The Toronto-Dominion Bank (TD) Earnings Call Transcript & Summary

Welcome back, everyone, and welcome to those who are joining us via the webcast. Today, you will be hearing from Bharat, Kelvin and the leaders of TD's Canadian retail businesses as they discuss how TD is putting the customer at the center of everything we do, investing for the future and accelerating growth across the bank. We have a full agenda for today, including 2 Q&A sessions and the opportunity for a break in the middle of the program. And now it's my pleasure to introduce our Group President and CEO, Bharat Masrani, to kick off our program.

Thank you, Brooke, and good afternoon. I want to welcome those here in Toronto as well as participants on the webcast. Thank you for joining us for our Investor Day, focused on our Canadian retail and wealth and insurance businesses. We have a fantastic franchise, and I'm looking forward to discussing our performance and our plans for accelerated growth. Our work is in by our purpose. At TD, we create shareholder value by enriching the lives of our customers, communities and colleagues. We also strive to improve, to be better and to serve better. That's what it means to be the better bank. Together, our vision and purpose guide how we execute our strategy, to be a premier North American integrated financial institution with a deeply rooted customer focus. Our history of performance and value creation is clear. Over the past 5 years, including through the depths of the pandemic, TD's compound annual growth rate for shareholder returns was approximately 8%. During that same period, we returned almost $35 billion to shareholders while continuing to invest in our business and build significant capital. We exceeded the Canadian peer average on both of these important measures. We have bold ambitions for the future and are building on a very strong foundation. We execute a consistent and effective strategy. We have a proven business model, are purpose-driven and have a relentless focus on the future. Let me take a few moments to discuss how that strategy translates into action, informs our decision-making and drives our business forward. Our proven business model delivers great results. We build market-leading franchises centered on our customers and their evolving needs. We scale our businesses and diversify our mix to capture synergies, market leadership and share of wallet, and we manage the bank prudently with a well-developed risk management framework and a strong balance sheet. This winning business model generates consistent earnings growth over time. TD is also a purpose-driven bank. It is part of our DNA. We keep our customers at the center of everything that we do. We support local communities and build lasting relationships across our footprint. And we invest in our talented and diverse colleagues, our strongest competitive advantage. After all, banking is a people business. At TD, being purpose-driven defines us and is a direct contributor to our success. But banking is not a static business. it is always evolving. By being forward focused, we anticipate change, adapt, invest and build new capabilities with a clear focus on what's ahead. We drive innovation, mobilize data and evolve our operating models to run the bank better and deliver the personalized connected legendary experience that are hallmarks of TD today and will continue to be well into the future. In Canada, we've built market-leading diversified business across all aspects of banking. We have top 2 franchises in retail and commercial banking, top-tier wealth and wholesale businesses and operate the country's #1 direct insurer and #1 direct investing platform. Today, you will hear how we will continue to grow in our home market. In the U.S., we started as a challenger just 20 years ago. Since then, we've built America's eighth largest domestic bank. We have top 3 market share by deposits in 26 MSAs up and down the East Coast. We are growing our customer base and are investing for the future. In wholesale, TD Securities has grown from a traditional Canadian franchise to an integrated North American dealer with global reach. With the recent acquisition of Cowen, we have greater scale and even deeper capabilities, and we will continue to drive growth. Overall, over the past 5 years, we have grown TD Bank Group revenues, EPS and dividends faster than the peer average, delivering premium total shareholder returns. This performance and our strong capital position allows us to invest in our businesses' complete strategic acquisitions and return capital to you, our shareholders. Scale is increasingly critical to meet the needs of a highly competitive and rapidly changing market. Customer expectations are evolving. Regulatory changes are impacting the industry. And cybersecurity threats are growing more sophisticated and complex every day. TD's North American scale allows us to invest efficiently to address these and other market dynamics. We also have an incredibly powerful brand that resonates on both sides of the border. In 2023, Brand Finance ranked us the #1 most valuable brand in Canada. And in the U.S., the TD Shield shines from the TD Garden in Boston to a One Vanderbilt flagship in the heart of Manhattan and all across our network of stores from Maine to Florida. Our North American reach also gives us clear advantage as we compete for the best people. We have access to one of the world's largest talent pools and successfully attract world-class leadership to the bank. This scale supports efficient investments to accelerate technology-enabled change, build once, use everywhere. And we complement this work with strategic acquisitions to accelerate innovation. For example, we added leading AI capability with Layer 6 and bolstered algorithmic trading with headlands. A unique and inclusive culture is core to who we are and how we win. Behind every legendary experience is a TD colleague, and we continue to invest to extend this advantage. We also continue to lead across ESG initiatives. We are directly supporting a more sustainable future and help our clients with advice and financial services, and we recently announced a new $500 million sustainable and decarbonization finance target by 2030. TD will enable and bank the transition to a lower carbon economy. Today, you will also hear how we are reimagining the financial services to shape the future of banking in Canada. We are seamlessly integrating across our omnichannel distribution network to provide our customers with legendary experiences across branch, digital, phone and ATM. We are delivering real-time customer solutions across our products and services powered by AI-driven insights and data optimization. We're powering deeper customer relationships, accelerating mortgage pre-approvals and reimagining insurance claims. These are just a few examples among many you will hear today that illustrate how TD wows the customer in moments that matter. We're investing in technology to unlock speed and efficiency, strengthen stability and enhance the security of customer data. And we are relentlessly focused on operational excellence across the bank as we evolve and grow. In fact, we are further optimizing how we work to increase capacity, efficiency and speed. Through an initiative called the next evolution of work or NEW, we are delivering sustained improvements across all metrics. Combined, these initiatives are building the bank of the future. Customers have multiple needs across their life cycle. Our One TD approach continues to be critical to our success. When we bring more of the bank to our customers, we deepen our relationships and drive growth. In their presentations this afternoon, Michael, Barb and Ray will highlight One TD opportunities and our strategies for growth. They will discuss how we grow a core deposit customer relationship to meet more of their financial goals, enable their financial success by offering loans, investment advice and long-term planning; serve business owners' personal and commercial needs; and grow our share of wallet across all of our businesses. Over the past 5 years, we've added 2 million net new customers to TD, mostly organically, such that today, we serve 27 million customers globally. Our One TD strategy has driven terrific outcomes and provides us with tremendous growth opportunities. Throughout the afternoon, we will discuss our strategies and plans to be the fastest-growing bank amongst our Canadian peers. At our core, we have a powerful organic growth strategy with strong momentum. We will also continue to pursue acquisitions to enhance scale or capabilities across our businesses. Before we continue with our Canadian focus, let me take a moment to address the U.S. business. I'm sure you're interested in the details of our conversations with the regulators. And while we would like to share more with you, there are rules that prevent us from doing so. However, here are a few things I want to highlight. First, the issue we are dealing with has nothing to do with our good faith dealings with customers. Second, we are working with our regulators to put this matter behind us, and I'm confident that in time, we will. And more broadly, we are very well capitalized with strong liquidity, critically important in this period of economic uncertainty and volatility in the banking sector. We are stable, resilient and well positioned to navigate the environment as it evolves. TD Bank, America's most convenient bank, has substantial growth potential. There are 3x as many customers in our U.S. footprint as there are in all of Canada, and we will continue to build from a position of strength. We will continue to grow deposits and loans and serve the nearly 10 million Americans who already rely on us. We will build on our growing banking relationships in the U.S. to increase our share of wallet, create scale credit cards, commercial lending and wealth businesses and diversify our business mix, enhance efficiency and deliver stable returns through the cycle. Importantly, we will be here, we'll be there in our local communities and contribute to a more inclusive and sustainable future right across our U.S. footprint. TD is leading diversified businesses in Canada and the U.S., and we are building for growth. Today, we're going to focus on Canada, where our growth opportunities are extremely compelling. Our ambition, to outperform our peers, is supported by concrete plans that are in motion across our businesses. Our leaders will outline how we use our scale and growing base to outperform peers across our key Canadian personal banking products, continue to drive business banking performance, accelerate growth and increase market share, expand the fastest-growing wealth manager in Canada to achieve or widen #1 market share and disrupt the Canadian insurance market to extend our leadership. As we grow our franchises, we will continue to create shareholder value. Towards the end of today's session, Kelvin will present our medium-term financial targets. We are maintaining our existing total shareholder return, adjusted EPS growth and positive operating leverage targets and adding a new target for return on equity. Though we are currently in a weaker operating environment, we are very confident in TD's future and in our team's ability to deliver strong growth and shareholder returns. We're also adding a capital target, which currently is to operate with a CET1 ratio of approximately 12%. This puts TD in a substantial excess capital position with the means to pursue organic growth and acquisition opportunities. As we invest for growth, we will also return capital and enhance TD's total shareholder return. We recently announced our intention to repurchase 30 million common shares. We expect to complete this share buyback over the summer and then assess the opportunity for further share buybacks. This paced strategy will optimize growth and returns for our shareholders. It allows for a potential deterioration in market conditions as well as for organic or inorganic opportunities that may arise and which TD may be uniquely positioned to pursue. The strength of our business in our bank is undeniable and provides significant opportunity for growth. With that, it's time to get more granular. So back to you, Brooke, to introduce the next speaker. I'll be back later to take your questions. Thanks. Thank you very much.

Thank you, Bharat. I would now like to welcome Michael Rhodes, Group Head for Canadian Personal Banking to the stage. Michael has been with TD since 2011, and he joined the senior executive team in 2017 as Group Head for Innovation, Technology and Shared Services. Prior to that, he led U.S. Consumer Banking and Wealth Management and our North American Credit Cards and Merchant Services businesses. Michael's experience in financial services spans 30 years, but a fun fact is that he began his career as a mechanical engineer. Please welcome, Michael.

Well, thank you, Brooke. And good afternoon, everyone. I very much appreciate you all coming today and listen to our session. We have some great content here. In fact, we have lots of material to cover. And so to make it simple, I'm going to leave you with 3 simple messages. First, and Bharat mentioned some of this, but first, the Canadian Personal Bank is the leading franchise in the market. Second is momentum. We have momentum, and our momentum is grounded in solid execution disciplines. And third is about growth. And specifically, we have specific target growth opportunities, and I feel very strong about them. So I have an hour to talk to you here. When you take these 3 messages, you kind of have it all. I think the next hour will fill it in a bit, so you'll appreciate that. So let me start with the first point. Why do I say we have the leading franchise? It starts with scale. We have more customers, 13 million of them. We have the best distribution. We have the best locations, coverage and hours, and we are Canada's largest digital platform. We have the best brand. Our brand, if you look at financial services brand studies, we consistently rank the top. We have a diverse mix of partners, including many who are the best in their categories. Think about Amazon or Aeroplan. We have more interactions with our customers than our peers. So think about this, more interactions, more customers, this creates an unparalleled opportunity to deepen share of wallet. And to round out this strategy, we manage the business with a discipline to the cycle approach. This has served us well in the past. It will continue to serve us well on a go-forward basis. Plus, we continue to drive productivity. And in doing so, we actually create the opportunity, the expense environment, so we can invest in next-generation capabilities and growth. In Bharat's opening remarks, Bharat spoke about the trends shaping banking today. So all this change and disruption, our strengths, our strategies and our execution enable us to be successful as the operating model -- operating environment evolves. In fact, customers continue to choose TD, and our pace of winning new customer relationships is increasing. About 1 out of every 3 Canadians bank with TD. So why do customers choose TD? They choose us because we offer convenience; legendary customer experiences, both in-person and digitally; and a broad product suite to meet customers' needs. And underscoring it all, our bankers' passion for the customers and the power of our brand, these are second to none. TD is poised to capture market share. Bharat, you spoke about it. We are poised to capture market share, and we will outperform by being the bank of choice for all Canadians. So this is me giving you that the thumbnail sketch. I'd like to play a video that actually tells it from the customer's point of view, and then I'll move on. [Presentation]

Now you have to love a customer that keeps their TD counter trust bearer for 45 years. We up went to like 10 or 12 customers to do these videos, and one of them had a bearer from 40 years ago. That is loyalty. Our future growth is built on our current scale and strengths. I think the view you see here on the slide brings this to life. We have top 2 market share in all major product categories. Our reach and market coverage to all channels give us leading distribution capabilities across Canada. More Canadians live within 2 kilometers of a TD branch than any other bank. In other words, we are where customers are. Typically, our customers transact through digital banking on average of 40 times per month. So the scale and distribution strength is coupled with a disciplined approach to risk and efficiency. This translates to exceptional returns. Since 2017, we have driven a 320-basis-point efficiency ratio improvement, with ROEs exceeding 50% in 4 of the past 5 years. Winning a customer is important. Building long-term loyalty is critical. At TD, we do both. Our typical customer has been with us for 17 years. And while distribution, brand and partnerships strengthen us, it's our passionate frontline colleagues that set us apart. They go above and beyond for their customers each and every single day. It starts with we hire people who have a deep passion and care for customers. You hire right. But then we invest in them, and we empower them. Our recent external benchmarks for colleague engagement show we score in the top decile. Our customer experience reflects this. We are thankful for our terrific team and then the leadership they provide every single day. The hardest element of our model to replicate is our passionate frontline colleagues. Culture is so easy to observe, but it's incredibly difficult to copy. So to push ahead of competition, we're doing many things, including we're modernizing the way we work. Bharat talked about this. This is TD's next evolution of work or NEW as we call it. We're evolving the way technology and business leaders work together to enable capabilities for our colleagues and outcomes for our customers. This is a transformation, and the Canadian personal bank is at the forefront. We've increased our operating cadence, organizational agility, improved our processes and eliminate waste to become more efficient. We're turbocharging our speed to market. In the second quarter of '23, the most recent quarter alone, in this quarter, we launched 24 customer-facing features in our digital mobile platforms, tripling what we did over last year. So we all know technology is redefining industries, and financial services are no exception. TD is shaping the future of the banking with the customer at the center of everything we do. As an example, by the end of this year, we expect to securely migrate most Canadian personal bank's customer data to the cloud. That's accounts, that's interactions, that's transactions. This unlocks a wealth of customer insights supported by faster access to trusted data and better tooling using best-in-class platforms. And these insights will also simplify and personalize interactions. AI plays a big part. Through Layer 6, that's our industry-leading, award-winning AI capability, we enhanced mortgage renewal efforts, we improved credit risk models, we built account level flow of funds estimates. And the list goes on. Recently, we accelerated a preapproved mortgage applications, our decision time from 2 hours to less than 10 seconds. And so technology investments are important. But as we invest in technology, we are also doubling down on talent. People matter, and today in some ways more than ever. We've added over 750 branch-based personal bankers in the past 3 years. So these are the colleagues who provide trusted advice on everything from day to day products like checking accounts and savings accounts to investment products and mortgages. And to support the growth, we're also investing in marketing to drive demand. We've doubled digital acquisition over the past 5 years and significantly improved effectiveness. As an example, since 2019, our e-mail open rates are up 17%. Our click-through rates are up 23%. This is money well spent. So as customers' expectations continue to evolve, the value of TD's branch network endures. Some observers have predicted the demise of the branch for years. More recently, if you listen, the narrative is shifting, it's changing with some global banking experts talking about the renaissance of the branch. At TD, we have been consistent. Our branch network is and will continue to be a tremendous source of strength. In fact, we continue to double our share of customers in markets with a high branch density versus those with low. TD has the most urban network in Canada with the longest hours. This translates into a bigger book of business for each one of our branches with more balances, more accounts and more transactions than our peers. And as transactions have migrated to self-serve channels, TD branches are also evolving to drive even greater value. We've already doubled the ratio of sales to service-oriented colleagues. And as a result, since 2019, in-branch transactions are down 40%, whereas sales of new accounts per branch are up 15%. This is pushing down our cost to serve, allows us to redeploy the savings to grow the business. And as the nature of the in-branch experiences shift, we're reformatting our branch network to better support private advice conversations. We plan to renovate more than 200 branches in the next 3 years. That's about 20% of our network. In parallel, we are also reinventing the ATM experience and plan to refresh almost 20% of our 3,000 Canadian ATMs this year. This will increase reliability, enhance security, improves customer experience and creates new features, such as more accessible design and larger higher-resolution screens. And so as I noted, physical and digital working together is the winning formula in Canadian Banking. And TD is the leading digital bank in Canada. We are the largest digital bank in Canada with more online and mobile users than anyone else. Our self-service channels now account for more than 90% of interactions. The majority of these are mobile. In fact, since 2017, mobile traffic has increased at a compound annual growth rate of 17%. And also the strength of our brand shows in our digital results. TD is the most searched brand online, including for products like mortgages and checking. Think about the opportunity this digital presence creates. Scale matters, but customer experience builds relationships, and both our internal and external measures show we are creating momentum on customer experience. We're going to build this digital advantage, invest in our applications and digital presence, and we will capture an enormous opportunity ahead. There's a lot on the road map. So rather than me tell you about it, I have one more video I'd like to show. It's going to show you some of the great things that are coming, if somebody can tee that up. [Presentation]

So Brooke mentioned I used to be an engineer at one point. So I love bringing technology to solve problems, but it's the combination of technology and people together that make things work. In fact, it's digital and branches together, working together, that form our omnichannel strategy. And this is a key driver of our product and customer acquisition or ecosystem. Branches often serve as shop online purchase and store assets. For every 2 customers that convert digitally, there's another 1 who shops digitally and closes a transaction in the branch. The reverse is also true, our branches serve as billboards, the increased awareness and consideration of the brand and drive traffic to our digital platforms. Now you can see from this chart that our data account acquisition is strong, double-digit increases in both branch and digital channels compared to last year and strong performance relative to pre-pandemic as well. Together, TD's distribution channels create a powerful acquisition engine. Last year, our net customer growth was 2.3%. That's almost double the rate from 5 years ago. The trend this year, it's accelerating. Since 2017, we have grown our customer base faster than Canada's population, and we continue to do -- and we expect to continue to do this. We are serving customers how and when they want and are driving increased momentum across the Canadian bank. So TD is a strong deposit bank. I think we all know that. But TD's strategy has been and continues to be focused on gathering core deposits, such as transaction banking and savings account. Core deposits are high margin. They provide stable sources of funding, and they support relationships that enable further deepening opportunities. At TD, we've increased our share in core deposits in 6 of the last 8 quarters. And with increasing rate environment, including yesterday's move, we see continued shift that prepares us for higher yield. That said, to date, we are seeing a more moderate shift from core to term than compared to our peers. And we also continue to optimize our cost to serve, further enhancing profitability over time. So strong volumes, lower cost, higher margins. These are all good things. On the other side of the balance sheet, we've delivered strong growth. Now some of you may remember, I committed to create momentum in our real estate secured lending business on our Q1 2022 earnings call. We've delivered. We have had the highest quarter-over-quarter growth based on spot volumes for 3 of the last 5 quarters versus the other 4 big banks, including our most recent quarter. Our pipeline for real estate secured lending, or RESL, is strong. Now do I call this victory? No. No, I don't, but it's concrete progress. In credit cards, TD's portfolio is very well positioned for outperformance with strength in travel in key categories such as balanced consolidation and everyday spend. In fact, we had record credit card loan growth in the second quarter, up 14% on a year-over-year basis. Notably, Ajay is in here, I know that. As we grow, we consistently deliver low impaired PCL rates, which are lower than our Canadian peers for 3 of the past 4 quarters. So I've discussed the strength of our franchise, the key building block of the future. And I've outlined where we have momentum and why. So now let's discuss growth and how are we going to use our clear advantages to extend our leadership. Our ambitions. Our ambition is to outperform the market as the bank of choice for all Canadians, and we will continue to grow our net customer base growth at a rate faster than Canada's population. We will grow in critical segments and outperform in product areas that deliver strong returns through the cycle. And with immigration fueling population growth, we've targeted a 50% growth rate in New to Canada customer acquisition over the medium term. On the share side, we will maintain our #1 share position in core deposits. We've targeted #1 in credit cards. And in RESL, we want to capture a meaningful share and target reaching $500 billion in loans as over the medium term. That's a 40% increase over existing balances. Longer term, we aspire to be #1. Now these are bold ambitions, and they're backed by a clear and proven approach. First, we are customer-obsessed. We continue to align our culture, our capabilities and our investments around the customer need. Second, we're doubling down our strength in customer acquisition. Our brand strength, distribution capabilities and focus on the New to Canada segment position us well. And third, enabled by investments in personal bankers, technology and data, we are executing new approaches to deepen customer relationships. We are personalizing offers, delivering content in the right moments and leveraging our colleagues for proactive outreach to build share of wallet. And as we modernize, our tech stack will be improved or reduce costs, and this will increase our agility and speed to market. You see, we're moving towards an orchestrated omnichannel model with data as the connective tissue. This enables powerful, more seamless interactions across customers' channel of choice, be it a branch or a digital phone or ATM. For instance, we can authenticate a customer of the branch or the contact center to use their mobile device. The reverse is also true. When customers connect to our 24/7 contact centers through their mobile app, their identity is automatically verified. They transact faster and more securely. We call this Omnidial, and we have multiple granted patents on this. We can predict customer needs through data-driven insights and deliver billions, literally billions of digital nudges each year to keep TD top of mind. And at digital age, speed matters, but so does human connection. If deeper advice or insights are needed, a skilled colleague is literally just moments away. We're not just trying to serve our customers. We want to make an impression, and we want to drive engagement. And greater engagement is what creates this significant One TD opportunity that we talk about. Our strategy is simple. If a customer has a product with another bank, we want them to move to TD. That's it. Now we're already doing this well, executing effective playbooks to deepen customer relationships. In fact, the number of customers with 2 or more products with us has increased by almost 300,000 over the past year alone. Now as we improve execution, this volume will continue to increase. With 13 million personal banking customers, the potential is tremendous. Our branches are also a referral engine for a small business bank. And in wealth management, we have a sizable referral opportunity. Barb and Ray, I know later on today, you're going to talk about these. Because together, all of us, we're bringing One TD to all of our customers. So let's drill a bit deeper into our growth opportunities. In everyday banking, savings and investment, we provide day-to-day banking products, checkings and savings as well as investment products such as mutual funds and GICs. Our growth strategy is working. We have #1 market share in core deposits. Primacy is high, and our customers are very engaged. We see that play out in checking account attrition rates, which are at historic lows. In addition, TD has consistently maintained the #1 market share for Interac debit transaction. But we're not resting. We are doubling down our strength in customer acquisition with a very specific focus on the New to Canada segment. We're also deepening relationships with customers with growing recent momentum in the NEW to investing segment, and you can see that in this chart. This is supported by goal builder, which helps customers set financial goals like saving for vacation, a home or retirement, and helps customers track their progress against that. So I've mentioned New to Canada a few times. So you've probably figured out this is pretty important, and it is. To grow our net customer base faster than Canada's population, we have to target this segment. So we're designing packages and experience for the unique needs of new Canadians throughout their journey. To support the pre-arrival stage, TD has an exclusive strategic relationship with Canada Visa. They're one of the leading online sources for Canadian immigration information. Upon arrival in Canada, newcomers can access TD's compelling banking packages, including the industry's first package designed to meet the needs of international students. And to support newcomers as they and their families establish roots in Canada, we continue to tailor our credit policies to their unique circumstances. Our branch network is so well positioned to serve this key market. In communities with the highest newcomer populations like Toronto, in these communities, TD has a 26% branch share. This is a competitive advantage that is very difficult to replicate. And our branch colleagues reflect the communities in which they work. It's our privilege to serve those New to Canada in their preferred language. TD colleagues in our branches, we speak of our 80 languages. Almost 2,000 speak Hindi or Punjabi, and more than 1,000 speak Mandarin or Cantonese. We're already seeing accelerated growth in this segment, and I am confident that we will deliver our medium-term objective to increase New to Canada acquisition by 50% over last year's level. So let's turn to credit cards. TD has the leading credit card franchise with the largest active customer base and a robust product line that includes proprietary and co-brand portfolios. Credit cards are important also because they drive customer loyalty. They create day-to-day interaction between the customer and the bank. Since 2019, our credit card spend per active account has grown by more than 20%, with increases in both discretionary and nondiscretionary categories. We are also setting customer acquisition records. Our digital platform and omnichannel approach power strong performance. In fact, in the second quarter of 2023, our most recent quarter, we are our best ever quarter for active accounts and digital acquisition. Plus, attrition has fallen by 110 basis points since 2019. That represents about $0.25 billion in incremental balances. It's high engagement through our loyalty programs that supports retention. Over the past 3 years, we've seen 27% more customers actively engage in these programs. And as we grow, we continue to deliver strong credit metrics, and this underpins the profitability of the card business. So rewards programs directly influence credit card decisions. We have the best product lineup. Both TD First Class and our Aeroplan cards were recognized by MoneySense as the best in their category. We've recently refreshed our proprietary rewards programs. We've already seen new accounts up more than 60% on a year-over-year basis. And TD partners -- and on the partnership side, we have some of the best brands that we work with, including Aeroplan, Starbucks, Amazon and Uber. These are all brands that you know. They have tremendous appeal in key segments and provide significant access to new customers. We relaunched our Aeroplan program in 2020. And as travel has rebounded post pandemic, we've seen very strong growth, including the high net worth segment. Our partnerships and loyalty innovations are paying off, and we see this in behavior and performance. Our balances are 3x higher, and our spend is 4x higher for customers who actively redeem in a program. TD is redefining the credit card loyalty business, capturing share and transforming customers into brand advocates. So here's how we achieved #1 in the medium term. First, as customer behavior normalizes, balances will grow. We've recovered probably about 1/3 of our revolve rates as before pre-pandemic our existing book, and so there's significant upside as revolve rates restore. Second, we will win more customer relationships. We have momentum in new-to-bank customer acquisition, supported by a strong product lineup and our supercharged acquisition engine. Between 2019 and 2022, we saw an 8% increase in new accounts and credit cards. We expect to see another 20% in the medium term. So far this year, our year-over-year new account growth rate, we are surpassing this target. We're getting the right cards into the hands of our customers and are increasingly earning top-of-wall position. We are building momentum towards the goals that we're discussing today. So on to real estate secured lending or RESL. So this is clearly a key priority. And look, this is a market where you need to work harder and smarter to win business, particularly as the market dynamic remains fluid. Execution is critical, and we're delivering. Here's one approach we're taking. Our frontline bankers rely upon leads to be successful in reaching out proactively to customers. These leads are generally delivered either by an in-branch colleague, sourced through digital tools or modeled based on customer data. Today, the leads we generate are more timely, targeted and effective. The investments we've made in analytics and moving data faster are driving better acquisition volumes. And on renewals or retention, we've taken a data-driven approach backed by strong digital capabilities and frontline colleague engagement. We've seen retention rates improve by over 400 basis points year-over-year. Now that's a measure of total portfolio retention. If you look at our at-maturity retention, our performance from the year-end 2022 is even better. So achieve $500 billion in loans. How are we going to do this? Well, we need to increase loans by $140 billion. That's a sizable lift. So to do that requires a sound, multitiered approach backed by strong execution. It starts with our [ off us ] balance opportunity. Remember, you saw in an earlier slide, $270 billion was the number. So these are the loans, $270 billion that our existing customers have with other financial institutions. Even the modest penetration rates, the upside is significant. Our investments in lead management will help us capture material market share here. Now to capture more opportunity, we'll also improve the productivity of our frontline bankers. Over the past 10 months, we piloted a specialist approach in our branches. This has led to a 15% improvement in volumes with the pilot compared to our current generalist model. This is a great success, and we'll be rolling this out across our branches in the coming quarters. We also see an opportunity beyond our customer base by targeting specific segments with tailored approaches. A couple of examples. The builder segment. It's a compelling One TD market, where we get to leverage the strong relationships our business bank has with real estate developers. The recent investments, we are tapping this underpenetrated market. We're seeing momentum with year-over-year improvement in a down market. Once again, I say New to Canada, this is a key segment. And with upcoming enhancements to our policies, our products and our customer experience. We want to franchise these customers. Another segment, investors. This represents a $66 billion opportunity, and we're taking steps to increase share. So it's also important that we extend TD's fantastic track record to every community. In RESL, this includes our focus on the indigenous communities through dedicated specialist teams. Mortgages are complex and often daunting step in a customer's life. Advice the right moments, deliver with a deep understanding of customer needs will drive better conversion and growth. We are designing our journeys to match our customers' engagement model of choice. Customers generally start online, then they may go to the phone and then to a personal banker either in branch or virtually. And once an application is submitted, our modernized platform, data and automation deliver a faster, simpler experience to capture more business with improved back office productivity. Our outlook for housing is optimistic over the medium term. And given that optimism in the medium term, the investments we're making, we are poised for growth, and we will reach our ambitions in RESL and really across the Canadian Personal Bank. So I've spoken for a bit, so I'm going to ask some of my leadership team now to come and help me carry the burden. And before I do that, I'm also going to have a glass of water because I've been speaking for a while. And so to welcome some of my colleagues. We'll start by -- these are the folks that are actually driving the business and driving the growth, and so going to make all these things happen with us and over 20,000 people in the Canadian Personal Bank. And Sona, we'll start with you, Sona Mehta. Sona runs our everyday banking savings and investing product. Sona had been with the bank for 18 years. You've been the Canadian Personal Bank, the insurance business, technology, credit risk, a little bit of everything. So Sona, please welcome you here and come up the stage with me. And then Meg McKee. Here we go, Sona. And so Meg McKee. Where's Meg? I know you're in here somewhere. Here we go. Meg, so Meg has been with the bank for the shorter period of time. You've been here for just over a year after close to 20 years at American Express. Meg runs our credit card business, our loyalty programs and our unsecured payment business. And so Meg, welcome you to stage as well. And Frank Psoras. Frank, you're the one making all the great things happen in RESL. And so Frank's been with the bank for many, many years. And you've had a number of roles, including -- I first met you in the merchant acquiring business and then in credit card and everyday banking. But before TD, you also were at American Express and then Moneris. And so Frank, come to stage, please. And then we can grab some seats.

So this is the fireside chat. I get to ask the questions and other people get to answer.

You can rest a little bit.

I guess. So I'm looking forward to this. So Sona, a lot of talk about NEW To Canada.

I noticed that.

Yes, you did notice that. So I guess everyone will take away in your notes, New to Canada is important. It's very important. So how are we going to go to -- how are we going to do this?

Yes, absolutely. I think it really -- as you said, it's a key segment. It's really driving the lion's share of the growth. And so to be successful, we have to understand the customer's mindset. So 2 things that I would share that we've picked up. First is there's a certain confusion and complexity as a newcomer orients to the Canadian banking system. What we find, newcomers have a very high financial acumen and are very savvy about the financial systems in their home countries, but there are nuances with the Canadian banking system. For instance, we have checking and savings accounts. We have a myriad of very strong, but a large number of registered savings plans, all with their own acronyms. And so -- and that's just the deposit side of the business. Last month, I had the opportunity to sit with a number of customers in a focus group, and we run New to Canada as a segment across Canadian Personal Bank. Meg and I worked very closely on the credit policies. And so one of the customers said to me, and then many subsequently jumped in, credit scores, they're like a mystery. And so there are a lot of questions that newcomers have. I feel that as bankers, we can and we should demystify these topics. The relationship you mentioned with Canada Visa is allowing us to do that. So we speak with a TD voice and provide objectivity and clarity to these questions. And in that process, we have the opportunity to amplify brand awareness amongst newcomers. So that's one. The second one I'll touch on is that language matters, and it doesn't matter a bit. It matters a lot. Now we have 1 in 4 Canadians that actually have a mother tongue other than English or French. And an interesting insight we learned is that even amongst newcomers that speak English or French quite proficiently, they have a preference often to revert to their mother tongue when they're speaking about financial matters. And what they tell me is that the nuances matter. They want to have the confidence that they haven't missed anything. And so we've taken that to heart. Recently, we launched a feature where as you're booking an appointment online, you have the ability to preselect what language you'd like to speak with us in. And then that enables us to match on the back end so that you have the right adviser, the right banker in front of you. So I think it's something that we take great pride in. I would say TD is a very -- we've always been a representative of the communities in which we operate, and we're highly attuned to their needs. So those are a couple of the ways we go to market.

No, it's good. And it's in the language is why I visit the retail network. I see it all the time. And just so proud of the colleagues we have and the way they represent our communities. And -- but Sona, you can maybe double-click on this a bit more. It's like how we go to market with all of this.

So we've organized our team across CPV so that it's very segment-wide. So it's really a horizontal structure as opposed to by product. And as we've understood the segment, what we've understood is that even within the segment, it's not one size fits all. There's unique subsegments within New to Canada. And so that's why we focus, for instance, on international students. So as opposed to just one generic offering, we have an international specific student package. It has the basics of what every student needs. But then we go beyond and include things that are specific to international students, like 12 months of free money movement via RTD, global transfer platform. And then on top of it, we tap into our best-in-class partnership. So that, Meg and team are building. So with Amazon, we have a gift card. Now they're settling in a new country. There's lots of things that one needs to do when you do that. And since we launched that last summer, we've seen incredible results. So we're very pleased with that approach. And then the second thing that we've done is we've looked at what influences a newcomer to choose where they bank. And what we found is even more so than the general population, word-of-mouth is highly prevalent in this particular market. And so family members, friends, community social networks. This is how a newcomer chooses where the bank, and it actually makes a lot of sense. You don't not necessarily know the brands. And so what we focused on is each of our interactions with our existing customers, that's where we need to double down. Those need to be welcoming. Each one is more terrific than the last, and that's what will give us our positive flywheel of acquisition.

What I love about this is it's playing on our strengths.

Absolutely.

That's great. And so -- well, thanks. Then maybe I shift to you, Meg. And so I know New to Canada plays a part in your plans, but I put the ambitions out there. And one of the ways to get there is to lift new account acquisition by 20% over our historic rates. So how are we going to do this?

We're going to do that. So hello, everybody. So I'd probably start by talking about our products. So I'm very bullish on our product line strategy and our value propositions. And I really feel like we have a product for every Canadian consumer preference, which I think is really important. So we have our Amazon co-brand, low rate, cash back. We have our MBNA portfolio and our business cards. And then we have the 2 portfolios that you spoke more specifically about during your remarks. So the first being our proprietary portfolio, which, as you said, is performing very, very well since we refreshed it late last year. And then the second is our Aeroplan portfolio, which we also relaunched when Aeroplan relaunched their program. And since this time this year, we're bringing on nearly double the number of accounts that we were bringing on this time last year, which is just an incredible amount of momentum. And we see that kind of continuing for the years to come. So from products we have on the shelf perspective, I feel really, really good. And then when I think about segment strategies, we're focusing on a couple of areas. So one, of course, is New to Canada. As Sona mentioned, we're working very, very closely together to make sure that we can extend credit very early in someone's relationship, either as a new Canadian or just anybody that's new to TD. But I actually think that the largest single growth opportunity that we have in the cards business might be with our existing banking customers. So that's getting more credit cards into the hands of people who already have a relationship with TD but don't carry a card with us. And that's been a real focus of ours this year, leveraging some of the investments that we're making in bankers and data and capability. And so already this year, we've seen a 50-basis-point increase in our penetration rate of our existing banking customers, which, again, is pretty incredible momentum that we see continuing. So I think a combination of our product line and our very focused segment strategy, I'm feeling really bullish about our ability to achieve our aspiration and origination share.

That's great. And then the recent numbers certainly do prove that out. So thanks for that. So Frank, on the RESL side, I actually laid out a bit of the how in terms of how we're going to get there, but there's also kind of the housing market. A lot of folks have questions in the housing market.

So a bit of a popular topic. So I'd just say, let's be very real. I'm not going to say something new here in terms of the consequences of Bank of Canada rate increases. The reality is that did drive a slowdown in the market, and we did see that kind of over this 18-month period. However, as rates started to stabilize, and if you actually look at industry stats, the market picked up again, both in price but also in unit sales. And so we started to see that lift. And as you mentioned earlier, Michael, the Bank of Canada yesterday decided to lift rates by 25 basis points. A little unexpectedly, let's just be honest about that, maybe a little sooner than some people would have thought. But it's really to kind of tame inflationary pressures, but ultimately also to kind of slow down the economy a bit. Now there was a specific call out to housing here because, obviously, they were starting to see some of the pickup as well, and especially in key markets like GVA and GTA. And if you actually look back when this whole thing started back 18 months ago, there was a lot of fear in the market that at the end of the day, with the pace and size of these increases coming from the Bank of Canada, that would create a lot of chaos in the economy. That's actually obviously not proven to be true, both in the economy as well as in the housing market. And so if we think about the short term, we think about the short term and talking TD economics, you can't really kind of predict the future here. There's a bit of a lot of -- you'd be very speculative. But we do think that in July of this year that the Bank of Canada, in order to continue to tame inflation and also slow down the economy, will lift rates by about 25 basis points and trying to manage things appropriately and the soft landing. Now if we look at the medium term, there's a couple of factors that we take into consideration as we think about our outlook. One is population growth. Population continues to grow here in Canada, and that's going to stoke demand. The second thing is we do expect rates to eventually stabilize, and so that will create a market that's a little bit more stable, for lack of a better word. And then third, of course, is that we still have a lag in housing supply. And without the supply and with continued population growth and a rate environment that is going to be much more stable, you're probably going to see price appreciation and, ultimately, see some growth.

It's ironic. It feels like it's easier to predict the medium term than the near term because the supply/demand characteristics will play out. I took ECON 101. I think you did as well. So we'll probably see that play out. So that's good. So Sona, Meg, back to you on another kind of macro question, if you will. And I asked Frank about the housing market and kind of inflation and kind of customers' checking accounts. It's something that people are interested in. You have visibly to flow of funds. And so what are we seeing? How are customers dealing with kind of higher costs?

Yes, absolutely. And I know, Michael, you already addressed kind of the migration we've seen in the deposit book. So as I look then on the other side, which is the inflows, payroll and then outflows like bills and expenditures, this year is, I would say, markedly different than prior years. In particular, last year as inflation really took off and post-pandemic travel and spending kicked in, very high rates of growth in bills and debit spend as an example, and payroll wasn't quite keeping up at that pace. This year, what we've seen is consumers really leaning in, I think, responding to the uncertainty and to the inflation. And so in Q1, what we noticed is that the pace of bills as well as debit spend was up roughly about 3%. And then the most recent quarter in Q2, that nudged up ever so slightly to roughly in the 4% range. But on the opposite side, payroll was making some healthy gains. So in the first half of this year, we've seen on average payroll, this is measured through direct deposits and government support, that was actually up 6%. And so while small, what we've seen is a positive gap restored. So you have payroll growing faster than typical bills and expenditures, and I think that's important. That wasn't the case last year. Now having said that, this is a moment in time. We know, as Frank talked about, I mean there are higher debt servicing costs on the horizon, which will pinch savings rates. So this may evolve further, but what we've seen in the first half of the year is positive.

That's good to see. Absolutely. Maybe shifting gears one more time. Meg, for you. I talked about partnerships. And so a lot of leading brands are truly a partner with TD. And so why?

Why is that?

Yes.

So I think, I mean a lot of partners are singing a largely for the same reasons that our customers are choosing us. We've got a great brand, a great distribution retail footprint, great data capabilities, legendary customer experience. And then the easy answer is really just our scale and relevance. We've got a very large customer base. We can bring increased sales, new customers, new channels, new segments to our partners. And so I think that's sort of the easy answer. But I think it's more than that. I actually think it's our approach to partnerships, which is winning us new partners and then helping us build out this large partner roster that's sustainable over time. And that's, again, the approach that we take, which we like to refer to as sort of a win-win-win. So we make sure that value and benefit is generated for each stakeholder in the ecosystem. So certainly our customers, for ourselves and importantly, for our partners, making sure that they're driving a lot of benefit for the relationship that they have with us. And one quick example is our new sort of linked loyalty partnership model, which we're doing with a couple of partners now, where we're actually driving new member sign-ups and engagement with loyalty programs that the partner may be running. So that's something different that we're doing that's driving value for a lot of our partners. So I think that approach is what's helping us build out our roster, which is a really important part of our loyalty strategy going forward.

I like this win-win-win because when we hit that, the program becomes very durable and sustainable. So I talked about a lot of things that we've done. Anything coming up of note?

Yes. So actually, so exciting...

I set you up for that one.

Exciting news. Yes. So I don't know if you've noticed, if you can even see, but the roof of the Blue Jay stadium is actually green today, and that's in tribute to the relationship and long-standing relationship that we have with the Toronto Blue Jays. But what we'll be doing is actually bringing some real cardholder benefits to bear later this year. So our cardholders will have easier entry into Blue Jays' games via premium TV cardholder entrances as well as some in-stadium perks as part of an expanded sponsorship program, which I think is great. This is real activation of a sponsorship and some meaningful value for our cardholders. So much more to come on that, but really exciting.

I am looking forward to my preferred access. So that's great. And then one more question, I'm going to do a rapid fire, a couple more questions. But Frank, for one more. We spoke a lot about next evolution of work. And so maybe you can just take a minute and tell us like what is this. Maybe more importantly, tell us of the outcomes. I mean what are we getting for this?

Yes, it's a great question, Michael, and I'm sure on the mind of others as we've talked about next evolution of work. But at its core, what next evolution of work is cross-functional teams of business and technology coming together to solve customer problems. And really, it's creating organizational agility because we actually go through much more simplified and streamlined processes to actually achieve these things. And so within our real estate secured lending business, at the end of the day, what we have done is we have stood up something called our homeowners journey. And our homeowners' journey is composed of all these cross-functional teams, but they're focused on the end-to-end customer experience. And so what they actually do is think about everything from the home purchase experience and getting that first mortgage, all the way to like renewing that mortgage and ultimately to the discharge experience when you finally have paid off that mortgage, and the team's focus on solving customer opportunities in each of those steps of the customer experience.

And give me one example, give an example of an outcome.

So one of the things that we're really anchoring from a customer experience perspective is focus on what are the customer issues. And one of the things that we've actually identified in the mortgage application process is the need for speed. And so when we look at that need for speed, the customer is looking to get things done quick. And our teams focused on this particular part of the process in the homeowners' journey, this cross-functional group is really anchored in on identifying opportunities to improve that. So in this case, one of those things was underwriter speed. And so how do we get more applications through our underwriters in a faster way? Now to do that, we actually want to introduce a new underwriting platform. In the past, we probably would have had a project that would have taken a couple of years, where we spent a lot of money and ultimately waited to see that outcome. With the next evolution of work, what we've done is actually broken this up into smaller releases that allow us to see the benefits sooner and get to customer outcomes faster. So using this underwriting example, what we've done is we've actually deployed a portion of our underwriter workbench, that's the name of the product. And what we've done in that particular instance is we've actually deployed it on full applications, and we're already seeing a 25% improvement in productivity from our underwriters. By seeing that productivity improve, there is 2 things. One, we're realizing the benefits sooner. But second, we're actually getting the benefit of learning through the model. So if we've deployed something smaller, we can understand where we might have things that we can do to actually improve the experience, whether for the colleague or for the customer, and ultimately bring it to life. So at the end of the day, if you look at the next evolution of work, and we think about it from our broader goal of trying to create speed for customers in this particular part of the application process, what we've actually seen is we've reduced customer cycle time 12% year-over-year, and we have plans to actually continually improve that. So ultimately, with next evolution of work, we make it a lot easier for our colleagues to actually get things done. We actually drive to customer outcomes way faster, and hence, we see the business benefit sooner.

I love seeing the business benefits. And again, the business benefits are delivered in year. This isn't something like multiyear-type thing, which...

No. We are seeing it pace by pace by pace.

Love it. Okay. Last question, rapid fire here. A lot of conversation about customer experience. So tell me what you're doing in your group to bring this to life.

Yes, we're very much anchored on the right advice in the right moments. Like the home buying experience is one of the most stressful experiences for any customer. It's the biggest investment they're going to make. So if you think about kind of taking that statement, right advice in the right moments and kind of portioning into 2 pieces. The right advice. What we're really focused on is what you talked about a little bit, Michael, driving more specialization, making sure that our advisers are in the best spot to provide the best advice to our customers through specialization. The second part of that comment is the right moment, and so that right moment can be quickly responding to a customer to get them in touch with an adviser when they need it or leveraging our data to actually help identify when that customer may be in that moment. And so right advice in the right moment is really where we're anchoring our focus.

I love it. So specialization and advice is one of the keys. Meg?

Yes. I think truly operating with customer centricity. So as part of our transition to next evolution of work, one of the processes we've run is an end-to-end diagnostic, looking at literally every single customer interaction that we have and looking at areas where we have opportunities to better delight our customers. And then what we've done is in those findings, we've actually reprioritized all of the work that we're doing to prioritize those things that will have the biggest customer impact. And I think my colleagues would agree with me that what we're finding is often these real customer experience improvements that we're making also have a productivity and efficiency improvement as well as often a colleague experience improvement. So things that we're doing with a focus on the customer experience are actually having a benefit for the broader organization.

So I love that. Customer colleague and the P&L experiment expense line. It's also win-win-win.

Another win-win-win.

That's good. So Sona, yourself?

Our customers are so digitally active. 90% of their transactions are happening online. That's both mobile, and then it bleeds into the digital -- the omnichannel experience, I should say. So we're taking a look at some of those moments that matter and in 2 categories. So we have some of those high stress moments. So as a customer, for instance, you feel like you've been the victim of fraud. In the past, you would pick up the phone, you would get to the right number, but it may take you a few steps. Today, what you can do is open up your TD Mobile app and directly from within the mobile app through Omnidial, get connected to someone in the fraud loss prevention team. So we get you triaged as quickly as possible in that moment of stress. And so we've taken a look at these moments of high anxiety and stress and also the high-frequency moments that are very simple and routine, for example, logging on. And we have a whole backlog and road map to say, how do we make all of those moments, high stress, high-frequency moments, better? And we just partnered really closely with our mobile and tech platforms. It's the best example of business and tech coming together, and we do really good work together.

No, I know the work is great. In fact, just today, it was announced that TD One for J.D. Power customer experience on the mobile app. Now to be fair, it was a tied award, but we were there in the #1 position. Thing I feel really good about is the trajectory we have, the plans we have, I feel really good about where we're going. That's awesome. So thank you all. I very much appreciate it. Thank you. So I will wrap it up quickly, I promise. So I just want to end where I started. My thoughts upfront were pretty simple. We have the leading franchise in Canada unambiguously. So I hope you heard that. We have momentum, and our momentum is grounded in very solid and focused execution, and we have tremendous opportunities for growth. Those are the 3 opportunities. All of this is supported by the best bankers in the marketplace and the best brand you can have. And because of all of this, we will deliver upon our ambitions, and we will create shareholder value. So thank you so much for joining us today. I know Barb, you're coming up, and then we're going to have a Q&A session. So I'm looking forward to hearing some more of your thoughts and questions. Thank you.

Thank you, Michael, Sona, Meg and Frank. For our next session, I would like to welcome to the stage Barb Hooper, Group Head for Canadian Business Banking. Barb has been with the bank for almost 30 years and started her career in TD Securities. She has led a number of key enterprise functions, including corporate development, strategy, treasury and balance sheet management, enterprise real estate and sustainability and corporate citizenship. Barb serves on the Canadian government's Sustainable Finance Action Council, chairing the technical expert group focused on climate-related financial disclosures. Please join me in welcoming Barb Hooper.

Thanks, Brooke. And good afternoon, everyone. As you know, I recently assumed leadership of the Canadian Business Bank from Paul Douglas. Under Paul's leadership, the team has built a strong business that is well positioned in the market as one of Canada's premier business banks. Building upon that foundation, we see tremendous opportunity for continued growth. We have momentum, and we have the strength and the team to continue to meet the needs of Canadian businesses and take share. That is why I'm excited to lead the Canadian Business Bank through our next chapter and to share our strategy with you today. Our ambition is simple: to be a leading purpose-driven bank in Canada with better business bankers, empowered to deliver TD. Our business bankers are locally based and have deep sector expertise. They build strong customer relationships, provide valuable advice and have a proven track record of evaluating and managing risk. We will accelerate our growth by continuing to add new local bankers, invest in the development of our team and expand specialization where we see opportunity. And we will continue to modernize our capabilities and processes in order to enhance the client and colleague experience. Our business bank is also a critical One TD partner. We are central to many valuable relationships and well positioned to activate more One TD opportunities across the bank. Today, TD's premier business bank has top 2 market share in every segment in which we compete. We serve approximately 1 million business banking customers and 1 million retail customers through TD Auto Finance. As you can see, the business has an attractive profile with scale, low losses and a record of strong growth and good returns. Over the past 20 years, we have outgrown our peers to become the #2 player in the market. Our business credit market share has risen from 10% in 2004 to 18% in 2022. And the vast majority of this growth has been organic. We focus on both new and existing clients, growing our customer base and deepening relationships. We're proud that nearly 40% of our business customers have been TD clients for over 10 years. We take a consistent approach to credit through economic cycles. This is a prudent approach, but also one appreciated by our clients. The result is that we grow slightly slower during economic boom times, but we take share faster when conditions are soft and competitors may be pulling back. We segment customers based on the complexity of their needs. Our bankers provide advice to very small or micro customers, to mid-market through to corporate clients. This has allowed us to build lasting relationships as our clients grow and expand over time. Let me show you just one example of the power of TD's deep, local business banker connections. [Presentation]

When I meet customers like Brad and Christy, I hear over and over again about the importance of the relationship with their TD banker and the value of the advice that we provide. There is no substitute for knowing your customer and for being there when they need you the most. Having bankers located as close to clients as possible is a key differentiator for TD that facilitates a deeper understanding of the client's business and market. Where it makes sense, we establish industry and product specialization to further enhance the quality and value of the advice that we provide to clients. In agriculture, for example, we have over 200 dedicated locally-based bankers enabling TD to achieve top-tier market share in the sector. That specialization extends to diverse communities so we can get even closer to their specific needs. For example, we have dedicated teams and training to support segments, including the Black customer experience and women in enterprise. And our partnership with indigenous communities dates back decades when we helped establish the First Nation's Bank of Canada in 1996. We have a dedicated indigenous banking team, and we'll continue to partner with indigenous communities and actively support their growth. Going forward, we will continue to look for opportunities to further accelerate growth through specialization and to positively impact the communities we serve. Being a great business banker means having deep credit expertise and embodying TD's ownership culture, giving our customers confidence in our approach. We have a diversified loan portfolio with a stable mix of C&I and commercial real estate. We generate impaired PCLs in the middle or lower part of the Canadian peer range year after year. Our local focus, broad credit expertise and deep industry knowledge, together with our disciplined approach, allow us to be a consistent underwriter through the cycle, resulting in these low and relatively stable PCLs. That's the kind of risk management that drives prudent and consistent growth. Our commercial real estate portfolio is approximately $47 billion or about 43% of the Canadian Business Bank's commercial loan portfolio. Importantly, in Canada, we have meaningful recourse to quality guarantors on the vast majority of our CRE exposure. A large majority of our CRE exposure is managed in 2 national specialized groups, one focused on commercial mortgages and the other focused on real estate construction and development. A small amount of our exposure, about 14%, is managed out of our mid-market commercial banking centers and commercial national accounts group with advice and assistance from our specialized groups. Our CRE portfolio is heavily weighted toward multiunit residential mortgages, which represents about 37% of the total book and is largely insured by CMHC. Real estate development loans represent just over 27% of our CRE portfolio. These loans are largely comprised of construction financing for low, medium and high-density housing. Our clients in this business are large, experienced developers, many of whom have had relationships with TD that span decades and generations. Our exposure to office properties is comparatively modest at just over $2 billion or 5% of our CRE portfolio, and the majority of this is to large national real estate companies. Exposure to retail properties is 15%. And of that, exposure to enclosed malls represents less than $500 million. We are disciplined lenders and have taken a conservative approach to lending to all of these sectors. The competition in this space is fierce, but our competitive advantages are clear. We are well positioned for continued growth and resilience in CRE. Now let's go a bit deeper on how we are going to build our success and drive accelerated growth in the future. Our ambition is to be the #1 commercial bank, small business bank and auto finance lender. To make progress towards this longer-term goal, we intend to continue to grow our businesses faster than the market. In the medium term, we will achieve increases of over 35% in business loans to $150 billion, over 25% to core deposits to $170 billion and almost 20% in retail auto loans to $32.5 billion. We are confident that we have the right road map to reach our destination. There are 3 pillars to our strategy. First, we will continue to build scale and specialization, focusing on underpenetrated markets in commercial banking and expanding dealer, OEM and marketplace relationships in TD Auto Finance. Second, we are modernizing to enhance banker capacity and efficiency. We are investing to improve customer experience and increase speed. Finally, in collaboration with our partners in the Canadian personal bank, wealth and TD Securities, we will accelerate One TD momentum across the bank. The opportunity is tremendous. I think that's from the smoke. We have a deep bench of expert business bankers, a strong local focus and targeted specialization in key sectors and communities to help drive our future growth. We currently have nationwide coverage with local bankers across Canada. We've added almost 500 customer-facing colleagues in the last 5 years, and we'll continue to invest in people to support growth. In Ontario, we have leading market share and have developed local expertise to support anchor industries such as construction, trucking and food and beverage in the Greater Toronto area. In markets such as BC, Alberta and Quebec, we perform well, but we are underpenetrated. We are expanding our scale and adding bankers in these regions. The commercial bank is also accelerating growth in high-opportunity sectors such as knowledge-based industries. We are doubling down and building expertise across these areas to support Canada's growth markets. These initiatives, combined with our winning culture and customer centricity, will enable us to continue to outgrow competitors. Small business bank -- small businesses form the foundation of Canada's economy and represent the heart of our communities. I was delighted that TD came in #1 in the J.D. Power 2022 Canada Small Business Banking Satisfaction study with the highest score in 4 of 6 categories. We have scale and we have momentum, with nearly 900,000 small business banking customers. Our growth in new deposit accounts in the last 12 months was up 13% year-over-year. In this next video, we show the power of TD's customer focus and ability to nurture a relationship over many decades through in-person and increasingly digital experiences. Let's have a look. [Presentation]

It's wonderful to see this success story and humbling to know that our team played a part in it. We're proud to be building our future hand in hand with our customers. As Michael mentioned earlier, TD has the best retail branch network in Canada, which has been a powerful competitive advantage for us in Small Business Banking. Building on our core strengths, we are focused on modernizing our business. And we recognize that, as our customers' needs evolve, we must adapt and change to drive growth. We are enhancing the credit experience for Small Business customers and improving the efficiency of our colleagues through remote onboarding, automated credit decisioning and our unified sales management and credit platform. And we are using advanced machine learning techniques to power our loan approval process, risk monitoring and collection strategies. This is increasing speed and productivity across the Small Business portfolio. Now let's turn to TD Auto Finance, another strong business well placed for accelerated growth. We are excited to again announce that TD Auto Finance was ranked the highest in dealer satisfaction among noncaptive, nonprime lenders with retail credit for the sixth year in a row in the J.D. Power 2023 Canada Dealer Financing Satisfaction Study. Let me spend a few minutes on how we're going to continue delivering high customer satisfaction while we build this business. TD Auto Finance is a full spectrum auto lender with a national footprint, full-service sales team and a full-lending product suite across automotive, recreational, marine and power sports dealerships. On the retail side, we have approximately 6,000 dealer relationships, with #2 market share in prime auto and #1 market share in nonprime auto and recreational. Since entering the commercial market organically in 2012, we have grown our floor plan banking relationships to more than 550 dealers, representing over 20% market share, yet we still see significant opportunity in the market. To capture it, we will further expand acquisition channels with more dealer relationships and OEM and marketplace partners. Dealers seek auto finance relationships that can support their customers across the credit spectrum, and we can meet that need. For example, building off the work done in the Canadian personal bank, TD Auto Finance has robust credit policies and processes to facilitate auto lending to New to Canada customers. We are also investing to modernize our capabilities in this business. We are using data and digital insights to empower dealers, OEM and marketplace partners to deliver differentiated financing experiences. We offer enhanced dealer support through our dealer relationship managers, credit, funding and customer service teams. And our TD Wheels app is evolving the car buying experience, helping customers gain knowledge and confidence in their future purchase through prequalification of financing while providing dealers with prequalified leads at no cost to them. In an important market, TD is well positioned for growth. With approximately 1 million business banking customers, the Canadian Business Bank is well positioned as a connector within TD. We have an incredible team of trusted bankers who are deeply knowledgeable about the business and personal needs of their customers. Our bankers invest in partner relationships across TD so they can confidently and quickly establish connections, making it easier for customers to achieve their goals with the help of all of our businesses. For example, 100% of our retail branch footprint is covered by Small Business bankers, which has led to over 12,000 referrals to retail banking and more than 13,000 referrals from retail banking in just the last 6 months. This partnership extends to wealth as well. And after the break, Ray Chun will discuss the benefits of co-locating senior private bankers in our commercial banking centers. And as our customers' businesses grow in scale and complexity, our partnership with TD Securities gives us additional levers to help power our customers' future. For example, through TD Securities, we can offer sophisticated solutions and tailored products such as trade finance, FX, derivatives and advisory services to help clients mitigate risk and grow. This robust referral engine benefits all TD businesses. Most importantly, it benefits our customers, solidifies relationships across the market and is a key building block of our future. Our Canadian Business Bank is strong. And our long-term ambition is bold: to be #1. We have a winning strategy and are well positioned to meet the challenges ahead of us and be successful. With specialized offerings, coverage and expertise, we will continue to scale our businesses and accelerate growth in underpenetrated markets. And most importantly, we will deliver a legendary experiences to our customers, backed by modern technology, streamlined processes and data-driven insights. As I said at the start, the future of the Canadian Business Bank is very bright, and it is a pleasure for me to lead our team and support our clients in the next chapter of our growth. Thank you.

Thank you, Barb. I'll now ask Bharat and Michael to join us on stage for our first Q&A session. As Bharat mentioned, today's Investor Day is focused on our Canadian Retail businesses. This first Q&A will be to address questions on the Canadian personal and commercial Bank. We will begin taking questions from those of us joining in person. And if time permits, we will move to questions from the webcast. If you're in the room with us and would like to ask a question, please raise your hand, and a microphone will be brought to you. And please remember to introduce yourself. [Operator Instructions] Okay. Let's get started.

It's Meny from Scotiabank. Lots of good growth projections. To me, one obvious question is just the underlying rate and macro environment that's underpinning those projections. I know Frank touched on it a little bit, but just wanted to get a better sense of when you're making these projections, what are you assuming, particularly for rates, but also in terms of the macro environment and especially more short term rather than long term?

So I'll start with that. And if I take those rates and volume growth, let me start with rates. If you were to look at kind of forward curves, recognize they're kind of moving around a bit as we speak, but the general shape of them over the past 6 months or so, that's kind of how we think about rates on a go-forward basis. If you look at volumes, we anchor on TD Economics and our TD Economics group has forecasts for credit card growth, RESL growth. And so RESL in specific, our medium-term outlook has growth rates in the, I think, 5% to 6% type range on a compound annual growth rate. And so when you look at our $140 billion, say, of RESL growth, embedded in there is the assumption that the housing market has pricing increases. And so the average ticket size will increase over time as well. That being the case, we're not getting there purely on average ticket size. We're getting there on the combination of some increase in the per mortgage amount and then also an increase in volumes. And Barb, on your side?

It's really the same process that we go through. We look at our TD Economics forecast. We look at how we think we can outgrow the market. And a lot of that is based on our historical experience. We've shown that we've outgrown the market quite nicely over the past period of time.

Let me just to add to that, I mean, obviously, with the rate increase of yesterday, this economy is running. There is no doubt, if you look at the numbers from last month, both on job growth and economic growth, pretty strong. And at some point, that will not be the case. It will slow down if rates go high enough. But overall, when you look at the long-term prospects for Canada, with high immigration, people wanting to come here, the prospects for Canada over the long term are very bright. And yes, there will be bumps if we get into a real slowdown. Of course, some of these numbers will slow down. But as we saw in the housing market, there is a chronic shortage of supply. And then people are coming here, and most of them come to major metropolitan areas, urban areas, people need to live somewhere. And that's why you see continuous growth. And New to Canada segment, you heard from Sona and Michael, and folks coming here, they have great education, they have good financial resources, and they add to the economy. So I think there are certain offsets here, but there could be some bumps here. Let's see how this plays out over the next few quarters, but the prospects for these businesses, as you -- hopefully, you got it from Michael and Barb, it's just terrific.

Just as a follow-up, immigration plays an important role in your plans. I think we were used to thinking about immigration as being just a total positive for the Canadian economy. I think the way I look at it based on yesterday was that there are some negatives here as well in terms of inflation and rates. So I'm curious there, in particular, your view of that, is there a negative side to immigration? Is there a risk that the government has to pivot here in terms of its immigration targets and the risk to the business plan from them?

There's ample capacity to absorb immigrants. But like you said, we have to balance this out. There are only so many new homes that can be created in Canada. And when you have competition for those homes, you could create some discord among populations and all that. It's been a terrific story for Canada. I think we need to be somewhat aware of what the other issues are, and I know as a country we will. Canada has had a terrific record of adapting, adjusting. Our immigration policy moved from decades ago. It was largely more humanitarian and still is. A big portion of immigration is that family reunion. But as well, the country has pivoted to required skills, wanting specific types of immigrants coming here. And so I think on balance, things work out, but I think we need to be aware that there could be certain pressures. And as a country, as a society, we need to deal with it and make sure that we are adapting to those realities.

Ebrahim Poonawala, Bank of America. I guess a question, Michael, for you. So there's no question about your ability to innovate the scale of your franchise. When we hear growth, right, given the market structure, along [indiscernible] around price war. So give us a sense when you think about competing in the growth strategy. Eventually, one, is there a lasting advantage that TD can have on innovation where competition doesn't catch up? And if -- would pricing be the logical way to compete and get some of that growth? And why not, right, you have the deposit advantage, why not pursue that?

So great question. And if I think about what's the lasting advantage, the lasting advantage -- I actually started out my discussion, which is, say, we have the leading franchise. And there are a lot of components to that, but our top-of-the-funnel activity is the best in the marketplace. So I think a top-of-the-funnel activity, it's awareness and consideration, the best in the marketplace. Our branch locations and the density in the urban environments, more Canadians live within 2 kilometers of 1 of our branches than anyone else, more branch traffic. Our digital properties have more traffic, both the public site plus our mobile app site. And so the top-of-the-funnel activity is tremendous. And so for us, success is not about changing our risk appetite or about winning a price war. Success is about execution. Success is about executing and actually optimizing the funnels that we take all these shoppers and turn them into longtime franchise customers. And so when I look at our top of the funnel activity, there's no reason we shouldn't be #1 in every product that we compete in. And so I'm really focused on execution, and we haven't relied upon pricing in order to win. I know we have received some questions in the second quarter earnings call, "Well, geez, your RESL growth was strong. You must have been using pricing." Our RESL margin for origination in the second quarter was higher than our origination margin in the first quarter. Our success is driven by execution. That's the reason I used execution so often in my discussion. And so it's not about pricing, and it's not about risk expansion.

And just one follow-up. You mentioned the deposit mix shift that's going to continue to play out. Like how concerned are you where you -- deposit rates reprice higher and the spreads tighten much more, given that we've not been in this environment for a long, long time, just your visibility on the relationship aspect of your customers and your visibility in terms of deposit flows, what's operational and what's not?

So yes, great question. And again, higher rates, you do see mix shifts happening. One of the things that we have going for us, and it's a relative game, relative to the marketplace, I feel very, very good in terms of where we are, and we see the historic data show that. But if you look at our franchise, I'll talk about that we want to be the bank for all Canadians. And the fact that we have such a large retail base in addition to the wealth customers that we have and the Small Business customers, that large retail base actually serves as a real anchor because you have less mix shift happening there and you have more mix shifts happening among the wealthier customers. And look, we have everyone, but we have a very balanced portfolio in terms of how we manage this. And so as rates go higher, do I expect to see some more mix shifts? Yes, there'll be some more mix shifts as rates go higher. But I think we're actually very well positioned for this. And I know Ray on the wealth side, you'll hear him talk soon about all the opportunities we have to basically franchise customers as balances move around. And ultimately, some balances they end up in GICs, which are looking for rate. Long term, they could become investing customers in Ray's shop.

And maybe just to add to the answer from a commercial banking perspective. In commercial banking, we do have an ability to price for each customer. So tailored pricing for each customer. So we are able to be very aware of the importance to a customer from a relationship perspective on the term deposit side. And so we can play with pricing where it's important to maintain customer relationships. And we've been very successful in maintaining relationships. We've seen deposits move to other banks for high-term deposit rates, but we haven't lost any customers really as a result of that.

Michael talked about your core deposit ratio. Market share actually went up as to what you've seen as rates have gone up.

Actually, we've been gaining -- last 8 quarters, we've gained core deposit share. We've gained, I'm looking at Sona, 60 points or so in share over the past year. And so the spread with the market is actually improving. And so we see ourselves, again, on a comparative basis, outperforming the marketplace. And it thinks -- it's the nature of our franchise. I started out by saying we have a great franchise. I've worked in 5 different countries in retail banking. This is an incredibly strong franchise. And if we can take our incredibly strong -- if -- when we take our credibly strong franchise and we execute well, good outcomes come from that.

Mike Rizvanovic, KBW. I wanted to ask a little bit about noninterest-bearing deposits. So when I look at your mix today, noninterest-bearing deposits to total deposits, I'm struggling to figure out if they've structurally changed. So should I be using maybe pre-COVID as that mix shifting back to where it was in 2019? Or just given the rates are -- we haven't seen rates as high since prefinancial crisis. If I measure it back to pre-GFC levels, it looks like there's quite a bit more runoff on the noninterest-bearing stuff to go into interest bearing, and that would be much more impactful to your earnings. So any comment on if there's been a structural change on that mix where it's just going to be higher going forward?

Well, I think I'll talk on the retail side, and Barb, you can talk on the other side. You used to be our treasurer recently by the point of view on this as well. But just overall, yes, in higher rates, you're going to see a shift. That being the case, I keep on going back to we have this core retail franchise relationship that actually will serve us well even as rates go up. And then overall deposit levels in aggregate, if you actually look at the bank balances in general or sales, certainly, we've seen an increase in deposit levels in total. And I have always been looking to see through the reversion back on the growth rates, and we haven't quite seen that yet. And we've actually seen our deposits in aggregate be quite resilient. In fact, when Sona was talking earlier today or even today in this inflationary environment, seeing that our money in coming in from deposits and payroll and government transfers is actually more than our money out, and that's kind of creating some opportunities. But Barb, do you have a point of view?

Yes. I think if you look at sort of the long-term growth rates in deposits, there was clearly an increase above the long-term trend through the pandemic, and it's coming back down toward the trend in the business bank. There are some factors that will likely cause that reversion to continue. And one of those is the repayment of [ SBA ] loans, which should start in December of this year. So you probably will see deposits come down further around that event.

And just on the mix itself, noninterest bearing as a percentage of total deposits is pre-GFC. Is that mix a good benchmark to use in terms of where your mix could go if rates stay elevated for longer?

So Barb used to be the treasurer, so...

Yes. I think as a general matter, it's a good thing to look at. I think that there have been changes over time in terms of alternate places to invest your money. And so I'm not sure it'll move back to the exact same spot, but it's not a bad reference point.

The only thing I would add is pre-GFC to now, how many new customers do we have? Quite dramatic shift on that. Secondly, the checking balances at TD, these are transaction monies. Unlike in other jurisdictions through the surge deposits, you had a lot of money sitting in noninterest-bearing accounts. So did we but nothing dramatic. So I think if you were to take those into -- I mean who knows? Maybe your thesis might be correct. But we had a tremendous growth in just a number of customers in Michael's business and in Barb's business. And these are transaction accounts, particularly the noninterest-bearing accounts. I mean I forget, Sona, you -- one of the presentations you told me, what's the median balance of one of these accounts? Relatively small. So the so-called cash sorting is less of a risk and, hence -- is the share keeps on going up because that's the type of clientele we have. A little different for Ray Chun's business. He's the wealth guy, and he'll be coming after the break because those are high-net-worth customers, people like yourselves and say, "Well, why am I giving so much money in my checking account?" So I need to find something else.

It's definitely not a problem that I have.

No, Ray can fix your problem. I'm sure he is looking for you before the day is out. So I think that there are other factors at play here. I won't just take the averages. Maybe your thesis might turn out to be correct, but there are a lot more factors to take into account now than what might have been the case pre-GFC.

Dean Highmoor from Mackenzie Investments. This question is for Michael. It's a 2-part question. Earlier in your comments, you talked about the improvement in retention for the operation -- operating accounts. Maybe you could just drill deeper into that as to the drivers of that. Is that sustainable? And then you also mentioned that you had an improvement in the efficiency ratio of 300 basis points since 2017. With this improvement in retention and this growth in this tech and digital platforms that you're excited about, what further improvements in the efficiency ratio should we expect, say, over the next 5 years?

Yes. So I'll -- piece by piece. First question is about retention. Our retention rate is at historic lows. And one of the things I talked about was primacy. On primacy, you have a direct deposit coming in and to start using us for bill pay, these other factors. And so we're spending a lot of time and energy and effort to build primacy and actually starts when you actually open up the account and you try to build primacy upfront. There's also another factor, which is an interesting one, is customers can originate checking accounts, both digitally and in a physical branch. And there's something about human behavior. I'm not quite sure what this is, [indiscernible] behavior where as a customer comes into a branch, you get much more primacy than if it's opened up digitally. Same is not necessarily true on, say, credit cards, but certainly is on checking accounts. And so again, the strength of our branch network also creates primacy. And so at the point of sale, you get everything done. We're focused on the primacy, and that's driving, I think, very strong performance. That was the first question. And the second -- I'm losing my -- so your second question?

What sort of improvement in the efficiency ratio should we expect to, say, over the next 5 years or the medium term?

Great question, Dean. Great question.

Do you want to answer this or you want me to?

No, no [indiscernible]. I'm waiting for your answer.

So in terms of the efficiency ratio, look, to be fair, we -- I really target creating positive operating leverage. And [ by creating ] positive operating leverage, I look to generate value for the shareholder and be -- create the capacity for us to save. And so I'm probably not going to give you a specific number here in terms of what the target is on a go-forward basis. What I will offer is that the playbooks we're putting into place create the opportunity to drive efficiencies in our platform. If you think about our branches, and [indiscernible] will say, "Well, jeez, you can improve your efficiency ratio if you close branches." The truth of the matter is we're renovating branches today. And the reason we're renovating branches is we actually need to create more space for sales advisers because we have such demand on a local level. So we're taking out [indiscernible]. It's -- and actually creating the opportunity to put our advisers in there, plus new wallpaper and paint, but it's really about capacity. And so when we think efficiency ratio, it's going to a combination of efficiencies you're driving but what you're also reinvesting in order to support the business on a go-forward basis. And it's really the operating leverage. I need to do all that and create positive operating leverage because the efficiency ratio kind of falls out of that. So I know I didn't answer your question, but just to tell you how I think about it.

Yes. I'll take one from the webcast. Why do you think TD is seeing a slower pace of rotation into term deposit products than peers? And could you put some numbers around that?

Yes. I mean the slower -- I guess one of the slides, I think, had some numbers around that, and you can actually see that. And look and why this slower pace? Well, first of all, it's a core part of our focus and our strategy. That's one. Two is our pace of opening up new customer relationships, and Bharat, you mentioned this. Winning new customers is great, and we win a lot of new core banking customers that actually helps this ratio. And our rate of customer acquisition, I said in my remarks, our rate of customer acquisition is accelerating. So we're the largest in the marketplace, and our customer acquisition is accelerating. So that all comes into place. And plus it's the combination of factors that include new account acquisition and the fact that we're a bank for all Canadians. And more retail customers are going to have much less of a mix shift. And I know Bharat, you talked about that before.

Paul Holden, CIBC. Two questions. First one is related to the credit card strategy. Wondering what role interchange fees might play in that? Clearly, there's a risk at some point in the future that interchange fees will come down. They have been coming down. Does that change the importance of the credit card product? Or does it simply shift the strategy in which -- in the way in which you execute?

Well, so I mean, as I think you know interchange fees did recently have an adjustment. And I think this must have been third adjustment in the past few years. I actually -- with that adjustment that was made, it was quite interesting because the policy objective was to support small businesses, and the policy objective was achieved. With the way it was shaped -- because achieve a policy objective and manage through that. And from a rewards and loyalty programs, it's very important for us to be able to continue to provide the value propositions to our customers. And so with respect to the changes that were made, we feel very good about our ability to manage through that. Longer term, are there going to be changes? Like I would say I hope not because I think the credit card is a product that Canadians have really come to appreciate and the value they get from that. And from a policy perspective, there are 2 stakeholders here. They're small businesses and their consumers. And so I think the balancing of that has worked well so far. And so I'm anticipating that will work well on a go-forward basis. In the -- if interchange rates were to fall dramatically, look, product value propositions would have to change unambiguously. And that being the case, the credit card is a device that allows people to buy things today and pay for them out of future income. That need doesn't go away. And so that need won't go away. But I hope that the environment we have now persists.

Second question is related to HELOCs. I don't recall seeing it on any of the slides in terms of growth objectives, but it's a fairly significant product for TD. I think you probably have a #1 market share in HELOC. Maybe you can -- was that intentional it was left out? Is it still a growth product for you? Maybe talk a little bit about your plans there.

When I talk about RESL, it's a combination of HELOC and mortgage. I try to be overly precise about are you growing HELOC or growing mortgage because it's really a customer conversation. And so I don't want to necessarily say my HELOC goal is this and my mortgage goal is that. It's really dependent upon an individual customer's circumstances. And as a category, we want to capture the category. The mix is underneath that. Yes, I pay attention to it. I will tell you in HELOC, if you look at the kind of league tables, we actually have a relatively less share compared to mortgages, where the higher share, and so the mix is actually less HELOC, more mortgage. That being the case, we're trying to solve customer needs as opposed to kind of manage an individual line item for a specific share objective. The overarching RESL category, definitely want to win there.

The $500 billion includes HELOCs.

Yes, it does.

Sohrab?

Sohrab Movahedi, BMO Capital Markets. First question for Michael. The work we do suggests that since COVID, the average age of the TD customer has been increasing, and their tendency to spend has gone down for more savers. I guess your stats would suggest that your loan growth has been slower in RESL and what have you. When you look at your businesses, do you stratify by stage of life? And will this necessitate going into a younger generation to grow the RESL? And is that -- and I want to know what Ajai feels about that from a credit score perspective.

Is he sitting on that side?

I said hi to him on the way.

Clearly, we spent a lot of time talking about New to Canada. The youth market and younger populations matter, too. But the 3 big categories that you compete on in retail banking is new to the market, clearly, a big thing in Canada. People come of age and are entering the need for financial services and switchers. And so clearly, it's an important component. We do have a lot of focus on that. And our aspiration is to continue to grow that segment. I didn't spend a whole lot of time talking about that segment. But that is actually lead generation for the deepening of the relationship, whether it be the investment products or RESL. And look, with RESL, at the end of the day, from a credit perspective, we don't adjust our risk appetite to react to one thing here or there. We're through-the-cycle lenders, and it served us well. We're quite confident that if we underwrite a loan, we're going to underwrite it well, but the youth market is clearly going to be important one for us.

So do you feel like you have the right presence to meet the youth or the younger, the next-generation market where they want to meet you, which is not really in the branch?

Well, yes and no. Believe it or not, an awful lot of student accounts are opened up in branch. I will tell you that we are significantly increasing our presence on campus, like as we speak. And I'm not sure the exact number this year. I can say a multifold increase over the past few years on what our on-campus presence is going to be. And we're also doing some new things actually around even kind of [indiscernible] youth market to actually build a really good experience in the branch. In fact, I had someone reach out to me just on LinkedIn yesterday and sent me a note that they were with their child and opened up an account in the branch. They talked about what a wonderful experience it was. So we're playing everything from youth to student to graduating students, but being on campus is going to be important as well.

Okay. And maybe just a quick one for Barb. What is the single biggest factor in winning a commercial customer?

It's really understand -- having that confidence in your banker. So banker that understands your business, understands credit, right, who can assess whether a credit is going to work for the bank or not work for the bank, who can work with the customer to structure a credit so that it will work for both sides. So it's really that the quality of the banker who can really be a partner to the business to help them figure out how we can work with them to help them grow their business.

So it's a lending first-type hook is what you're suggesting.

On commercial banking, it's largely lending, yes.

Okay. We have time for one last question.

I've got a few, but I'll just limit it because it sounds like we're running out of time. Michael...

By the way, we have a reception out.

Yes, absolutely. I'm going to ask you [indiscernible]. But Michael, can you talk to us about the conversations you're having with customers who are facing very high mortgage payments or the potential for high mortgage payments, especially if rates stay higher for longer? And is that maybe part of the -- I mean this negative amortizing? Is that part of the growth in mortgages you're also including in that? Maybe you can talk a little bit about how those conversations are going, and especially in view of yesterday's ratings?

Yes. I can assure you that negative amortization was not a line item in the model to get to $500 billion. So rest assured there. In terms of customers who were coming up, the 2 issues is, you have variable rate customers and customers who come to term. And one of the things that we're seeing clearly is that -- and Sona, you spoke about this, customers have the ability through cash flow to absorb the higher payments. We've underwritten the loans to reflect potentially higher-rate environments. We're seeing cash flows that are positive. And we have all sorts of metrics that we look at. And I'll just give you one to kind of think about, which I think tells the story, which is we have a workout group called TD Helps. If I look at the number of customers who have a mortgage who are going to TD Helps, I just do a count of the number of customers who are going to TD Helps this year versus the same period last year, it hasn't changed. And so our customers are handling the higher rates. There's clearly going to be a mix shift in terms of how spend is actually handled and so discretionary spend could end up going down to absorb the higher payments, but customers have shown the ability through the combination of savings they have and plus their cash flows to support this. And I have a report that I get frequently. Ajai, I know I asked all the time for the leading indicators of stress in the system. And one of the things I do is look what's going on in TD Helps. And if you look at the number of customers who've gotten, say, through the TD Helps and amortization extension, the number is very low. I mean I'm not going to tell the number. It's a very low number of customers who've actually got amortization extensions because that's the tool to get them to be able to afford the mortgage.

Okay. That's very helpful. And just one other question for you. In one of your slides, I saw a very interesting statistic where you were able to highlight that there was a -- I think it was $270 billion of loans.

Off-us.

Off of you. I mean it's a little creepy, you can find that out. But if -- can you give me an idea of maybe the magnitude of that what it looked like maybe 5 years ago versus what it looks like today? And why is it that you think you'll be successful? And maybe you can give me an example of how you're getting someone like me who has a checking account with you to bring over my [indiscernible] [ loan ]?

So you're one of that $270 billion. So first of all, I'll talk to you after this. I know your [ leaders ] may or may not have thought how to lie. But the $270 billion, it represents our existing customers with mortgages elsewhere. And to be fair, any bank can get this if they want to because the data is available. I don't know how it's changed over time, to be honest. And I could probably figure it out. But in terms of the playbooks to get there, I spoke a lot about lead management. And Frank, in our discussion, we talked about that. So when we think about a customer, we know a few things about them. We know if they come into a branch and say, "I'm interested in a mortgage." Well, that's a good lead. They go into one of our digital tools and said, "I'd love an appointment." That's a lead. The third category of leads, which is the one that I had a stat on there, which brings this to life, is customers where we have data on the customers. And through the data, we can predict a likelihood to be interested in a mortgage, either it's a new home purchase or is a renewal with another financial institution. There's a chart there that showed a 3x number. The 3x was when we take our modeled leads, and we've actually done some things. We're actually now incorporate digital signals and digital intent into the leads. We got a 3x increase in terms of the volume that we're actually getting by actually proactive outreach to our customers. And so one of the playbooks is actually just giving our customers a call because we have insights, we can have a conversation with them. And when those insights are targeted, relevant and timely, we're winning business. In the second quarter alone, relative to prepandemic, the loan balances that we have from leveraging these external leads, we're up literally hundreds and hundreds and hundreds of millions of dollars relative to prepandemic by just having a conversation with our customers informed by data using one of our branch-based colleagues or one of our remote colleagues who are actually doing the calling, and it's working. And when the leads are relevant customers, they say, "Thank you. Thank you for reaching out to me because this is the need I have." So I mean your question actually brings this all together, but talking about executing well, it's taking our data, our technology, our colleagues, putting them all together, find the right moments and driving activities. In the first question, I was asked [indiscernible] success is about execution. Success is about execution, and that's how we're going to do it.

It's a great discussion. We're out of time for our first Q&A session. But later in the program, there'll be another opportunity for you to ask questions. Thank you, Michael, Bharat and Barb. We will now take a short break. There are refreshments available on the other side of the floor where you entered, and we will reconvene in 15 minutes at 3:10. [Break]

Welcome back, everyone. I would like to invite Ray Chun to the stage for the first of his 2 presentations, beginning with Canadian wealth management, followed by TD Insurance. Ray has been with TD for more than 30 years and has led numerous functions in retail banking, including product, branch banking, data and analytics and global contact centers. He previously served as President and CEO of TD Insurance and, most recently, led direct investing and wealth delivery. Ray is also a member of the Board of Directors of the Toronto Region Board of Trade. Please welcome, Ray.

Well, welcome back, everyone. I hope you had a chance to get some coffee, connect with some of the colleagues over the break, cool down a little bit. The room is getting a little toasty, right? So we're now going to pivot to the businesses that I have the great privilege to lead: wealth management and insurance. Let's begin with wealth management. TD is a leading wealth management provider in Canada with integrated businesses across asset management, direct investing and wealth advice. We offer a full spectrum of solutions and services to empower Canadians to grow their financial confidence, and we have the product shelf that is second to none. Today, we have strong momentum in each of our businesses. In asset management, we continue to widen our lead versus our competitors as the #1 Canadian institutional asset manager. In direct investing, we are the undisputed market leader, and we are adding more assets and new accounts than any of our competitors. And in wealth advice, TD has the fastest-growing private wealth management franchise by assets. Our aspiration is to continue to outperform our peers and be the wealth management firm of choice for Canadians. And as Michael and Barb have shared, our scale, our brand and our tremendous One TD opportunity continues to drive client growth. Throughout today's presentation, we will highlight the strategies that have enabled our strong performance and that will continue to propel us forward in the years to come. The Canadian wealth management business exemplifies TD's deep client focus. We strive to understand each and every client to deliver the right solutions at the right time in the channels of best fit. We have over 2 million clients, almost $1 trillion in client assets and over $1.6 billion in net income. Over the past 5 years, we have delivered almost 10% NIAT growth annually, supported by sustained growth in assets under management and administration and strong revenue performance. We created the wealth management and insurance segment in Q4 of last year, and that was in recognition of the significant and growing contribution of these businesses to TD. In his opening remarks, Bharat spoke about business diversification. The wealth management business delivers revenue diversification with resilient and growing fee income through economic cycles. And over the past 5 years, our fee revenue has increased at 8% growth rate with a premium return on equity. I also want to share and mention just 2 things. First, our private banking business is reported under the Canadian personal and commercial segment, but it's an important complement to our private wealth management offering. And today, I'll be sharing some exciting private banking initiatives that will accelerate our growth. And second, while our U.S. wealth business continues to grow rapidly, we will talk more about their strategies at our next Investor Day. Since 2012, TD wealth management has invested over $3 billion in our people, products and platforms to deliver best-in-class solutions to our clients. This ability to make the right investments to serve our clients has more than doubled our annual revenue from $2.7 billion to $5.6 billion over the past 10 years. In direct investing, our leadership position is the result of consistent innovation to bring market-leading capabilities to our clients. In 2015, we relaunched WebBroker, which is the long-standing foundation of our direct investing business. And in 2022, we launched TD Easy Trade, which delivers intuitive and guided experience for our new-to-investing clients. In TD Asset Management, we broadened our product shelf, adding alternatives asset capabilities with the acquisition of Greystone 5 years ago. And since then, we have continued to build on our market-leading capabilities in fundamental and quantitative equities, fixed income, asset allocation and asset liability management. Our breadth of products support our advisers as they guide clients throughout their financial journeys. We are also taking bold steps to modernize our technology platforms and enhance the way we deliver advice. Whether it is the expansion of our family office or our newly launched direct channels in financial planning and private banking, we are reimagining the client experience of the future. And across our platforms, we are persistently investing to create capacity for our colleagues and further enhance the client experience. Let me now focus on our TD Asset Management business, which is the only Canadian provider that manages all major product categories in-house, an important differentiator for our overall strategy. With our unparalleled product shelf, including 3x more in-house alternatives assets than peers, TD Asset Management can serve a diverse client base that spans the gamut of investing, from internationally known pension funds to individual Canadians. As the #1 institutional money manager in Canada, we build integrated institutional solutions, and we are winning large mandates with a combination of low-cost passive solutions and higher-margin active and alternative solutions. We are equally proud of our sales record and offerings for our retail clients, including diversified asset allocation portfolios, innovative quantitative capabilities and an investment process that incorporates ESG considerations. Driven by leading investment performance and effective distribution, our assets under management are the second largest in Canada. We continue to grow our scale advantage, enabling TD Asset Management to deliver for our clients and investors with lower costs and higher profitability. We are well positioned to withstand industry margin pressures with strategies to increase sales of multi-class products and broaden access to alternatives. Our scale and vertical integration of manufacturing and distribution allows us to react quickly to the changing environment. This supports our resilient operating margin advantage, which is almost 30 points higher than our competition. Our disciplined scalable investment process, coupled with leading talent, contributes to powerful outperformance. Over the past 5 years, TD Asset Management's active fund category has delivered over 100 basis points in value above the relevant benchmark. And our performance is even stronger in the alternatives category, where we delivered over 250 basis points above the benchmark. Let's now turn to TD Direct Investing, which is the leading online brokerage in Canada. Our 35% asset market share is almost 3x larger than our next closest peer. And our #1 rankings from The Globe and Mail and MoneySense speak to our innovative market-leading client experiences. We are the country's largest, most client-centric and technology-enabled digital investing platform. TD Direct Investing has a proud history of innovation from pioneering telephone-based trading to launching best-in-class platforms for emerging client segments. TD has been at the forefront leading the industry. Last year alone, we enabled a modernized advanced dashboard, launched TD Easy Trade for newer investors and delivered market firsts, including instant cash funding, which allows clients to transfer cash in real time from external bank accounts using Interac e-Transfers. Our ability to deliver at scale faster than our peers allows us to continually widen our market share leadership over time. TD has the only platform that can serve the full spectrum of direct investing clients. The breadth of our offering enables us to meet clients wherever they are in their investing journey and to support them as they grow. The launch of TD Easy Trade has been an absolute home run. It's driving over 20% of all new accounts since its launch in January 2022. TD Easy trade clients are typically younger investors with more than 2/3 coming from the Gen Z or millennial generation. And these young Canadians are projected to hold 25% of the country's assets by 2030. We are bringing these clients into the TD ecosystem early, and we will continue to grow with them throughout their lifetime. And for more experienced investors on our WebBroker platform, we offer robust trading tools and personalized market data to help clients build a diversified portfolio in both the Canadian and U.S. markets. Now while our clients are self-directed, they are not alone. Our leading educational content and multilingual support allows them to develop as confident investors. Finally, we have world-class technologies for sophisticated active traders. Our platform is built for advanced orders, complex option strategies and offers extensive customization with speed and reliability. Active traders are a very valuable client segment. They generate over 15x more revenue than new investors, and sophisticated active traders generate 30x more revenue while having significant higher retention rates. Now taken together, TD is empowering clients across the investing spectrum from first-time investors to the most experienced traders. Let's watch this video to learn more about how we're doing this across direct investing. [Presentation]

As you have just seen, our platform resonates strongly with all investors. And I'm very excited about what's next, fractional share trading, fully paid lending and TD Active Trader, a brand-new platform for sophisticated active traders. Most existing active trader platforms are over a decade old, and our new platform will offer unmatched capabilities. Our undisputed market leadership is a significant competitive advantage, enabling truly innovative investments that continually improve the client experience and widen the gap to peers. Now let me move to wealth advice, where we have built our business from the ground up and have the fastest-growing private wealth management business in Canada. We have achieved scale with over 5,000 advice professionals, 600,000 clients and more than $300 billion in assets under administration. Our approach is purposefully designed to better serve clients with a full spectrum of capabilities across banking and credit, planning and investing and specialized services, including the family office and private client insurance. These offerings underpin our holistic end-to-end approach to advice, guiding clients with the financial plan that helps their -- helps them grow their wealth, protect what matters and leave a legacy for those close to them. In private wealth management, we have set the bar high, and we are accelerating our growth. TD is adding Canadian advisers at double our previous rate and faster than the rate of our largest peer, notwithstanding the highly competitive market for talent. Our success in recruiting advisers to the bank is rooted in our culture, our brand and our commitment to always put the client first. And at TD Wealth Management, we offer unparalleled experiences to our advisers with flexible team structures, specialized support and the most powerful growth opportunity in the industry with our One TD referral engine. Together, TD Asset Management, TD Direct Investing and wealth advice have delivered a strong track record of growth and outperformance. Over the past 5 years, TD wealth management growth has outpaced peers in assets under administration and revenues. And we have made purposeful investments to deliver peer-leading efficiency and return on equity. TD is among the fastest-growing, most profitable and capital-efficient wealth managers in Canada. And we have clear strategies to further build on this leadership. Our ambition is to outperform peers and be the wealth management firm of choice for Canadians. With strong contributions from each of our businesses, we expect to double our net asset growth to over $225 billion over the medium term, driving double-digit NIAT growth. In TD Asset Management, we will widen our lead as the #1 institutional asset manager in Canada while accelerating growth in retail. We will also take market share in online brokerage assets as we expand the gap between TD Direct Investing and our next closest peer. And in wealth advice, we expect to have the fastest-growing advice channel by assets. We will accomplish this by using 3 levers. And let me share them with you. First, we will leverage the tremendous upside from deepening our existing relationships with our One TD approach. In partnership with the Canadian Personal Bank we will drive referrals from the largest retail customer base in Canada. And with our business banking colleagues, we will provide more business owners with wealth services. Second, we will continue to deliver legendary client experiences through product and platform innovation. This involves enhancing our digital experiences, expanding our broad suite of products and developing best-in-class capabilities to remain at the forefront of the market. And finally, we will accelerate our expansion through new distribution strategies. Now this is not just about adding people. We will introduce new models that will reach unique client segments across Canada and build a robust sales pipeline for TD Wealth Management. Each of our strategies will leverage our track record of success to bring best-in-class solutions to our clients. The size of the opportunity within our own 4 walls is significant. We estimate that TD clients, including the existing wealth clients, have roughly $2 trillion of assets that are currently held outside of wealth management. This represents a significant embedded opportunity and a long-term pathway to more than double our assets. The Canadian Personal Bank represents our largest One TD opportunity, and we are fortunate to serve 1 in 3 Canadians, giving wealth access to the largest retail customer base in Canada. And Michael and I are partnering to bring more TD products and services to better serve our clients. And together with the commercial bank, we are also supporting business owners through their journeys. We have co-located our senior private bankers in commercial banking centers and plan to achieve national coverage by the end of fiscal 2024. TD is building the bank of choice for high-net-worth business owners by enabling our clients to manage their business and personal finances in one place. I'm also excited about our partnership with TD Securities. We have collaborated to create custom structured node products, strengthened our research capabilities and modernized FX pricing and processing for all wealth clients. Now if I look within just wealth management, we estimate that we have over 1 million clients that use a single TD Wealth product, presenting many opportunities to deepen our wealth relationships. These include expanding private banking within our private investment advice and investment council client base and enabling more of our mass affluent advice clients to use direct investing for trading online. We already have the playbooks to deepen client relationships. Each year, we complete approximately 130,000 referrals with Canadian personal and commercial banking. But let me tell you the well of opportunity runs deep. Today, only 15% of Canadian personal banking and 30% of the business banking customers have a TD Wealth relationship. Our unique culture and relentless commitment to our clients sets us apart and gives us the confidence that we will win as One TD. In asset management, our objective is to accelerate growth by tripling retail mutual fund and ETF net sales over the medium term. We are investing in sales training and enablement infrastructure to support retail distribution and will further accelerate growth by building out our sales teams. Our ability to reach more clients is strengthened by leveraging the new distribution channels, including Financial Planning Direct and TD Easy Trade platform. And as I mentioned earlier, our leading position and scale allows us to compound our advantage and strengthen our lead. We continue to develop powerful new retail and institutional products and capabilities. For our retail investors, we are increasing access to alternative products, providing additional diversification options. And we are using data and AI to enhance our traditional equity products as well as adding offerings in commodities and global private credit. Our breadth of capabilities, coupled with our market-leading position in Canada and our One TD partnership with TD Securities positions us well to expand global client coverage. Under the brand TD Global Investment Solutions, we intend to enter 20 new countries over the medium term. Our immediate focus is on East Asia and Australia, where TD Securities' strong client relationships have already driven early success. With these strategies, TD Asset Management is well positioned to deliver on our growth ambitions and target delivery of over $80 billion in net asset growth over the medium term. If I turn to Direct Investing, I am equally excited about the growth opportunities in Direct Investing. We will deepen relationships with our sizable client base and add new clients through One TD. At the same time, Direct Investing will also attract new to TD clients and refer them back to our partners, demonstrating another way in which One TD is a 2-way street. We have a robust and long-standing history of innovation, and we'll continue to innovate for the future. With TD Active Trader, we will further differentiate from the competition. And we are relentlessly adding functionalities to enable trading of advanced orders, complex strategies and enhancing our mobile offering to provide a seamless omnichannel experience. For example, we plan to bring leading capabilities to markets such as fractional share and fully paid lending. TD Direct Investing is winning market share. Trust in the TD brand and in the education and tools offered by TD Direct Investing play a key role in accelerating our growth. We will also harness the power of AI and predictive analytics to deliver top-notch personalized education that helps new investors become experienced and our experienced investors become sophisticated. With these strategies, TD Direct Investing expects to add over 300,000 new clients while deepening relationship with our strong base and as we drive towards our target of $65 billion in net asset growth over the medium term. And if I now turn to Wealth Advice, you heard earlier that we are at scale and delivering accelerated growth. Key to our growth is our ability to attract advisers. Let's pause for a minute to hear why advisers are choosing TD and how we help them grow with us. Let's watch this video. [Presentation]

I mean you just saw and heard why TD is the destination of choice for Canada's best wealth advice professionals. Over $2 trillion in One TD opportunity is a powerful pipeline for our advisers. Advice relationships strengthen our enterprise relationships, as holistic planning and investment management promote client confidence and doubles our share of wallet when a client becomes advised. And to capture this significant opportunity, we will continue to accelerate our distribution. We're going to introduce new direct models and enhance collaboration between advisers and clients. As I shared earlier, I am proud of the success we have in building the fastest-growing private wealth management business in Canada. TD is adding advisers at double the rate we did over the last 5 years, and we will continue this momentum. In addition, we will strengthen our growth by launching new direct models. This technology-enabled strategy involves pods of advisers that enhance service levels and improve adviser capacity by up to 3x. These direct models enable expanded coverage that is difficult to replicate in the field. As a result, TD is positioned to capture share in new markets and create specialized offers for New to Canada and other unique segments. Lastly, we are enhancing adviser and client collaboration through advanced digital portals and elevating the client experience with mobile financial plans and digital onboarding. By hiring over 1,000 advisers and expanding capacity with direct channel offerings, we anticipate that advice will deliver $80 billion in net asset growth over the medium term. As I shared today, we are a leading wealth management provider in Canada, starting from an undeniable position of strength. We have the most diversified and integrated platform in Canada with market-leading franchises and a proven track record of growth. With our innovative culture and the #1 brand in retail distribution network, we are well positioned to continue this momentum and to empower even more Canadians to invest with confidence. Before I turn to TD Insurance, let's take a minute to watch one more video. In it, you're going to hear 2 wealth advice clients discuss how a One TD approach provided them with financial clarity on their business and life goals. [Presentation]

As you heard, Nick and Justina are thrilled with their TD adviser, and our One TD approach enables us to connect our segments and to bring the best of TD to all of our clients. Now let's transition to another business that is poised for outperformance TD Insurance. TD's acquisition of Canada Trust in 2000 marked the bank's entry into the general insurance business with the bank acquiring its direct-to-consumer insurance subsidiary. Since then, TD has grown this business to become Canada's leading direct-to-consumer insurer and the #1 affinity insurer with over $5 billion in total revenue. As many of you know, TD is the only Canadian bank that owns a general insurance business. This is a significant competitive advantage. Our ambition is to double general insurance premiums to $9 billion and outperform our insurance peers to be the insurer of choice for Canadians and small businesses. In this session, I will highlight the strategies that will widen TD Insurance's lead and accelerate our growth to deliver our bold ambition. As you've heard throughout the afternoon, at TD, we have deep customer relationships across our Canadian businesses. We're there for our customers to help them live, save, borrow and invest, and TD Insurance helps protect what matters most. We manage insurance as 2 businesses, general insurance and life and health. In our general insurance business, we offer home and auto coverage and now small business insurance. Our general insurance business is the #1 affinity insurer in Canada, serving over 2 million customers across the country. In life and health, we offer credit and balance protection, term insurance, accident and sickness coverage and travel insurance, also serving over 2 million customers across Canada. The insurance business is an important contributor to TD's diversified business mix in Canada, making up 1/4 of TD's fee revenue and providing $760 million in net income. With $4.4 billion in annual premiums, general insurance makes up 85% of TD Insurance's business and it's a powerful growth engine. For the rest of this session, we will focus on the general insurance business. As you know, customer expectations continue to evolve. 77% of customers will prefer to submit an insurance claim online. 90% want to purchase auto insurance online. And we also know that 90% of customers expect personalization. The ability to connect digitally is not -- isn't a nice to have, it's an absolute must-have for our customers. TD Insurance was the first major insurer in Canada to offer national end-to-end online sales and self-serve capabilities for home and auto insurance. These capabilities complement our existing network of claims and contact center advisers who provide expert support and advice to our customers. We're creating omnichannel experiences with the customer at the center of everything we do. We have made significant strategic investments in this business to help create differentiated customer experiences and drive a sustainable competitive advantage. TD Insurance has a powerful foundation for advancements in digitization and automation, which allows us to reinvest back into the business while also leveraging the bank's expertise in data, analytics, AI and machine learning. These differentiated capabilities improve risk selection, pricing, underwriting, reserve management and drive better personalization and customer experience. We are using this to deliver industry-leading fraud detection capabilities. These investments enhance profitability and enable TD Insurance to scale while maintaining margins. Now traditionally, insurance has been sold by brokers who receive a commission with each sale. But the winning model for the insurance business today and in the future is the direct-to-consumer model. TD General Insurance is 100% direct-to-consumer. At our scale, this model offers significant cost advantages over the broker model. This has enabled us to invest in sophisticated marketing capabilities. At TD Insurance, we've implemented advanced analytics and AI-driven marketing. TD has a brand that is second to none. And on average, we are the first option that shows up on Google when customers search for insurance. The direct model has -- also enables TD to drive superior customer experiences. TD Insurance is a vertically integrated company, owning the end-to-end value chain from sales and distribution to product, pricing, underwriting and claims management. We constantly evolve each part of the value chain to deliver legendary customer experiences. As a result, TD has organically moved up 1 position to become the #3 personal lines insurer in Canada. As I mentioned at the start of this session, our ambition is to be the insurer of choice for Canadian customers and small businesses. We aim to double TD's general insurance premiums over the medium term. We will maintain our position as Canada's #1 direct personal insurer by continuing to create market-leading, differentiated customer experience where and how our customers want to engage. And we are taking market share in personal lines with the ambition of being Canada's fastest-growing personal line insurer. Finally, we will disrupt and win in small business insurance to become the #1 small business insurer in Canada. This is the right opportunity at the right time. The $12 billion small business insurance market is highly fragmented, underserved and prime for disruption. There is substantial white space to provide small businesses, which make up 98% of all Canadian businesses with trusted advice and insurance that is designed to meet their needs. We have a clear road map to achieve these aspirations and to accelerate organic growth through opportunities that are unique to TV. As you have heard, TD Insurance is a disruptor in the insurance market, and we are doubling down. We will increase the share of sales and service transactions that are fully digital and enable distinctive omnichannel experiences. Today, 85% of all service transactions are digitally enabled. Over the medium term, our target is to have customers complete over 60% of all sales entirely digital from end to end. We have Canada's top-rated insurance app with best-in-class capabilities, including the ability to start a claim within seconds. And we are investing to deliver a seamless omnichannel experience while widening our direct distribution expense advantage and driving towards a 50% reduction in acquisition costs over the medium term. TD's next evolution of work is helping to power these achievements. With structured planning and collaboration across our journey and platform teams, we expect to drive increased speed as we deliver continued enhancements to the customer experience. We know the insurance landscape is changing as a result of evolving customer expectations. So we've aligned our business model to be agile and meet these changing needs for ease, value and advice. I'll give you some first-hand insight into how we put the customer at the center of all that we do across our full value chain. Have a look at this video. [Presentation]

As you saw in the video, TD Insurance strives to make it easy for Canadians to get the best advice, protection and support in the moments of truth. Perhaps the most critical part of the insurance product is the claims process, and TD Insurance delivers legendary customer experiences. For example, nothing is more important than being there for our customers during catastrophic events like the wildfires that are currently affecting Canadians throughout the country. I couldn't be more proud of the response from our claims team, including our mobile response unit that is on location, helping support our customers directly in their critical time of need. With our differentiated industry-leading auto centers, TD Insurance continues to raise the bar for exceptional claims experience. Our TD branded auto centers provide customers with one location to start their claim, get their car rental and have their car repaired. Now typically, there are trade-offs between delivering best-in-class service and managing expenses. But not so with our auto centers. In addition to elevating the customer experience, TD auto centers create operational efficiencies. By managing the claims experience end-to-end with trusted partners, TD drives savings in repair costs and better manages the impact of inflation across auto repair supply chains. The benefits of this strategy are magnified in the current environment with costs rising across the industry as claims volumes normalize post-pandemic and inflationary pressures persist. Now any of us that have been in a car accident knows how stressful it is, and TD auto centers help to take away some of that stress. The feedback on our auto centers has been great. I thought I'd share my favorite feedback that I received from a client that used our auto centers. And he said, "Disney may be the happiest place on earth, but the TD Insurance auto centers are a close second." Now that is music to my years. TD is a purpose-driven brand and we have a long history of being green. TD Insurance is the first insurer to offer electric vehicle certified repair facilities, including charging stations and electric vehicle rental options at our auto centers. Our leadership in this segment will be an important competitive advantage as 100% of all new passenger vehicle sales shift to electric by 2035. Throughout this session, we have talked about TD's unique position in the insurance industry and how we are disrupting the insurance market. I wanted to share one more example of TD's unmatched opportunities in this space. We recently launched TD Small Business Insurance and the results so far have been terrific. Our closing ratio is just under 50%, providing the value of our new -- proving the value of our new product offering in this underserved market. Small Business Insurance is a natural extension of TD's personal lines business. We are targeting retailers, contractors, wholesalers and business professionals with low complexity risks. This includes TD Insurance affinity customers such as engineers, accountants, lawyers. These customers are similar to our existing customers which helps us provide the best advice, protection and support while we are driving profitable growth. Today, TD Insurance is proud to offer small business owners a comprehensive product solution set, including commercial property, liability and auto. Our target is to be the #1 small business insurer in Canada in the medium term. And with our top-rated brand, winning model and the strength of One TD, we know we're best positioned to win. Now being part of the TD Bank Group is a competitive advantage and provides outsized organic growth and One TD opportunities. TD has a powerful brand that is synonymous with trust. TD Insurance benefits from this through lower customer acquisition costs and the #1 insurance brand in Canada. TD Insurance can also deepen customer relationships across the bank by leveraging our market-leading brand and model to better protect over 1.1 million TD RESL customers. Our TD Insurance private client advice offering is quickly making TD Insurance the insurer of choice for high-net-worth Canadians, contributing to substantial premium growth in this highly priced segment since launching in 2018. There are over 200,000 high-net-worth TD wealth customers that can benefit from TD's unique direct-to-consumer private client advice insurance. As Canada's leading direct-to-consumer insurer, TD Insurance already has the winning model. With market-leading capabilities and the strength of TD's brand, TD Insurance is uniquely positioned with sustainable competitive advantages, and we have made the right foundational investments to continue to build upon our market leadership and further accelerate growth. I could not be more confident that TD Insurance will deliver on its growth strategy. And with that, I'd like to thank you for your time, and I'll turn it back over to Brooke. Thanks.

Thanks, Ray. For our final session. I would like to welcome Kelvin Tran, Group Head and Chief Financial Officer for TD Bank Group. In his more than 20 years with TV, Kelvin has led almost every function in finance, including serving as Chief Accountant, Chief Auditor and CFO for U.S. Retail and TD Securities. Kelvin is also the Founding President of Ascend Canada, a not-for-profit organization focused on developing pan-Asian leaders. Please welcome Kelvin.

Thank you, Brooke, and good afternoon, everyone. I don't have any videos to share. By now, you will have heard from leaders of each of our Canadian businesses about the strength of our franchises and our bold ambitions for the future. Our strong financial performance speaks for itself, and medium-term targets are equally compelling. Our North American franchise is a powerful income-generating machine. And TD is a bank for all seasons, whether through shifting macroeconomic and operating environment, and wow, what a ride this has been over the past 5 years, and TD continues to deliver with a long track record of strong growth. In Michael's session, he touched on the Canadian Personal Bank's stable core deposit base. TD's strategy on both sides of the border is to focus on gathering sticky deposits. The bank's strong performance in rising rate environment is an outcome of that strategy. Mike also touched on TD's momentum in new customer acquisition, and we see that in our financial performance, with deposits growing by almost $400 billion over the last 5 years as customers entrust TD with more of their business. TD has similarly delivered in loan growth. Over the past 5 years, TD's gross loans have risen by over $220 billion. And as Bharat noted in his opening remarks, scale matters in banking, and TD is scaled to win. We are the #1 Canadian bank by total deposits and total gross loans and a top 5 North American bank by both measures, and we're not stopping here. We have strong liquidity and capital and are well positioned for growth. Earlier this afternoon, Bharat described the bank's enterprise strategy and proven business model. Each of Michael, Barb and Ray highlighted our market-leading franchises in Canada across personal banking, business banking, wealth management and insurance. And at our next Investor Day, we will dive into our wholesale and U.S. Retail segments. Taken together, TD's businesses generate consistent and predictable top and bottom line financial results, outperforming the Canadian peer average across revenue, earnings per share and return on equity. Over the past 5 years, TD has delivered adjusted earnings per share growth of almost 9% on a compounded annual growth rate basis, over 1.4% above the Canadian peer average. Our proven business model enables the bank to deliver high-quality earnings for shareholders year after year, consistently generating an average return on equity above 15% over the last 5 years, again, outperforming the Canadian peer average. TD has a powerful North American franchise. Our integrated business model and One TD approach drive higher returns for the bank overall than would be possible if the businesses were operating individually. The power of our franchise is reflected in TD scale. Our North American scale and integration position the bank well to continue to invest across brand, talent and technology, enhancing operational efficiency throughout our footprint. TD has a leading diversified retail platform in Canada. Our Canadian presence includes premier retail and commercial banking businesses, which accounts for over 40% of the bank's earnings. In Canada, we also have market-leading wealth management and insurance franchises. Across our Canadian businesses, we are accelerating growth. Our wealth management and insurance businesses combined with our Canadian Personal Banking's large credit card portfolio generate substantial noninterest income and provide a stable, diverse revenue base for the bank. This afternoon, we have shared bold ambitions to continue to strengthen our Canadian franchises, which together account for over 55% of the bank's total earnings. At our next Investor Day, you will learn more about our wholesale and U.S. retail businesses. And as we did in Canada, in the U.S., we will build on our strength in core deposits to deepen customer relationships and ultimately create scaled U.S. credit cards and wealth businesses. These efforts, combined with TD Securities growing investment banking business, will further enhance our revenue diversification and balance TD's rate sensitivity. Rate sensitivity is an outcome of TD's excellence in gathering core checking deposits. TD's best-in-class treasury team employs a comprehensive deposit tractor strategy to promote a steady repricing of the portfolio and stabilize earnings across the interest rate cycle. Throughout the afternoon, Michael, Barb and Ray highlighted strategies that will augment noninterest income, further supporting stable returns through the cycle. And these strategies are well underway and already bearing fruit. Over the past 5 years, growth in TD's adjusted noninterest income has outpaced Canadian peers by almost double the rate. Taken as a whole, TD's diversified business mix drive consistent growth with lower volatility. Over the past 5 years, the bank's adjusted earnings growth volatility was over 300 basis points below the Canadian peer average. I mentioned at the start of my remarks that TD Bank is a bank for all seasons, and that is borne out in the data presented this afternoon. Rigorous expense management is another critical component to deliver shareholder value regardless of the operating environment. We have managed the bank through many economic cycles, and we have proven the ability to adapt. And as many of you know, TD targets positive operating leverage over the medium term. And over the last 5 years, we have delivered. We have also outperformed the competition with an adjusted efficiency ratio with 300 basis points better than Canadian peer average. It is important to note that our expense focus does not diminish our appetite to invest. And this afternoon, you heard my colleagues describe their bold ambitions and clear strategies to achieve them. TD's robust earnings generation enables us to continue to invest, accelerate strategic plans to drive growth and shape the future of banking. TD's stable earnings support the bank's strong dividend growth and shareholder returns. Over the past 5 years, TD has delivered dividend growth of almost 9%, which is over 200 basis points above the Canadian peer average while maintaining a steady payout ratio of 40% to 50%. This represents a cumulative return of over 51%, which is 14% greater than the Canadian peer average. We have seen similar outperformance in total shareholder return, which grew at a compounded annual growth rate of almost 8%, and that's 1.5% higher than the Canadian peer average. As many of you know, TD maintains a consistent strategic approach to deploy capital. We are committed to investing in our businesses to drive organic growth. We pursue inorganic growth when we identify an opportunity that is strategically compelling, financially attractive, within TD's risk appetite and importantly, culturally aligned with the bank. We distribute capital to shareholders through dividend increases in line with the target payout ratio that I mentioned earlier and then return excess capital to shareholders via share buyback. And so all in all, through dividends and share buyback, TD returned over half of its earnings, almost $35 billion to shareholders over the last 5 years. As TD has always done, we will continue to manage capital prudently. We will pursue commercial opportunities in the market and accelerate strategic plans to drive growth while continuing to deliver attractive total shareholder return. At the Q2 earnings call a few weeks ago, you would have heard that TD is in a strong capital position. Our consistent earnings growth has contributed to a peer-leading CET1 ratio of 15.3% as of Q2. This strong capital generation, combined with our track record of returning over 50% of our earnings to our shareholders, demonstrate the tremendous earnings power of TD. The bank's business mix is more capital efficient than our Canadian peers. Normalized for balance sheet risk, TD's organic capital generation is greater than the Canadian peer average by 40 basis points on average over the last 5 years. Quarter-after-quarter, TD delivers robust organic capital generation. And as we've said on our prior earnings call, we believe the right level of CET1 capital to target in this environment is 12%. This allowed us to prudently plan for an uncertain economic environment, organic and inorganic investments and paced capital return to shareholders. TD's strong capital position is bolstered by a robust liquidity risk management. With policies in place, we target sufficient liquidity to withstand the closure of wholesale funding markets for 90 days, which is significantly above the 30-day regulatory minimum. TD's funding program emphasizes deposits as a core source of funding with personal and commercial deposits representing almost 3/4 of the bank's funding base. Our industry-leading deposit base is focused on a diverse set of franchise customers, where the median Canadian checking account balance is around. $2,000. TD also maintains ready access to wholesale funding across markets, diversified terms, funding types, currencies to help ensure low exposure to a sudden contraction of wholesale funding capacity and minimize structural liquidity gaps. Finally, TD is disciplined through the cycle approach to underwriting promotes balance sheet resilience. In every segment, from mortgages to credit cards, from personal to commercial, TD's prudent approach delivers net charge-off ratios below the Canadian peer average. Through the initiatives described today, TD will deliver the peer-leading shareholder value that our shareholders have come to expect. We have described our road maps to extend our leadership in Canada. And through different macroeconomic environments, we remain focused on successfully executing our strategies. TD continues to target adjusted earnings per share growth of 7% to 10% over the medium term while producing a 16% plus return on equity. And to wrap up, you can see that I share my colleagues' enthusiasm about TD's future, and I'm confident that our plans will drive significant shareholder value. We are building on leading franchises, leveraging our scale and diversifying our business mix, which, in turn, will promote consistent earnings growth through the cycle and above peer average total shareholder return. TD will continue to invest to drive growth while managing expenses rigorously, we remain focused on delivering positive operating leverage over the medium term, and we'll continue to manage capital prudently. In the current operating environment, we are targeting a CET1 ratio of 12% to meet our growth objectives while providing attractive returns to you, our owners. And with that, I will turn to hand it back to Brooke.

Thank you, Kelvin. I'm going to invite Ray and Bharat back up to the stage for our final Q&A session. I would ask you to focus your questions on our Canadian Wealth Management and TD Insurance businesses as well as the financial overview. Again, we will start with questions in the room before moving to the webcast. [Operator Instructions] Let's get started.

Scott Chan from Canaccord Genuity. Ray, you talked about the asset management side. And I know it's your old slide, you had $32 billion, you're totaling almost $400 billion. How much of that $32 billion is Greystone? And is that high single-digit mix you think appropriate going forward in an environment where alter more in demand?

Yes. I'd say the bulk of that $32 billion would be Greystone. And certainly, what we're seeing is with our large institutional clients, sort of almost going forward that they've moved to an investment philosophy where now they're balancing between equity, fixed income and alternatives, and that's actually continuing to gain momentum in the marketplace. So I do suspect there will be more interest and continued interest in growing alternatives as we go forward.

And, Bharat, second question. Your new medium-term target, 16% plus ROE, you almost did that last year, and you've got a lot of excess capital. How do you kind of balance that new target? Seems conservative versus the $16 billion of excess capital you have to spend.

Seems conservative. You should sit with my management team. Listen, when -- if you look at TD's record, when rates are low or when rates are reasonably strong, when the capital requirements are higher or lower, we do deliver consistent ROEs. The business model adjusts. And the reason it adjusts is because what you heard today. We've got scaled businesses that keep on growing. We are creating opportunities to grow even a very large business. You've heard from Michael that 1 out of 3 Canadians bank with TD. More than 1 out of 2 Torontonians bank with TD. And notwithstanding that, if we keep on growing, and I'd like to say we are a 168-year-old growth company, we will generate the returns. Now your point that we've got very high capital levels, and that's a good thing. I think Kelvin said it, I said it earlier, we live in uncertain economic times. It's good. It's good for a bank to have good capital levels. So are we kind of sandbagging once this capital get on normalizes? I don't think so because there are so many moving parts. We've seen this movie before. And I think to put a goal like that relative to what our competition does, it's a pretty good goal, and I feel comfortable that we will deliver.

Ebrahim Poonawala, Bank of America. I guess a question for Kelvin. Just talk to us about -- you talk about the tractors and the treasury management job you guys do. As we think about the next 12, 18 months, rates headed higher, the trajectory of the net interest margin, what that means for NII? And on the other side, if over the next 12 months, we get to a point where the Bank of Canada is cutting rates, what does that mean for the margin and NII? Does that make operating leverage how to combine that backdrop?

Yes. So our -- when we provided the views on net interest margin is really you can predict only so far ahead of you, and on the Q2 earnings call, we talked about pressure really in Q3. And then when the tractors started to kick in, you do expect margins to improve then. In our model, when we look forward, which is based on TD economics, there's going to be certain rate cuts expected in late '23 or '24. There, you would see margin pressure on deposits. But what we're really happy about is that we will continue to drive volume growth through that period. And as you have heard earlier on, we have significant initiatives to drive other income growth as well. So we -- when we look at the bank, it is about a combination of all these businesses together to help us deliver 7% to 10% earnings per share growth.

Is there any backdrop given the volume growth that Michael laid out, if that were to play out? Is there any scenario where you see NII actually declining in any meaningful way?

Well, it really depends on how much rate decline you're going to see and what the economy is. But the way what we look at it is not just net interest margin on its own, we look at the collection of the businesses, how they perform together. We model different scenarios. And with that, we're comfortable with the 7% to 10% in the medium term.

And just to clarify on that, just to add something. And sometimes, this is not very clear on TD's tractor strategy. And I know this is not a state secret or whatever. But these off rates now, the on rates are much higher than when we put those tractors on earlier. So that provides a good momentum going forward. And secondly, when we talk about rate cycles, part of our book is rate sensitive. Part of book is not rate sensitive. And how the beta behaves on the rate-sensitive side is going to have a huge impact on your question. And when rates were really low -- betas remained low for quite some time when rates started to rise. And so that's -- that was a tailwind. Time will tell whether the same sort of scenario plays out. So there's so many moving parts here. But suffice it to say, given our history here, if we get the volume growth as promised by the business leaders here and that too by not undercutting TD's sort of core franchise, we don't want to be price competing in every product, et cetera, then there's a reasonable chance that as volumes go up, you should see NII go up.

Mike Rizvanovic, KBW. A question for Ray on your insurance business. So if I think back to -- I think it was around the 2013 to '14 period, you had outgrown the industry in auto in Ontario and Alberta by quite a significant margin. And then you subsequently had some underwriting losses for a couple of years afterwards. And just in light of what's happened with cat losses being so high and unpredictable and obviously, auto theft is through the roof these days, what gives you confidence that you won't maybe make the same mistake? Because it does seem like you're looking to outgrow the industry more broadly in your insurance business.

Fair. Thank you for the question. I'd say a few things that I'll comment on, and I'll sort of break it up into a couple of different parts of your question. If you look at it from the 2013 period to sort of the growth piece that you're talking about, one of the things that we've done over the last 10 years has added tremendous talent and capabilities inside of our insurance business. That includes actuaries. That includes our risk management team. That includes all of our compliance product teams. And so certainly, from a talent perspective, we've made the investments to build out our teams across the entire spectrum of both within the business and all of our control functions. So I'd say, significantly different talent that's within the business. The second piece I'd say is when you think about large weather-related event losses, catastrophe events, really, what's important is to make sure that you have the right reinsurance program that minimizes and sort of stabilizes, from a financial perspective, fluctuation due to large loan losses -- or large weather-related events. And so what do we do there? On an annual basis, we model significant different scenarios for cat losses. And so we look at the number, this is what we call sort of the frequency of those events. We look at the severity of those events. We look at if reinsurance capacity was to change in the marketplace, what would that look like within our tower. And we look at all of that, and then on an annual basis, we adjust our pricing to make sure that we are priced adequately to factor in all of those moving pieces. I thought maybe I'd just share a fact with you guys to show. And we are -- when we talk about our reinsurance tower, we take a very prudent approach to our reinsurance tower and make sure that, obviously, we meet the OSFI requirements. But if you take the last 10 years of catastrophe events, weather-related large cat events, there's been 59 cat events over the last 10 years. And the gross amount of those losses, combined in its totality, is $2.1 billion. Our current cat tower is $2.1 billion for the year. And so when I say we take a prudent approach, we take a very prudent approach to make sure that we have sufficient reinsurance programs to manage our programs. And then on an annual basis, we have challenge sessions between our risk teams, our actuarial teams and our product teams on an ongoing monthly basis to make sure that we are priced adequately in every single market in both our auto and residential areas in the marketplaces that we compete.

And just one quick follow-up. So any reason why you have not been an acquirer in the P&C insurance space in Canada? You're obviously committed to the business. You're a relatively large player in the businesses that you compete in. And just given the fragmentation of the market, have you not seen some decent opportunities over time? And what are your thoughts on future M&A potential, just given the war chest that TD is sitting on?

The -- I mean, as you heard in my presentation, I would lead with that we believe adamantly, the winning model is the direct model. And the vast, vast majority of opportunities that exist within the Canadian landscape is broker-based models. And so from that perspective, it does not -- that is not the model that we believe is the go-forward model. And so there aren't that many -- we are probably one of the only true peer direct models in the Canadian marketplace as we go forward. And that's really the biggest reason.

Paul Holden, CIBC. First question for Kelvin. If I think about the growth ambitions that have been laid out and the organic capital generation these businesses generate, which I think is really high. Are these plans enough to actually -- are they self-funding, I guess, is the question I want to ask from a capital perspective? Or are the growth ambitions big enough that you'll actually draw down on the excess capital you have today?

Yes. I mean it really depends on the path I think that at the beginning, as you're investing in some of these businesses, the initiative. And also during this time of uncertainty and lack of capital, you actually see some banks pulling back, and that's actually a great opportunity for us to go on the offensive. So given those opportunities, if they are producing good ROE, we will invest that upfront and then generate returns over time. So that's how we look at it, opportunity by opportunity.

And then a question for Raymond. Listening to your talk about direct investing in particular, it seems to me a little bit like the holy grail of wealth management is to convert transaction-based business to fee-based business, it's more stable. It tends to be more profitable over time, you grow with your client asset base. We're talking about investing a lot in transactional-based business. So can you talk a little bit about how you balance those 2?

Sure. I mean it is -- the good news is that we have strong momentum across all of our businesses in wealth. And I think to your point, it's about finding that balance. But when we have the scale advantage that we have in the Direct Investing business, it is a significant advantage for us at TD, and you saw the ROE difference between us and our next closest peers. And so I'd say in the direct investing business, we continue to innovate and invest in that business because we believe we have a competitive advantage and can widen our market share. And you're seeing that. When we launched TD Easy Trade last year, to actually meet the needs of our more price-sensitive, younger investing clients new to investing, but also just younger, we have just seen a tremendous adoption. And so we still think there's significant growth in the direct investing business. And then for our fee-based businesses, as you've heard me say in the presentation, one of our strategic objectives is to accelerate our distribution of advisers across the country, and we have a continuum of advisers inside of our wealth management business all the way from financial planners that deal with sort of the lower end, starting out investing clients to our full-service brokerage to our discretionary money managers all the way up to our family office. And so we're continuing to invest in both our fee-generating businesses, Paul, but also playing off the fact that we have tremendous scale advantage in both DI and asset management. And they are, from an efficient return on our investment. Those are 2 terrific businesses as we go forward.

Bharat, the introduction of the ROE target, the medium-term ROE target, how do you think that is going to impact capital allocation decision-making at the bank that hasn't had one thus far?

No, I think it's simplistic if you say we haven't had one. We do look at capital how we allocate capital in different businesses. We are blessed with terrific businesses. It's hard to take capital away because all the businesses we have, for the most part, particularly the scale businesses, all generate well in excess of our cost of capital of the bank. Even if you risk adjust it for the specific business on risks, et cetera, it generates far in excess of our cost of capital. So it's a hard thing to do because why would you want to starve a business? But overall, I think if you look at the overall portfolio, global bank, different businesses, we've expanded certain areas of the business, I thought it was appropriate to put a number out. And when you look at 16%, we feel very comfortable that this is a good number relative to all the metrics you see in the market. You see TD's record over the years. And don't forget, when we started to invest in a big way in other markets, those were nascent markets for us. We were actually losing money there. And we were able to do that because of our ability to generate great returns in our mature businesses. So we will continue on that path. When it makes sense, we will enter new spaces, new markets, whatever the case might be as long as we stay within what I'd call the envelope of having financial credibility because you do want to make sure that over the long term, over the medium term that you are generating returns that you're proud of and investors would expect out of TD.

Okay. So just to make sure I understood you correctly. That's not necessarily a hurdle that you're using for capital allocation decision-making. So for example, if an acquisition opportunity presented itself, it need not to clear at 16%.

No, no, absolutely not. Absolutely not. And we would look at a sensible way of what's the long-term potential of the business, growth potential of the business and frankly, return dynamics of that business as we see it and in our judgment. If it makes sense, we will do it. We've entered a lot of spaces, including in Canada, where many would have said it did not make sense, but it did for us, and it has worked out reasonably well.

Raymond, you talked about -- I think you showed a stat 70% of CBB customers don't have a wealth relationship with TD. I'm just trying to understand that stat in terms of benchmarks, like is that worse than peers, better than peers. And how much of an improvement do you think you can get there? What would be kind of the gold standard there?

I haven't seen industry stats on that, so I can't comment on sort of relative to the other industries -- or to the other peer groups. But what I would tell you is that the approach that we're taking now going forward of putting senior private bankers actually inside of our commercial banking centers working side by side with our commercial banking relationship managers and actually doing joint calls together, we've been piloting this for a year and seeing tremendous success. And so as I said in the presentation, our plan is between Barb and I to have senior private bankers across all of our commercial banking centers by the end of 2024, and we believe that, that's going to lead to significant improvement in that penetration rate. But it is a -- I look at it as a huge opportunity and upside for the wealth management business as we go forward.

And is there a number that you're thinking about in terms of how low can that number go? Or how good can that number get?

It's early days. And so maybe next year I'll be able to give a better stat on that side. But what I want to tell you is just from a referral perspective, if I maybe take the question up a level, one of the secret sauce that we have at TD is that we've spent years cultivating a referral network system between both within the commercial bank and the retail. And today, we have about 130,000 referrals that we get from retail and commercial to wealth. Our collective objective together would be to see if we can double that flow of referrals from 130,000 to north of 250,000 to well.

We will take a question from the webcast. This one's for Ray as well. You mentioned the goal of doubling your personal lines premiums over the medium term. Is that an organic growth objective?

So the simple answer I'll start with is yes.

Oh, good.

And here's why. And we do believe we have an absolute competitive advantage. And we start with, first and foremost, the TD brand. The brand of TD gives us a tremendous advantage as we go out into the marketplace. And we have the #1 insurance brand also from an awareness and consideration when it comes to auto and residential. And so the combination of the TD brand, which also then supports the #1 insurance brand, starts from a top-of-the-house funnel. And similar to what Michael was saying, we have huge upside from a funnel perspective. Then you overlay the fact that we are the #1 affinity insurer in Canada. We have a 47% market share at 750 different affinity organizations that we have exclusivity to deal with their clients. That's 10 million clients that have affinity relationships that are affinity clients that we have opportunity to engage with. Third, I'd say that you're seeing that from a consumer perspective, and that's -- for me, it's always about where the consumer is going, what do they want? And you're seeing the tide shifting. And if the pandemic did anything, I think it further accelerated the desire of customers to deal digitally to do more self-serve online mobile. And that's exactly the space that we play in and are the leaders are -- in is in the general insurance, personal lines. As a direct insurer, we've made the investments on the digital self-serve capabilities and we have the leading technology, and we've made the investments in our platforms. And so now it's about execution and driving continued scale. And we're already now seeing double-digit premium growth across our general insurance business, and I have every confidence that we'll be able to double our business organically.

We'll take another one from the webcast. And this one maybe is for Kelvin. Is your 16% plus ROE target based on your 15% plus CET1 ratio, perhaps within normal course capital deployment like buybacks, dividend increases, et cetera?

Yes, in the normal course, like I talked about earlier on, is about deploying capital on organic growth, inorganic growth and then dividend increases and share buybacks. So all of those are levers that we've been using. And so we're looking at optimizing both the numerator, basically generating earnings, higher earnings over time and also optimizing our capital.

Great. Well, thank you, everyone. We're at time for our Q&A. Thank you for the questions and the engaging discussion. If we weren't able to get to your question on the webcast, please rest assured that a member of the Investor Relations team will follow up with you. For everyone in the room, I look forward to seeing you on the 54th floor for our reception. We have elevators waiting to take you to the lobby, where staff will direct you to the 54th floor elevators. But first, let me turn the stage back over to Bharat to close out the event.

Well, I want to begin by thanking our leaders who presented today, Michael, Barb, Ray and Kelvin. Just a great, great presentation. And of course, our panelists Sona, Meg and Frank, just a great job. I know it takes a village to put something like this together, you all did terrific. Also to thank Brooke for doing a terrific job hosting and keeping us on track, and then frankly, also organizing. It's never easy to get the meal service there and get all the timings right so well done, Brooke. And of course, all of you who joined us either in the room or on the webcast, thank you. Thank you for coming. I know it's been a long afternoon, not easy to take the whole afternoon away. And it was terrific, the engagement was great. The questions were great, very thoughtful. And I know there'll be more as we go upstairs and then the folks will be there in case you folks had some questions. And I do want to continue those conversations. As I said, sometimes questions get asked and they don't get fully answered. So let's make sure we clarify them. My hope is that you take away a greater understanding of our strategies in our Canadian business on how we are positioned for growth. It is about growth. And one key message here is the opportunity with One TD. Ray talked about having private wealth folks and private bankers in Barb's commercial banking centers. And I know when we have time, Riaz gets an opportunity to talk at the next Investor Day, I'm sure he will talk about how we are putting salespeople in our commercial banking centers as well, just an example of what we are doing to leverage TD's tremendous scale in just having the number of clients, the number of relationships we have and how do we make sure that the entire bank, the entire TD is being presented to those clients as we meet their needs. So terrific to see that. And I hope you also took away that we have a strong balance sheet, and I guess I don't have to tell this crowd, we have a very strong capital position. And that is certainly useful given the uncertain economic environment, but as well, it does provide a growth lever. When you have a world of constrained capital, and you are standing alone who doesn't have that problem, then opportunities do present themselves. And we, as you would expect, would make sure that we leverage our position to the limit. And of course, our differentiating culture. You heard a lot about not only One TD, but what makes this place special? It is the culture. It is the secret sauce of TD, as I say. When folks talk about One TD, they say, how does this work better? You're a big bank, silo is the way they go. But when folks join TD, when I go to the markets and they say, wow, this place is different. A commercial banker wants to know, does the client have a TD credit card. A wholesale banker, believe it or not. And I said, Riaz, are we -- there is Bob. Bob used to say this as well that let's make sure we are presenting the full capability of TD to our customers. So it is something that is we are really proud of. And the ambition, notwithstanding our size and scaleis to grow. I've said this before, we are a 168-year-old growth company. We have consistently outpaced our peers, and I expect no different going forward. Our strategy leverages our competitive advantage just to do that. And you heard a lot of it today, and I'm sure you'll hear more this evening. So it's an exciting time to be part of TD. It's just terrific, and I'm blessed with a great team, and thank you again for being part of our Investor Day. And for those of you in the room, I look forward to seeing you up on the 54th floor. Thanks very much.