			1			3			–			(1	)		–			(1	)
Balance, including off-balance sheet instruments, at end of period		728			440			185			1,353			598			413			183			1,194
Less: Allowance for off-balance sheet instruments⁹		30			33			–			63			25			43			–			68
Balance at end of period	$	698		$	407		$	185		$	1,290		$	573		$	370		$	183		$	1,126
Credit Card¹⁰
Balance, including off-balance sheet instruments, at beginning of period	$	934		$	673		$	322		$	1,929		$	819		$	580		$	341		$	1,740
Provision for credit losses
Transfer to Stage 1³		161			(155	)		(6	)		–			199			(141	)		(58	)		–
Transfer to Stage 2		(55	)		68			(13	)		–			(56	)		71			(15	)		–
Transfer to Stage 3		(8	)		(133	)		141			–			(8	)		(167	)		175			–
Net remeasurement due to transfers⁴		(62	)		84			12			34			(56	)		79			14			37
New originations or purchases⁵		35			n/a			–			35			30			n/a			–			30
Net repayments⁶		70			7			12			89			39			2			(35	)		6
Derecognition of financial assets (excluding disposals and write-offs)⁷		(25	)		(29	)		(103	)		(157	)		(20	)		(21	)		(64	)		(105	)
Changes to risk, parameters, and models⁸		(101	)		210			369			478			(80	)		233			377			530
Disposals		–			–			–			–			–			–			–			–
Write-offs		–			–			(452	)		(452	)		–			–			(418	)		(418	)
Recoveries		–			–			84			84			–			–			71			71
Foreign exchange and other adjustments		3			3			1			7			(2	)		(1	)		1			(2	)
Balance, including off-balance sheet instruments, at end of period		952			728			367			2,047			865			635			389			1,889
Less: Allowance for off-balance sheet instruments⁹		209			163			–			372			469			323			–			792
Balance at end of period	$	743		$	565		$	367		$	1,675		$	396		$	312		$	389		$	1,097

¹	Certain comparative amounts have been reclassified to conform with the presentation adopted in the current period.

²	Includes allowance for loan losses related to ACI loans.

³	Transfers represent stage transfer movements prior to expected credit loss (ECL) remeasurement.

⁴	Represents the remeasurement between twelve-month and lifetime ECLs due to stage transfers, excluding the change to risk, parameters, and models.

⁵	Represents the increase in the allowance resulting from loans that were newly originated, purchased, or renewed.

⁶	Represents the changes in the allowance related to cash flow changes associated with new draws or repayments on loans outstanding.

⁷	Represents the decrease in the allowance resulting from loans that were fully repaid and excludes the decrease associated with loans that were disposed or fully written off.

⁸	Represents the change in the allowance related to changes in risk including changes to macroeconomic factors, level of risk, associated parameters, and models.

⁹	The allowance for loan losses for off-balance sheet instruments is recorded in Other liabilities on the Consolidated Balance Sheet.

¹⁰	Credit cards are considered impaired and migrate to Stage 3 when they are 90 days past due and written off at 180 days past due. Refer to Note 2 of the Bank's 2019 Annual Consolidated Financial Statements for further details.


Allowance for Loan Losses (continued)^1,2
(millions of Canadian dollars)		For the three months ended
		January 31, 2020												January 31, 2019
		Stage 1			Stage 2			Stage 3	³		Total			Stage 1			Stage 2			Stage 3	³		Total
Business and Government
Balance, including off-balance sheet instruments, at beginning of period	$	736		$	740		$	208		$	1,684		$	736		$	690		$	131		$	1,557
Provision for credit losses
Transfer to Stage 1⁴		42			(41	)		(1	)		–			44			(42	)		(2	)		–
Transfer to Stage 2		(24	)		29			(5	)		–			(30	)		32			(2	)		–
Transfer to Stage 3		(9	)		(60	)		69			–			(1	)		(25	)		26			–
Net remeasurement due to transfers⁴		(18	)		34			(3	)		13			(13	)		20			1			8
New originations or purchases⁴		110			n/a			–			110			109			n/a			–			109
Net repayments⁴		(8	)		(8	)		(8	)		(24	)		7			(12	)		(4	)		(9	)
Derecognition of financial assets (excluding disposals and write-offs)⁴		(81	)		(109	)		(40	)		(230	)		(94	)		(110	)		(12	)		(216	)
Changes to risk, parameters, and models⁴		6			147			104			257			(33	)		153			66			186
Disposals		–			–			–			–			–			–			–			–
Write-offs		–			–			(47	)		(47	)		–			–			(35	)		(35	)
Recoveries		–			–			18			18			–			–			11			11
Foreign exchange and other adjustments		2			3			(4	)		1			–			(1	)		(2	)		(3	)
Balance, including off-balance sheet instruments, at end of period		756			735			291			1,782			725			705			178			1,608
Less: Allowance for off-balance sheet instruments⁴		78			82			18			178			79			124			6			209
Balance at end of period		678			653			273			1,604			646		$	581		$	172			1,399
Total Allowance for Loan Losses at end of period	$	2,149		$	1,653		$	881		$	4,683		$	1,640		$	1,293		$	796		$	3,729

¹	Certain comparative amounts have been reclassified to conform with the presentation adopted in the current period.

²	Includes the allowance for loan losses related to customers' liability under acceptances.

³	Includes allowance for loan losses related to ACI loans.

⁴	For explanations regarding this line item, refer to the "Allowance for Loan Losses" table on the previous page in this Note.

Summary of Loans Past Due but Not Impaired

The following table summarizes loans that are contractually past due but not impaired as at January 31, 2020 and October 31, 2019.



Loans Past Due but not Impaired^1,2
(millions of Canadian dollars)																As at
		January 31, 2020								October 31, 2019
		1-30 days		31-60 days		61-89 days		Total		1-30 days		31-60 days		61-89 days		Total
Residential mortgages	$	1,485	$	379	$	162	$	2,026	$	1,709	$	404	$	111	$	2,224
Consumer instalment and other personal		6,295		854		296		7,445		6,038		845		266		7,149
Credit card		1,335		343		229		1,907		1,401		351		229		1,981

Business and government		1,266		626		123		2,015		1,096		858		60		2,014
Total	$	10,381	$	2,202	$	810	$	13,393	$	10,244	$	2,458	$	666	$	13,368

¹	Includes loans that are measured at FVOCI.

²	Balances exclude ACI loans.