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IFRS 7 Disclosure | 12 Months Ended
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Oct. 31, 2025
IFRS 7 Disclosure [Abstract] |
IFRS 7 Disclosure | The shaded areas of this MD&A represent a discussion on risk management policies and procedures relating to credit, market, and liquidity risks as required under IFRS 7, Financial Instruments: Disclosures (IFRS 7), which permits these specific disclosures to be included in the MD&A. Therefore, the shaded areas which include Credit Risk, Market Risk, and Liquidity Risk, form an integral part of the audited Consolidated Financial Statements for the years ended October 31, 2025 and October 31, 2024. The Basel Framework The objective of the Basel Framework is to improve the consistency of capital requirements internationally and establish minimum regulatory capital standards which adequately capture risks. The Basel Framework sets different risk-sensitive approaches for calculating credit, market, and operational RWA. Credit Risk Credit risk is the risk of loss if a borrower or counterparty in a transaction fails to meet its agreed payment obligations. Credit risk is one of the most significant and pervasive risks in banking. Every loan, extension of credit, or transaction that involves the transfer of payments between the Bank and other parties or financial institutions exposes the Bank to some degree of credit risk. The Bank’s primary objective is to be methodical in its credit risk assessment so that the Bank can understand, select, and manage its exposures to reduce significant fluctuations in earnings. The Bank’s strategy is to include central oversight of credit risk in each business, and reinforce a culture of transparency, accountability, independence, and balance. WHO MANAGES CREDIT RISK The responsibility for credit risk management is enterprise-wide. To reinforce ownership of credit risk, credit risk control functions are integrated into each business, but also report to Risk Management. Each business segment’s credit risk control unit is responsible for its credit decisions and must comply with established policies, exposure guidelines, credit approval limits, and policy/limit exception procedures. It must also adhere to established enterprise-wide standards of credit assessment and obtain Risk Management’s approval for credit decisions beyond its discretionary authority. Risk Management is accountable for oversight of credit risk by developing policies that govern and control portfolio risks, and approval of product-specific policies, as required. The Risk Committee of the Board oversees the management of credit risk and annually approves certain significant credit risk policies. HOW TD MANAGES CREDIT RISK The Bank’s Credit Risk Management Framework outlines the internal risk and control structure to manage credit risk and includes risk appetite, policies, processes, limits and governance. The Credit Risk Management Framework is maintained by Risk Management and supports alignment with the Bank’s risk appetite for credit risk. Credit risk policies and credit decision-making strategies, as well as the discretionary limits of officers throughout the Bank for extending lines of credit are approved by Risk Management, and the Board where applicable. Limits are established to monitor and control country, industry, product, geographic, and group exposure risks in the portfolios in accordance with enterprise- wide policies. In the Bank’s Retail businesses, the Bank uses established underwriting guidelines (which include collateral and loan-to-value requirements) along with approved scoring techniques and standards in extending, monitoring, and reporting personal credit. Credit scores and decision strategies are used in the origination and ongoing management of new and existing retail credit exposures. Scoring models and decision strategies utilize a combination of borrower attributes, including, but not limited to, income, employment status, existing loan exposure and performance, and size of total bank relationship, as well as external data such as credit bureau information, to determine the amount of credit the Bank is prepared to extend to retail customers and to estimate future credit performance. Established policies and procedures are in place to govern the use, and monitor and assess the performance of scoring models and decision strategies to align with expected performance results. Retail credit exposures approved within the credit underwriting centres are subject to ongoing Retail Risk Management review to assess the effectiveness of credit decisions and risk controls, as well as to identify emerging or systemic issues and trends. Material policy exceptions are tracked and reported and larger dollar exposures and material exceptions to policy are escalated to Retail Risk Management. The Bank’s Commercial Banking and Wholesale Banking businesses use credit risk models and policies to establish borrower and facility risk ratings (BRR and FRR), quantify and monitor the level of risk, and to aid in the Bank’s effective management of risk. Risk ratings are also used to determine the amount of credit exposure the Bank is willing to extend to a particular borrower. Management processes are used to monitor country, industry, and borrower or counterparty risk ratings, which include daily, monthly, quarterly, and annual review requirements for credit exposures. The key parameters used in the Bank’s credit risk models are monitored on an ongoing basis. Unanticipated economic or political changes in a foreign country could affect cross-border payments for goods and services, loans, dividends, and trade related finance, as well as repatriation of the Bank’s capital in that country. The Bank currently has credit exposure in a number of countries, with the majority of the exposure in North America. The Bank measures country risk using approved risk rating models and qualitative factors that are also used to establish country exposure limits covering all aspects of credit exposure across all businesses. Country risk ratings are managed on an ongoing basis and are subject to a detailed review at least annually. As part of the Bank’s credit risk strategy, the Bank sets limits on the amount of credit it is prepared to extend to specific industry sectors. The Bank monitors its concentration to any given industry to provide for a diversified loan portfolio and to reduce the risk of undue concentration. The Bank manages this risk using limits based on an internal risk rating methodology that considers relevant factors. The Bank assigns a maximum exposure limit or a concentration limit to each major industry segment which is a percentage of its total wholesale and commercial private sector exposure. The Bank may also set limits on the amount of credit it is prepared to extend to a particular entity or group of entities, also referred to as “entity risk”. All entity risk is approved by the appropriate decision-making authority using limits based on the entity’s BRR. This exposure is monitored on a regular basis. To determine the potential loss that could be incurred under a range of adverse scenarios, the Bank subjects its credit portfolios to stress tests. Stress tests assess vulnerability of the portfolios to the effects of severe but plausible situations, such as an economic downturn or a material market disruption. Credit Risk and the Basel Framework The Bank uses the Basel IRB to calculate credit risk RWA for all material portfolios. Based on exposure class, in accordance with the OSFI CAR guidelines, either a foundation approach (Foundation Internal Ratings-Based (FIRB)) or advanced approach (Advanced Internal Ratings-Based (AIRB)) is applied. The following risk parameters are used in credit risk RWA calculations and may be subject to prescribed floors in some cases: ● Probability of default (PD) – the likelihood that the borrower will not be able to meet its scheduled repayments within a one-year time horizon. ● Loss given default (LGD) – the amount of loss the Bank would likely incur when a borrower defaults on a loan, which is expressed as a percentage of exposure at default (EAD). ● EAD – the total amount of the Bank’s exposure at the time of default, including certain off-balance sheet items. The FIRB approach primarily uses internally derived PD, while other components such as LGD and EAD are prescribed. The AIRB approach uses internally derived PD, LGD, and EAD. To continue to qualify to use the IRB approaches for credit risk, the Bank must meet the ongoing conditions and requirements established by OSFI and the Basel Framework. The Bank regularly assesses its compliance with these requirements. Credit Risk Exposures Subject to the IRB Approaches Banks that adopt the IRB approaches to credit risk must report credit risk exposures by counterparty type, each having different underlying risk characteristics. These counterparty types may differ from the presentation in the Bank’s 2025 Consolidated Financial Statements. The Bank’s credit risk exposures are divided into two main portfolios, retail and non-retail. Retail Exposures In the retail portfolio, including individuals and small businesses, the Bank manages exposures on a pooled basis, using predictive credit scoring techniques. There are three sub-types of retail exposures: residential secured (for example, mortgages and HELOCs), qualifying revolving retail (for example, credit cards, unsecured lines of credit, and overdraft protection products), and other retail (for example, personal loans, including secured automobile loans, student lines of credit, and small business banking credit products). The Bank calculates RWA for its retail exposures using the AIRB approach. All retail PD, LGD, and EAD parameter models are based on the internal default and loss performance history for each of the three retail exposure sub-types. These parameters are also used in the calculation of regulatory capital, economic capital, and allowance for credit losses. Account-level PD, LGD, and EAD models are built for each product portfolio and calibrated based on the observed account-level default and loss performance for the portfolio. Consistent with the AIRB approach, the Bank defines default for exposures as delinquency of 90 days or more for the majority of retail credit portfolios. LGD estimates used in the RWA calculations reflect economic losses, such as direct and indirect costs as well as any appropriate discount to account for time between default and ultimate recovery. EAD estimates reflect the historically observed utilization of credit limits at default. PD, LGD, and EAD models are calibrated using established statistical methods, such as logistic and linear regression techniques. Predictive attributes in the models may include account attributes, such as loan size, interest rate, and collateral, where applicable; an account’s previous history and current status; an account’s age on book; a customer’s credit bureau attributes; a customer’s other holdings with the Bank; and macroeconomic inputs, such as unemployment rate. For secured products such as residential mortgages, property characteristics, loan to value ratios, and a customer’s equity in the property, play a significant role in PD as well as in LGD models. All risk parameter estimates are updated on a quarterly basis based on the refreshed model inputs. Parameter estimation is fully automated based on approved formulas and is not subject to manual overrides. Exposures are then assigned to pre-defined PD segments based on their estimated long-run average one-year PD. The predictive power of the Bank’s retail credit models is assessed against the most recently available one-year default and loss performance on a quarterly basis. All models are also subject to a comprehensive independent validation as outlined in the “Model Risk Management” section of this disclosure. Long-run PD estimates are generated by including key economic indicators, such as interest rates and unemployment rates, and using their long-run average over the credit cycle to estimate PD. LGD estimates are required to reflect a downturn scenario. Downturn LGD estimates are generated by using macroeconomic inputs, such as changes in housing prices and unemployment rates expected in an appropriately severe downturn scenario. For unsecured products, downturn LGD estimates reflect the observed lower recoveries for exposures defaulted during the 2008 to 2009 recession. For products secured by residential real estate, such as mortgages and HELOCs, downturn LGD reflects the potential impact of a severe housing downturn. EAD estimates similarly reflect a downturn scenario. The following table maps PD ranges to risk levels: Risk assessment PD Segment PD Range Low Risk 1 0.00 to 0.15 % Normal Risk 2 0.16 to 0.41 3 0.42 to 1.10 Medium Risk 4 1.11 to 2.93 5 2.94 to 4.74 High Risk 6 4.75 to 7.59 7 7.60 to 18.24 8 18.25 to 99.99 Default 9 100.00 Non-Retail Exposures In the non-retail portfolio, the Bank manages exposures on an individual borrower basis, using industry and sector-specific credit risk models, and expert judgment. The Bank has categorized non-retail credit risk exposures according to the following Basel counterparty types: corporate, including wholesale and commercial customers, sovereign, and bank. Under the IRB approaches, CMHC-insured mortgages are considered sovereign risk and are therefore classified as non-retail. The Bank evaluates credit risk for non-retail exposures by using both a BRR and FRR. The Bank uses this system for all corporate, sovereign, and bank exposures. The Bank determines the risk ratings using industry and sector-specific credit risk models that are based on internal historical data. In Canada, for both the wholesale and commercial lending portfolios, credit risk models are calibrated based on internal data beginning in 1994. In the U.S., credit risk models are calibrated based on internal data beginning in 2007. All borrowers and facilities are assigned an internal risk rating that must be reviewed at least once each year. External data such as rating agency default rates or loss databases are used to benchmark the parameters. Internal risk ratings (BRR and FRR) are key to portfolio monitoring and management, and are used to set exposure limits and loan pricing. Internal risk ratings are also used in the calculation of regulatory capital, economic capital, and allowance for credit losses. Borrower Risk Rating and PD Each borrower is assigned a BRR that reflects the PD of the borrower using proprietary models and expert judgment. In assessing borrower risk, the Bank reviews the borrower’s competitive position, financial performance, economic, and industry trends, management quality, and access to funds. Under the IRB approaches, borrowers are grouped into BRR grades where a PD is calibrated for each BRR grade. Use of projections for model implied risk ratings is not permitted and BRRs may not incorporate a projected reversal, stabilization of negative trends, or the acceleration of existing positive trends. Historic financial results can however be sensitized to account for events that have occurred, or are about to occur, such as additional debt incurred by a borrower since the date of the last set of financial statements. In conducting an assessment of the BRR, all relevant and material information must be taken into account and the information being used must be current. Quantitative rating models are used to rank the expected through-the-cycle PD, and these models are segmented into categories based on industry and borrower size. The quantitative model output can be modified in some cases by expert judgment, as prescribed within the Bank’s credit policies. To calibrate PDs for each BRR band, the Bank computes yearly transition matrices based on annual cohorts and then estimates the average annual PD for each BRR. The PD is set at the average estimation level plus an appropriate adjustment to cover statistical and model uncertainty. The calibration process for PD is a through-the-cycle approach. TD’s 21-point BRR scale broadly aligns to external ratings as follows: Description Rating Category Standard & Poor’s Moody’s Investor Services Investment grade 0 to 1C AAA to AA- Aaa to Aa3 2A to 2C A+ to A- A1 to A3 3A to 3C BBB+ to BBB- Baa1 to Baa3 Non-investment grade 4A to 4C BB+ to BB- Ba1 to Ba3 5A to 5C B+ to B- B1 to B3 Watch and classified 6 to 8 CCC+ to CC and below Caa1 to Ca and below Impaired/default 9A to 9B Default Default Facility Risk Rating and LGD The FRR maps to LGD, with different models used based on industry and obligor size, and takes into account facility-specific characteristics such as collateral, seniority ranking of debt, loan structure, and borrower enterprise value. Average LGD and the statistical uncertainty of LGD are estimated for each FRR grade. In some FRR models, the scarcity of historical default events requires the model to output a rank-ordering which is then mapped through expert judgment to the quantitative LGD scale. Under the FIRB approach, LGDs are prescribed whereas the AIRB approach stipulates the use of downturn LGD, where the downturn period, as determined by internal and/or external experience, suggests higher than average loss rates or lower than average recovery. To reflect this, calibrated LGDs take into account both the statistical estimation uncertainty and the higher than average LGDs experienced during downturn periods. Exposure at Default The Bank calculates non-retail EAD by first measuring the drawn amount of a facility and then adding a potential increased utilization at default from the undrawn portion, if any. Usage Given Default (UGD) is measured as the percentage of undrawn exposure that would be expected to be drawn by a borrower defaulting in the next year, in addition to the amount that already has been drawn by the borrower. In the absence of credit mitigation effects or other details, the EAD is set at the drawn amount plus (estimated UGD x undrawn) for AIRB exposure, or (prescribed UGD x undrawn) for FIRB exposures. BRR and drawn ratio up to one-year prior to default are predictors for UGD under the AIRB approach. Consequently, the UGD estimates are calibrated by BRR and drawn ratio, the latter representing the ratio of the drawn to authorized amounts. Historical UGD experience is studied for any downturn impacts, similar to the LGD downturn analysis. The Bank has not found downturn UGD to be significantly different from average UGD, therefore the UGDs under AIRB are set at the average calibrated level, by drawn ratio and/or BRR, plus an appropriate adjustment for statistical and model uncertainty. UGDs under the FIRB approach are prescribed for relevant exposure classes. Credit Risk Exposures Subject to the Standardized Approach (SA) Currently the SA to credit risk is used for new portfolios, which are in the process of transitioning to IRB approaches, or exempted portfolios which are either immaterial or expected to wind down. The Bank primarily applies SA to certain segments within both the Retail and Non-retail portfolios. Under the SA, the exposure amounts are multiplied by risk weights prescribed by OSFI, based on the OSFI Capital Adequacy Requirements (CAR) guidelines, to determine RWA. These risk weights are assigned according to certain factors including counterparty type, product type, and the nature/extent of credit risk mitigation. The Bank uses external credit ratings, including Moody’s and S&P to determine the appropriate risk weight for its exposures to sovereigns and central banks, public sector entities (PSEs), multilateral development banks (MDBs), banks (securities firms and other financial institutions), and corporates. The Bank applies SA to certain retail portfolios, including Real Estate Secured Lending (RESL), where the assigned risk weight is primarily based on the exposure’s Loan-to-Value ratio and whether the exposure is categorized as income producing or general. Lower risk weights apply where approved credit risk mitigants exist. For off-balance sheet exposures, specified credit conversion factors are used to convert the notional amount of the exposure into a credit equivalent amount. Derivative Exposures Credit risk on derivative financial instruments, also known as counterparty credit risk, is the risk of a financial loss occurring as a result of the failure of a counterparty to meet its obligation to the Bank. Derivative-related credit risks are subject to the same credit approval standards that the Bank uses for assessing loans. These standards include evaluating the creditworthiness of counterparties, measuring and monitoring exposures, including wrong-way risk exposures, and managing the size, diversification, and maturity structure of the portfolios. The Bank uses various qualitative and quantitative methods to measure and manage counterparty credit risk. These include statistical methods to measure the current and future potential risk, as well as ongoing stress testing to identify and quantify exposure under a range of adverse scenarios. The Bank establishes various limits to manage business volumes and concentrations. Risk Management independently measures and monitors counterparty credit risk relative to established credit policies and limits. As part of the credit risk monitoring process, management periodically reviews all exposures, including exposures resulting from derivative financial instruments to higher risk counterparties, and to assess the valuation of underlying financial instruments and the impact evolving market conditions may have on the Bank. There are two types of wrong-way risk exposures, namely general and specific. General wrong-way risk arises when the PD of the counterparties moves in the same direction as a given market risk factor. Specific wrong-way risk arises when the exposure to a particular counterparty moves in the same direction as the PD of the counterparty due to the nature of the transactions entered into with that counterparty. These exposures require specific approval within the credit approval process. The Bank measures and manages specific wrong-way risk exposures in the same manner as direct loan obligations and controls them by way of approved credit facility limits. The Bank uses the standardized approach for counterparty credit risk to calculate the EAD amount, which is defined by OSFI as a multiple of the summation of replacement cost and potential future exposure, to estimate the risk and determine regulatory capital requirements for derivative exposures. Credit Valuation Adjustment Risk The Bank maintains policies and procedures that govern the valuation and hedging of Credit Valuation Adjustment (CVA) risk. These policies, procedures and associated results are regularly reviewed and approved by senior management. While CVA risk, capital and hedging is managed and owned by a dedicated business function, the independent Risk Management function oversees the process, including the effectiveness of hedges, reporting and monitoring for compliance to policies and frameworks and adherence to risk appetite. Quantitative models used for CVA risk and CVA capital comply with TD’s Model Risk Management Framework. Validation of the Credit Risk Rating System Credit risk rating systems and methodologies are independently validated on a regular basis to verify that they remain accurate predictors of risk. The validation process includes the following considerations: ● Risk parameter estimates – PDs, LGDs, and EADs are reviewed and updated against actual loss experience to verify that estimates continue to be reasonable predictors of potential loss. ● Model performance – Estimates continue to be discriminatory, stable, and predictive. ● Data quality – Data used in the risk rating system is accurate, appropriate, and sufficient. ● Assumptions – Key assumptions underlying the development of the model remain valid for the current portfolio and environment. Risk Management verifies that the credit risk rating system complies with the Bank’s Model Risk Policy. At least annually, the Risk Committee is informed of the performance of the credit risk rating system. The Risk Committee must approve any material changes to the Bank’s credit risk rating system. Credit Risk Mitigation The techniques the Bank uses to reduce or mitigate credit risk include written policies and procedures to value and manage financial and non-financial security (collateral) and to review and negotiate netting agreements. The amount and type of collateral, and other credit risk mitigation techniques required, are based on the Bank’s own assessment of the borrower’s or counterparty’s credit quality and capacity to pay. In the Retail and Commercial banking businesses, security for loans is primarily non-financial and includes residential real estate, real estate under development, commercial real estate, automobiles, and other business assets, such as accounts receivable, inventory, and fixed assets. In the Wholesale Banking business, a large portion of loans are to investment grade borrowers where no security is pledged. Non-investment grade borrowers typically pledge business assets in the same manner as commercial borrowers. Common standards across the Bank are used to value collateral, determine frequency of recalculation, and to document, register, perfect, and monitor collateral. The Bank mitigates derivative counterparty exposure using mitigation strategies that include master netting agreements, collateral pledging, and central clearing houses. Master netting agreements allow the Bank to offset and arrive at a net obligation amount, whereas collateral agreements allow the Bank to secure the Bank’s exposure. Security for derivative exposures is primarily financial and includes cash and negotiable securities issued by highly rated governments and investment grade issuers. Central clearing houses further reduce bilateral credit risk by taking the opposite position to each trade. In all but exceptional situations, the Bank secures collateral by taking possession and controlling it in a jurisdiction where it can legally enforce its collateral rights. In exceptional situations and when demanded by the Bank’s counterparty, the Bank holds or pledges collateral with an acceptable third-party custodian. The Bank documents all such third party arrangements with industry standard agreements. Occasionally, the Bank may take guarantees to reduce the risk in credit exposures. For credit risk exposures subject to the IRB approaches, the Bank only recognizes irrevocable guarantees for Commercial Banking and Wholesale Banking credit exposures that are provided by entities with a better risk rating than that of the borrower or counterparty to the transaction. The Bank makes use of credit derivatives to mitigate credit risk. The credit, legal, and other risks associated with these transactions are controlled through well- established procedures. The Bank’s policy is to enter into these transactions with investment grade financial institutions and transact predominantly on a collateralized basis. Credit risk to these counterparties is managed through the same approval, limit, and monitoring processes the Bank uses for all counterparties for which it has credit exposure. The Bank uses appraisals as well as valuations via automated valuation models (AVMs) to support property values when adjudicating loans collateralized by residential property. AVMs are computer-based tools used to estimate or validate the market value of residential property and uses market comparables and price trends for local market areas. The primary risk associated with the use of these tools is that the value of an individual property may vary significantly from the average for the market area. The Bank has specific risk management guidelines addressing the circumstances when they may be used, and processes to periodically validate AVMs including obtaining third-party appraisals. Other Credit Risk Exposures Non-trading Equity Exposures The Bank applies the standardized approach to calculate RWA on non-trading equity exposures. Under the standardized approach, a 250 % risk weight is applied to equity holdings with the exception of speculative unlisted equities that receive a 400 % risk weight. Equity exposures to sovereigns and holdings made under legislated programs continue to follow the OSFI prescribed risk weights of 0 %, 20 % or 100 %. Securitization Exposures The Bank applies risk weights to all securitization exposures under the revised securitization framework published by OSFI. The revised securitization framework includes a hierarchy of approaches to determine capital treatment, and transactions that meet the simple, transparent, and comparable requirements that are eligible for preferential capital treatment. The Bank uses Internal Ratings-Based Approach (SEC-IRBA) for qualified exposures. Under SEC-IRBA, risk weights are determined using a loss coverage model that quantifies and monitors the level of risk. The SEC-IRBA also considers credit enhancements available for loss protection. For externally rated exposures that do not qualify for SEC-IRBA, the Bank uses an External Ratings-Based Approach (SEC-ERBA). Risk weights are assigned to exposures using external ratings by external rating agencies, including Moody’s and S&P. The SEC-ERBA also takes into account additional factors, including the type of the rating (long-term or short-term), maturity, and the seniority of the position. For exposures that do not qualify for SEC-IRBA or SEC-ERBA, and are held by an ABCP issuing conduit, the Bank uses the Internal Assessment Approach (IAA). Under the IAA, the Bank considers all relevant risk factors in assessing the credit quality of these exposures, including those published by the Moody’s and S&P rating agencies. The Bank also uses loss coverage models and policies to quantify and monitor the level of risk, and facilitate its management. The Bank’s IAA process includes an assessment of the extent by which the enhancement available for loss protection provides coverage of expected losses. The levels of stressed coverage the Bank requires for each internal risk rating are consistent with the rating agencies’ published stressed factor requirements for their equivalent external ratings by asset class. Under the IAA, exposures are multiplied by OSFI prescribed risk weights to calculate RWA for capital purposes. For exposures that do not qualify for SEC-IRBA, SEC-ERBA or the IAA, the Bank uses the SA (SEC-SA). Under SEC-SA, the primary factors that determine the risk weights include the asset class of the underlying loans, the seniority of the position, the level of credit enhancements, and historical delinquency rates. Irrespective of the approach being used to determine the risk weights, all exposures are assigned an internal risk rating-based on the Bank’s assessment, which must be reviewed at least annually. The ratings scale TD uses corresponds to the long-term ratings scales used by the rating agencies. The Bank’s internal rating process is subject to all of the key elements and principles of the Bank’s risk governance structure, and is managed in the same way as outlined in this “Credit Risk” section. The Bank uses the results of the internal rating in all aspects of its credit risk management, including performance tracking, control mechanisms, and management reporting. Market Risk Trading Market Risk is the risk of loss from financial instruments held in trading portfolios due to adverse movements in market factors. These market factors include interest rates, foreign exchange rates, equity prices, commodity prices, credit spreads, and their respective volatilities. Structural (Non-Trading) Market Risk is the risk of loss on the balance sheet or volatility in earnings from traditional banking activities, such as personal and commercial banking products (loans and deposits), as well as related funding, investments and high-quality liquid assets (HQLA), due to adverse movements in market factors. These market factors are primarily interest rates, and foreign exchange rates. The Bank is exposed to market risk in its trading and investment portfolios, as well as through its non-trading activities. The Bank is an active participant in the market through its trading and investment portfolios, seeking to realize returns for the Bank through careful management of its positions and inventories. In the Bank’s non trading activities, it is exposed to market risk through the everyday banking transactions that the Bank executes with its customers. MARKET RISK IN TRADING ACTIVITIES The overall objective of the Bank’s trading businesses is to provide wholesale banking services, including facilitation and liquidity, to clients of the Bank. The Bank must take on risk in order to provide effective service in markets where its clients trade. In particular, the Bank needs to hold inventory, act as principal to facilitate client transactions, and underwrite new issues. The Bank also trades in order to have in-depth knowledge of market conditions to provide the most efficient and effective pricing and service to clients, while balancing the risks inherent in its dealing activities. WHO MANAGES MARKET RISK IN TRADING ACTIVITIES Primary responsibility for managing market risk in trading activities lies with Wholesale Banking, with oversight from the Market Risk function within Risk Management. The Global Market Risk Council meets regularly to review the market risk profile and trading results of the Bank’s trading businesses. The committee is chaired by the Vice President, Head of Market Risk, and includes Wholesale Banking senior management. HOW TD MANAGES MARKET RISK IN TRADING ACTIVITIES Market risk plays a key part in the assessment of trading business strategies. The process for the Bank to launch new trading initiatives, or expand existing ones, involves an assessment of risk with respect to the Bank’s risk appetite and business expertise and an assessment of the appropriate infrastructure required to monitor, control, and manage the risk. The Trading Market Risk Framework outlines the management of trading market risk and incorporates risk appetite, risk -80 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 11/1/2024 11/12/2024 11/21/2024 12/2/2024 12/11/2024 12/20/2024 1/2/2025 1/13/2025 1/22/2025 1/31/2025 2/11/2025 2/20/2025 3/3/2025 3/12/2025 3/21/2025 4/1/2025 4/10/2025 4/21/2025 4/30/2025 5/9/2025 5/20/2025 5/29/2025 6/9/2025 6/18/2025 6/27/2025 7/8/2025 7/17/2025 7/28/2025 8/6/2025 8/15/2025 8/26/2025 9/4/2025 9/15/2025 9/24/2025 10/3/2025 10/14/2025 10/23/2025 TOTAL VALUE-AT-RISK AND TRADING NET REVENUE (millions of Canadian dollars) Trading net revenue Value-at-Risk governance structures, risk identification, risk measurement, and risk control. The Trading Market Risk Framework is maintained by Risk Management and supports alignment with the Bank’s risk appetite for trading market risk. Processes are in place to classify positions as either trading book or banking book for the purpose of calculating regulatory capital, per OSFI CAR Guidelines. Policies define the governance and monitoring requirements of internal risk transfers. Trading Limits The Bank sets trading limits that are consistent with the approved business strategy for each business and its tolerance for the associated market risk, aligned to its market risk appetite. In setting limits, the Bank takes into account market volatility, market liquidity, organizational experience, and business strategy. Limits are prescribed at the Wholesale Banking level in aggregate, as well as at more granular levels. The core market risk limits are based on the key risk drivers in the business and includes notional, credit spread, yield curve shift, price, and volatility limits. Another primary measure of trading limits is VaR, which the Bank uses to monitor and control overall risk levels. VaR measures the adverse impact that potential changes in market rates and prices could have on the value of a portfolio over a specified period of time. At the end of each day, risk positions are compared with risk limits, and any excesses are reported in accordance with established market risk policies and procedures. Calculating VaR The Bank computes total VaR on a daily basis by combining the General Market Risk (GMR) and Idiosyncratic Debt Specific Risk (IDSR) associated with the Bank’s trading positions. GMR is determined by creating a distribution of potential changes to the market value of the current portfolio using historical simulation. The Bank values the current portfolio using the market price and rate changes of the most recent 259 trading days for equity, interest rate, foreign exchange, credit, and commodity products. GMR is computed as the threshold level that portfolio losses are not expected to exceed more than one out of every 100 trading days. A one-day holding period is used for GMR calculation. IDSR measures idiosyncratic (single-name) credit spread risk for credit exposures in the trading portfolio using Monte Carlo simulation. The IDSR model is based on the historical behaviour of five-year idiosyncratic credit spreads. Similar to GMR, IDSR is computed as the threshold level that portfolio losses are not expected to exceed more than one out of every 100 trading days. IDSR is measured for a ten-day holding period. The following graph discloses daily one-day VaR usage and trading net revenue, reported on a TEB, within Wholesale Banking. Trading net revenue includes trading income and net interest income related to positions within the Bank’s market risk capital trading books. For the year ending October 31, 2025, there were 18 days of trading losses and trading net revenue was positive for 93 % of the trading days, reflecting normal trading activity. Losses in the year did not exceed VaR on any trading day. VaR is a valuable risk measure but it should be used in the context of its limitations, for example: ● VaR uses historical data to estimate future events, which limits its forecasting abilities; ● it does not provide information on losses beyond the selected confidence level; and ● it assumes that all positions can be liquidated during the holding period used for VaR calculation. The Bank continuously improves its VaR methodologies and incorporates new risk measures in line with market conventions, industry practices, and regulatory requirements. To mitigate some of the shortcomings of VaR, the Bank uses additional metrics designed for risk management. This include Stress Testing as well as sensitivities to various market risk factors. The following table presents the end of year, average, high, and low usage of TD’s portfolio metrics. TABLE 44: PORTFOLIO MARKET RISK MEASURES (millions of Canadian dollars) 2025 2024 As at Average High Low As at Average High Low Interest rate risk $ 10.3 $ 10.5 $ 21.1 $ 1.6 $ 8.4 $ 16.8 $ 27.7 $ 5.1 Credit spread risk 15.8 19.3 27.4 13.7 25.1 30.0 40.5 18.9 Equity risk 14.1 11.0 29.3 6.6 7.7 7.8 12.0 5.2 Foreign exchange risk 4.6 4.1 10.2 1.2 5.2 2.9 7.8 1.2 Commodity risk 37.6 24.6 46.0 3.8 6.0 4.5 11.5 2.2 Idiosyncratic debt specific risk 13.1 19.8 28.0 13.1 18.2 20.3 29.7 13.8 Diversification effect 1 (41.7) (52.7) n/m 2 n/m (45.0) (50.8) n/m n/m Total Value-at-Risk (one-day) 53.8 36.6 58.9 20.9 25.6 31.5 44.9 21.8 1 The aggregate VaR is less than the sum of the VaR of the different risk types due to risk offsets resulting from portfolio diversification. 2 Not meaningful. It is not meaningful to compute a diversification effect because the high and low may occur on different days for different risk types. Validation of VaR Model The Bank uses a back-testing process to compare the actual profits and losses to VaR to review their consistency with the statistical results of the VaR model. Stress Testing The Bank’s trading business is subject to an overall global stress test limit. In addition, global businesses have stress test limits, and each broad risk class has an overall stress test threshold. Stress scenarios are designed to model extreme economic events, replicate worst-case historical experiences, or introduce severe, but plausible, hypothetical changes in key market risk factors. The stress testing program includes scenarios developed using actual historical market data during periods of market disruption, in addition to hypothetical scenarios developed by Risk Management. Stress tests are produced and reviewed regularly. The events the Bank has modelled include the 1987 equity market crash, the 1998 Russian debt default crisis, the aftermath of September 11, 2001, the 2007 ABCP crisis, the credit crisis of Fall 2008, the Brexit referendum of June 2016, and the COVID-19 pandemic of 2020. WHO MANAGES STRUCTURAL (NON-TRADING) MARKET RISK The TBSM group manages the market risks of traditional non-trading banking activities, while the Wholesale Banking business manages non-trading market risks within that segment, all subject to oversight from the Asset Liability and Capital Committee (ALCO). The Treasury CRO / Non-Trading Market Risk function within Risk Management provides independent oversight, governance, and control of these market risks. The Risk Committee reviews and approves key non-trading market risk policies and monitors the Bank’s positions and compliance with these policies through regular reporting and updates from senior management. HOW TD MANAGES STRUCTURAL (NON-TRADING) MARKET RISK Non-trading interest rate risk, if not managed, has the potential to increase earnings volatility and generate losses without contributing long-term expected value. To manage this risk, the Bank’s non-trading asset and liability profile is managed in accordance with a target and series of limits to control the impact of interest rate changes on the Bank’s NII, while maintaining the Bank’s economic value sensitivity within risk appetite. Managing Structural Interest Rate Risk Interest rate risk is the impact that changes in interest rates could have on the Bank’s margins, earnings, and economic value. Interest rate risk management is designed to generate a predictable, high-quality NII stream over time. The Bank has adopted a disciplined hedging approach to manage the net interest income from its asset and liability positions. Key aspects of this approach are: • Evaluating and managing the impact of rising or falling interest rates on net interest income and economic value, and developing strategies to manage overall sensitivity to rates across varying interest rate scenarios; • Modelling the expected impact of customer behaviour on TD’s products (e.g., how actively customers exercise embedded options, such as prepaying a loan or redeeming a deposit before its maturity date); • Assigning target-modelled maturity profiles for non-maturity assets, liabilities, and equity; • Measuring the margins of TD’s banking products on a fully-hedged basis, including the impact of financial options that are granted to customers; and • Developing and implementing strategies to stabilize net interest income from all retail and commercial banking products. The Bank is exposed to the interest rate risk from “mismatched positions” which occur when asset and liability principal and interest cash flows have different repricing or maturity dates. The Bank measures this risk based on an assessment of: contractual cash flows, product-embedded optionality, customer behaviour expectations and the modelled maturity profiles for non-maturity products. To manage this risk, the Bank primarily uses financial derivatives, wholesale investments and funding transactions. The Bank also measures its exposure to non-maturity liabilities, such as core deposits, by assessing interest rate elasticity and balance permanence using historical data and business judgment. Fluctuations of non-maturity deposits can occur due to factors such as interest rate and equity market movements, and changes to customer liquidity preferences. Banking product optionality, whether from freestanding options such as mortgage rate commitments or options embedded within loans and deposits, expose the Bank to significant financial risk. To manage these exposures, the Bank uses a dynamic hedging approach designed to replicate the payoff of a purchased option. • Rate Commitments : The Bank measures its exposure from freestanding mortgage rate commitment options using an expected funding profile based on historical experience. Customers’ propensity to fund, and their preference for fixed or floating rate mortgage products, is influenced by factors such as market mortgage rates, client characteristics, and seasonality. • Asset Prepayment and other Embedded Options : The Bank models its exposure to options embedded in some of its products based on analyses of customer behaviour. Examples of modeled options are the right to prepay residential mortgage loans, and the right to early redeem some term deposit products. For mortgages, econometric models are used to model prepayments and the effects of prepayment behaviour to the Bank. In general, mortgage prepayments are also affected by factors such as rate incentive along with mortgage age, home prices, gross domestic product (GDP) growth, etc. A combined impact is also assessed to determine a core liquidation speed that is independent of market incentives. A similar analysis is undertaken for other products with embedded optionality. Structural Interest Rate Risk Measures The primary measures for this risk are Economic Value of Shareholders’ Equity (EVE) Sensitivity and Net Interest Income Sensitivity (NIIS). EVE Sensitivity measures the impact of a specified interest rate shock to the net present value of the Bank’s banking book assets, liabilities, and certain off- balance sheet items. It reflects a measurement of the potential present value impact on shareholders’ equity without an assumed term profile for the management of the Bank’s own equity and excludes product margins. NIIS measures the change in NII over a twelve-month horizon resulting from resetting interest rates on banking book assets, liabilities and certain off-balance sheet items under a specified interest rate shock scenario. The Bank’s Market Risk policy sets overall limits on structural interest rate risk measures. These limits are periodically reviewed and approved by the Risk Committee. In addition to the Board policy limits, book-level risk limits for the Bank’s management of non-trading interest rate risk are set by Risk Management. Exposures against these limits are routinely monitored and reported, and breaches of the Board limits, if any, are escalated to both the ALCO and the Risk Committee. TABLE 45: STRUCTURAL INTEREST RATE SENSITIVITY MEASURES (millions of Canadian dollars) As at October 31, 2025 October 31, 2024 EVE NII 1,2 EVE 1 NII 1 Sensitivity 1,2 Sensitivity 1,2,3 Sensitivity 1 Sensitivity 1,3 Canadian U.S. Total Canadian U.S. Total Total Total dollar 4 dollar dollar 4 dollar Before-tax impact of 100 bps increase in rates $ (957) $ (1,558) $ (2,515) $ 400 $ 390 $ 790 $ (2,489) $ 720 100 bps decrease in rates 865 1,227 2,092 (441) (419) (860) 1,914 (983) 1 Does not include exposures from Wholesale Banking. 2 Effective July 31, 2025, the sensitivity measures are reported by currency to better differentiate NIIS to movements in underlying rates. 3 Represents the twelve-month NII exposure to an immediate and sustained shock in rates, and may include adjustments for non-recurring items. 4 Includes other currency exposures. As at October 31, 2025, an immediate and sustained 100 bps increase in interest rates would have a negative impact to the Bank’s EVE of $ 2,515 million, an increase of $ 26 million from last year, and a positive impact to the Bank’s NII of $ 790 million, an increase of $ 70 million from last year. An immediate and sustained 100 bps decrease in interest rates would have a positive impact to the Bank’s EVE of $ 2,092 million, an increase of $ 178 million from last year, and a negative impact to the Bank’s NII of $ 860 million, a decrease of $ 123 million from last year. The year-over-year increase in EVE Sensitivity is primarily attributed to an increase in net fixed rate assets held, commensurate with growth in book capital. Year-over-year changes in NII Sensitivity are largely related to Treasury hedging alongside marginal changes in product mix. As at October 31, 2025, reported EVE and NII Sensitivities remain within the Bank’s risk appetite and established Board limits. Managing Non-trading Foreign Exchange Risk Foreign exchange risk refers to losses that could result from changes in foreign-currency exchange rates. Assets and liabilities that are denominated in foreign currencies create foreign exchange risk. The Bank is exposed to non-trading foreign exchange risk primarily from its investments in foreign operations. When the Bank’s foreign currency assets are greater or less than its liabilities in that currency, they create a foreign currency open position. An adverse change in foreign exchange rates can impact the Bank’s reported net income and shareholders’ equity, and its capital ratios. To minimize the impact of an adverse foreign exchange rate change on certain capital ratios, the Bank’s net investments in foreign operations are hedged so that changes in certain capital ratios fall within risk appetite, in response to movement in foreign exchange rates. The Bank does not generally hedge the earnings of foreign subsidiaries which results in changes to the Bank’s consolidated earnings when relevant foreign exchange rates change. Other Non-trading Market Risks Other structural market risks monitored on a regular basis include: ● Basis Risk – The Bank is exposed to risks related to the difference in various market indices. ● Equity Risk – The Bank is exposed to non-trading equity risk from investment securities designated at FVOCI, equity-linked guaranteed investment certificate product offerings and share-based compensation plans where certain employees are awarded share units equivalent to the Bank’s common shares as compensation for services provided to the Bank. These share units are recorded as a liability over the vesting period and revalued at each reporting period until settled in cash, and changes in the Bank’s share price can impact non-interest expenses. The Bank uses equity derivative instruments to manage its non- trading equity risk. Managing Investment Portfolios The Bank manages a securities portfolio that is integrated into the overall asset and liability management process for traditional banking activities. The securities portfolio is comprised of high-quality, low-risk securities and managed in a manner appropriate to the attainment of the following goals: (1) to generate a targeted credit of funds to deposit balances that are in excess of loan balances; (2) to provide a sufficient pool of liquid assets to meet deposit and loan fluctuations and overall liquidity management objectives; (3) to provide eligible securities to meet collateral and cash management requirements; and (4) to manage the target interest rate risk profile of the balance sheet. The Risk Committee reviews and approves the Enterprise Investment Policy that sets out limits for the Bank’s investment portfolio. In addition, the Wholesale Banking and Insurance businesses also hold investments that are managed separately. WHY NET INTEREST MARGIN FLUCTUATES OVER TIME As previously noted, the Bank’s approach to structural (non-trading) market risk is designed to generate stable and predictable earnings over time, regardless of cash flow mismatches and the exercise of options granted to customers. This approach also creates margin certainty on loan and deposit profitability as they are booked. Despite this approach however, the Bank’s NIM is subject to change over time for the following reasons (among others): ● Differences in margins earned on new and renewing products relative to the margin previously earned on matured products; ● Weighted-average margin impact from changes in business and product mix; ● Changes in the basis between certain market indices; ● Potential lags in changing product prices in response to changes in market interest rates, including rate-sensitive deposit pricing; ● Changes from the repricing of hedging strategies to manage the investment profile of the Bank’s non-rate sensitive deposits; and ● Margin changes from the portion of the Bank’s deposits that are non-rate sensitive but not expected to be longer term in nature, resulting in a shorter term investment profile and higher sensitivity to short-term rates. The general level of interest rates will affect the return the Bank generates on its modelled maturity profile for core non-rate sensitive deposits and the investment profile for its net equity position as it evolves over time. The general level of market interest rate volatility is also a key driver of some modelled option exposures, and will affect the cost of hedging such exposures. The Bank’s approach to managing these factors tends to moderate their impact over time, resulting in a more predictable NII stream over time. Insurance Risk Insurance risk is the risk of financial loss due to actual experience emerging differently from expectations in insurance product pricing and/or design, underwriting, reinsurance protection, and claims or reserving either at the inception of an insurance or reinsurance contract, during the lifecycle of the claim or at the valuation date. Unfavourable experience could emerge due to adverse fluctuations in timing, actual size, frequency of claims (for example, driven by non-life premium risk, non-life reserving risk, catastrophic risk, mortality risk, morbidity risk, and longevity risk), policyholder behaviour, or associated expenses. Insurance contracts provide financial protection by transferring insured risks to the issuer in exchange for premiums. The Bank is engaged in insurance businesses relating to property and casualty insurance, life and health insurance, and reinsurance, through various subsidiaries; it is through these businesses that the Bank is exposed to insurance risk. WHO MANAGES INSURANCE RISK Senior management within the insurance business units has primary responsibility for managing insurance risk with oversight by the CRO for Insurance, who reports into the Bank’s Risk Management Group. The Bank’s Audit Committee and the Bank’s Corporate Governance Committee respectively act as the Audit and Conduct review committees for the Canadian insurance company subsidiaries. The insurance company subsidiaries also have their own boards of directors who provide additional risk management oversight. HOW TD MANAGES INSURANCE RISK The Bank’s risk governance practices are designed to support independent oversight and control of risk within the insurance business. The TD Insurance Risk Committee and its subcommittees provide critical oversight of the risk management activities within the insurance business and monitor compliance with insurance risk policies. The Bank’s Insurance Risk Management Framework and Insurance Risk Policy collectively outline the internal risk and control structure to manage insurance risk and include risk appetite, policies, processes, as well as limits and governance. These documents are maintained by Risk Management and support alignment with the Bank’s risk appetite for insurance risk. The assessment of insurance contract liabilities (remaining coverage and incurred claims) is central to the insurance operation. TD Insurance establishes reserves to cover estimated future payments (including loss adjustment expenses) on all claims or terminations/surrenders of premium arising from insurance contracts underwritten. The reserves cannot be established with complete certainty and represent management’s best estimate for future payments. As such, TD Insurance regularly monitors estimates against actual and emerging experience and adjusts reserves as appropriate if experience emerges differently than anticipated. Liabilities for incurred claims and liabilities for remaining coverage are governed by the Bank’s general insurance and life and health reserving risk policies. Sound product design is an essential element of managing risk. In addition, TD’s insurance products are priced considering required capital levels, with targeted returns set by management. The Bank’s exposure to insurance risk is mostly short-term in nature as the principal underwriting risk relates to personal automobile and home insurance and small commercial insurance. Insurance market cycles, as well as changes in insurance legislation, the regulatory environment, judicial environment, trends in court awards, climate patterns, pandemics or other applicable public health emergencies, and the economic environment may impact the performance of the insurance business. We maintain premium, pricing and underwriting policies or standards to help manage these inherent risks. There is also exposure to concentration risk associated with general insurance and life and health insurance coverage. Exposure to insurance risk concentration is managed with an Accumulation Management Policy and through established underwriting guidelines, limits, and authorization levels that govern the acceptance of risk. Concentration of insurance risk is also mitigated through the purchase of reinsurance. The insurance business’ reinsurance programs are governed by catastrophe and reinsurance risk management policies. Strategies are in place to help manage the risk to the Bank’s reinsurance business. Underwriting risk on business assumed is managed through a policy that limits exposure to certain types of business and countries. The vast majority of reinsurance treaties are annually renewable, which minimizes long-term risk. Pandemic exposure is reviewed and estimated annually within the reinsurance business to manage concentration risk. Liquidity Risk The risk of having insufficient cash or collateral to meet financial obligations and an inability to, in a timely manner, raise funding or monetize assets at a non- distressed price. Financial obligations can arise from deposit withdrawals, debt maturities, commitments to provide credit or liquidity support or the need to pledge additional collateral. TD’S LIQUIDITY RISK APPETITE TD follows a disciplined liquidity management program, which is subject to risk governance and oversight, and is designed to maintain sufficient liquidity to permit the Bank to operate through a significant liquidity event without relying on extraordinary central bank assistance. The Bank maintains access to a stable and diversified funding base and aligns its funding profile with that of the assets and contingent obligations it supports. WHO MANAGES LIQUIDITY RISK The Risk Committee, the ALCO and the Treasurer are accountable for the identification, assessment, control, monitoring and oversight of liquidity risk. • The Risk Committee regularly reviews the Bank’s liquidity position and approves the Bank’s Liquidity Risk Management Framework biennially and related policies annually. • The Bank’s ALCO is responsible for establishing effective management structures and practices to ensure appropriate measurement, management, and governance of liquidity risk. • The Global Liquidity & Funding (GLF) Committee, a subcommittee of the ALCO comprised of senior management from Treasury, Wholesale Banking and Risk Management, identifies and monitors the Bank’s liquidity risks. In addition to our committee oversight framework, liquidity risk management activities are subject to the three lines of defence governance model. Treasury, the first line of defence for the management of liquidity risk, is subject to independent second line challenge and oversight by Risk Management. TD’s Internal Audit is the third line of defence. The three lines of defence are independent of the business whose activities generate liquidity risks. HOW TD MANAGES LIQUIDITY RISK The Bank manages the liquidity profile of its businesses in accordance with its defined liquidity risk appetite. The Bank’s strategies, plans and governance practices underpin an integrated liquidity risk management program that is designed to reduce exposure to liquidity risk and maintain compliance with regulatory requirements. A combination of quantitative and qualitative measures is used to control liquidity risk with the objective of maintaining sufficient liquidity to satisfy the Bank’s operational needs and client commitments in both normal and stress conditions. The Bank targets a 90-day survival horizon under a combined bank- specific and market-wide stress scenario, and surpluses over regulatory requirements, including those prescribed by OSFI’s Liquidity Adequacy Requirements (LAR) guideline. The Bank’s funding program emphasizes a stable, diversified deposit base as a core source of funding and maintains ready access to wholesale funding markets to diversify across terms, funding types, and currencies. This approach helps lower exposure to sudden contractions of wholesale funding capacity and minimizes structural liquidity gaps. The Bank also maintains a contingency funding plan (CFP) to enhance preparedness to address potential liquidity stress events. The Bank’s internal stress testing informs the management of liquidity risk. Among scenarios considered is a severe combined stress event resulting in elevated liquidity requirements and a loss of confidence in the Bank’s ability to meet obligations as they come due. In addition to this bank-specific event, this scenario incorporates a market-wide liquidity stress that materially reduces the availability of funding for all institutions and decreases the marketability of assets. The Bank’s liquidity risk management policies stipulate that the Bank must maintain a sufficient level of liquid assets to support business growth, and to cover stressed liquidity requirements under the stress scenario for a period of up to 90 days. Key elements of the scenario include: ● loss of access to wholesale funding including repayment of maturing debt in the next 90 days; ● accelerated deposit attrition or “run-off”; ● increased utilization of available credit and liquidity facilities; and ● increased collateral requirements associated with downgrades in the Bank’s credit ratings. Internal measures and limits complement regulatory liquidity requirements, such as the Liquidity Coverage Ratio (LCR), the Net Stable Funding Ratio (NSFR), and the Net Cumulative Cash Flow (NCCF) monitoring tool prescribed in OSFI’s LAR guidance. The Bank’s liquidity is managed to the higher of its internal liquidity requirements and target buffers over the regulatory minimums. The Bank also considers regional regulatory metrics as well as potential restrictions on liquidity transferability in the calculation of enterprise liquidity positions. Accordingly, surplus liquidity domiciled in regulated subsidiaries may be excluded from consolidated liquidity positions as appropriate. The Bank’s Funds Transfer Pricing process considers liquidity risk as a key determinant of the cost or credit of funds to businesses. LIQUID ASSETS The Bank’s unencumbered liquid assets could be used to help address potential funding needs arising from stress events. Liquid asset eligibility considers estimated stressed market values and trading market depth, as well as operational, legal, or other impediments to sale, rehypothecation or pledging. Assets held by the Bank to meet liquidity requirements are summarized in the following tables. The tables do not include assets held within the Bank’s insurance businesses as these are used to support insurance-specific liabilities and capital requirements. TABLE 46: SUMMARY OF LIQUID ASSETS BY TYPE AND CURRENCY (millions of Canadian dollars, except as noted) As at Securities received as collateral from securities financing and Bank-owned derivative Total Encumbered Unencumbered liquid assets transactions liquid assets liquid assets liquid assets 1 October 31, 2025 Cash and central bank reserves $ 17,966 $ – $ 17,966 $ 1,130 $ 16,836 Obligations of government, federal agencies, public sector entities, and multilateral development banks 2 112,902 117,718 230,620 95,245 135,375 Equities 18,403 4,111 22,514 19,146 3,368 Other debt securities 6,229 6,219 12,448 9,213 3,235 Other securities – – – – – Total Canadian dollar-denominated 155,500 128,048 283,548 124,734 158,814 Cash and central bank reserves 89,425 – 89,425 185 89,240 Obligations of government, federal agencies, public sector entities, and multilateral development banks 215,537 160,502 376,039 179,623 196,416 Equities 65,295 42,664 107,959 62,020 45,939 Other debt securities 77,703 17,744 95,447 29,212 66,235 Other securities 31,647 2,937 34,584 8,161 26,423 Total non-Canadian dollar-denominated 479,607 223,847 703,454 279,201 424,253 Total $ 635,107 $ 351,895 $ 987,002 $ 403,935 $ 583,067 October 31, 2024 Total Canadian dollar-denominated 163,269 117,083 280,352 110,064 170,288 Total non-Canadian dollar-denominated 482,052 179,665 661,717 247,478 414,239 Total $ 645,321 $ 296,748 $ 942,069 $ 357,542 $ 584,527 Unencumbered liquid assets include on-balance sheet assets, assets borrowed or purchased under resale agreements, and other off-balance sheet collateral received less encumbered liquid assets. 2 Includes National Housing Act Mortgage-Backed Securities (NHA MBS). Unencumbered liquid assets held in The Toronto-Dominion Bank, its domestic and foreign subsidiaries, and branches are summarized in the following table. TABLE 47: SUMMARY OF UNENCUMBERED LIQUID ASSETS BY BANK, SUBSIDIARIES, AND BRANCHES (millions of Canadian dollars) As at October 31 October 31 2025 2024 The Toronto-Dominion Bank (Parent) $ 257,722 $ 237,005 Bank subsidiaries 306,961 314,306 Foreign branches 18,384 33,216 Total $ 583,067 $ 584,527 FUNDING The Bank has access to a variety of unsecured and secured funding sources. The Bank’s funding activities are conducted in accordance with liquidity risk management policies that require assets be funded to the appropriate term and to a prudent diversification profile. The Bank’s primary approach to funding is to maximize the use of deposits raised through its personal, wealth and business banking channels. The deposits raised from these sources were approximately 64 % (October 31, 2024 – 63 %) of the Bank’s total funding. Non-personal deposit funding as reflected below does not include the Bank’s Wholesale Banking deposits (including Corporate & Investment Banking). TABLE 55: SUMMARY OF DEPOSIT FUNDING 1 (millions of Canadian dollars) As at October 31, 2025 October 31, 2024 Personal $ 650,396 $ 641,667 Non-personal 316,319 310,422 Total $ 966,715 $ 952,089 1 The calculation methodology has been changed to reflect deposit funding from personal, wealth and business banking channels. WHOLESALE FUNDING The Bank maintains various registered external wholesale term (greater than 1 year) funding programs to provide access to diversified funding sources, including asset securitization, covered bonds, and unsecured wholesale debt. The Bank raises term funding through Senior Notes, NHA MBS, and notes backed by credit card receivables (Evergreen Credit Card Trust) and home equity lines of credit (Genesis Trust II). The Bank’s wholesale funding is diversified by geography, currency, and funding types. The Bank raises short-term (1 year or less) funding using certificates of deposit and commercial paper. The Bank maintains depositor concentration limits in respect of short-term wholesale deposits so that it is not overly reliant on individual depositors for funding. The Bank further limits short-term wholesale funding maturity concentration in an effort to mitigate refinancing risk during a stress event. MATURITY ANALYSIS OF ASSETS, LIABILITIES, AND OFF-BALANCE SHEET COMMITMENTS The following table summarizes on-balance sheet and off-balance sheet categories by remaining contractual maturity. The values of credit instruments reported in the following table represent the maximum amount of additional credit that the Bank could be obligated to extend should such instruments be fully drawn or utilized. Since a significant portion of guarantees and commitments are expected to expire without being drawn upon, the total of the contractual amounts is not representative of expected future liquidity requirements. These contractual obligations have an impact on the Bank’s short-term and long-term liquidity and capital resource needs. The maturity analysis presented does not depict the degree of the Bank’s maturity transformation or the Bank’s exposure to interest rate and liquidity risk. The Bank’s objective is to fund its assets appropriately to protect against borrowing cost volatility and potential reductions to funding market availability. The Bank utilizes stable non-maturity deposits (chequing and savings accounts) and term deposits as the primary source of long-term funding for the Bank’s non-trading assets including personal and business term loans and the stable balance of revolving lines of credit. Additionally, the Bank issues long-term funding in respect of such non-trading assets and raises short-term funding primarily to finance trading assets. The liquidity of trading assets under stressed market conditions is considered when determining the appropriate term of the funding. TABLE 58: REMAINING CONTRACTUAL MATURITY (millions of Canadian dollars) As at October 31, 2025 No Less than 1 to 3 3 to 6 6 to 9 9 months Over 1 to Over 2 to Over specific 1 month months months months to 1 year 2 years 5 years 5 years maturity Total Assets Cash and due from banks $ 7,512 $ – $ – $ – $ – $ – $ – $ – $ – $ 7,512 Interest-bearing deposits with banks 106,857 724 39 – – – – – 1,797 109,417 Trading loans, securities, and other 1 4,243 5,867 5,219 3,647 4,107 10,100 33,372 31,052 122,529 220,136 Non-trading financial assets at fair value through profit or loss – – – 74 – 332 2,939 1,873 2,177 7,395 Derivatives 10,478 12,594 7,269 4,638 5,006 11,761 17,913 13,313 – 82,972 Financial assets designated at fair value through profit or loss 271 226 543 649 251 1,396 2,715 935 – 6,986 Financial assets at fair value through other comprehensive income 1,959 4,006 3,698 3,802 6,061 6,002 48,054 49,739 3,048 126,369 Debt securities at amortized cost, net of allowance for credit losses 4,850 3,768 5,670 7,152 3,992 28,954 70,952 115,102 (1) 240,439 Securities purchased under reverse repurchase agreements 2 164,872 40,541 28,394 6,906 4,840 786 739 – – 247,078 Loans Residential mortgages 3,463 7,240 16,334 25,284 23,462 78,900 112,140 48,240 – 315,063 Consumer instalment and other personal 1,115 2,652 6,373 9,240 7,052 31,673 96,668 37,975 66,285 259,033 Credit card – – – – – – – – 41,662 41,662 Business and government 59,741 12,360 13,577 17,631 17,491 44,950 89,699 56,975 33,519 345,943 Total loans 64,319 22,252 36,284 52,155 48,005 155,523 298,507 143,190 141,466 961,701 Allowance for loan losses – – – – – – – – (8,689) (8,689) Loans, net of allowance for loan losses 64,319 22,252 36,284 52,155 48,005 155,523 298,507 143,190 132,777 953,012 Goodwill 3 – – – – – – – – 18,980 18,980 Other intangibles 3 – – – – – – – – 3,409 3,409 Land, buildings, equipment, other depreciable assets, and right-of-use assets 3 – 3 2 4 10 86 679 3,333 6,015 10,132 Deferred tax assets – – – – – – – – 5,388 5,388 Amounts receivable from brokers, dealers, and clients 27,345 – – – – – – – – 27,345 Other assets 5,207 2,630 3,076 521 485 199 412 507 14,951 27,988 Total assets $ 397,913 $ 92,611 $ 90,194 $ 79,548 $ 72,757 $ 215,139 $ 476,282 $ 359,044 $ 311,070 $ 2,094,558 Liabilities Trading deposits $ 3,346 $ 4,147 $ 5,288 $ 2,790 $ 4,967 $ 6,314 $ 7,931 $ 3,099 $ – $ 37,882 Derivatives 10,690 13,350 8,930 7,039 4,359 8,034 15,169 11,785 – 79,356 Securitization liabilities at fair value – 1,096 570 1,069 739 2,248 13,667 5,894 – 25,283 Financial liabilities designated at fair value through profit or loss 48,996 46,231 57,600 26,665 17,192 652 3 – 296 197,635 Deposits 4,5 Personal 15,300 30,652 24,351 17,289 19,285 17,296 12,784 2 513,437 650,396 Banks 15,232 96 56 – 49 2 2 – 11,796 27,233 Business and government 18,548 20,498 19,236 15,276 10,272 51,067 56,791 32,004 365,783 589,475 Total deposits 49,080 51,246 43,643 32,565 29,606 68,365 69,577 32,006 891,016 1,267,104 Obligations related to securities sold short 1 2,677 575 1,304 1,647 1,245 6,351 14,346 12,879 2,771 43,795 Obligations related to securities sold under repurchase agreements 2 196,625 20,970 3,017 237 114 164 23 – – 221,150 Securitization liabilities at amortized cost – 719 182 367 567 1,602 5,104 6,300 – 14,841 Amounts payable to brokers, dealers, and clients 27,434 – – – – – – – – 27,434 Insurance-related liabilities 215 405 607 608 641 1,137 1,508 1,288 869 7,278 Other liabilities 5,198 6,600 2,535 1,628 922 2,380 2,024 5,944 7,009 34,240 Subordinated notes and debentures – – – – – – – 10,733 – 10,733 Equity – – – – – – – – 127,827 127,827 Total liabilities and equity $ 344,261 $ 145,339 $ 123,676 $ 74,615 $ 60,352 $ 97,247 $ 129,352 $ 89,928 $ 1,029,788 $ 2,094,558 Off-balance sheet commitments Credit and liquidity commitments 6,7 $ 16,424 $ 45,279 $ 31,734 $ 23,774 $ 23,268 $ 49,354 $ 174,265 $ 3,658 $ 1,990 $ 369,746 Other commitments 8 131 233 271 325 246 931 2,864 376 12 5,389 Unconsolidated structured entity commitments 1,312 1,004 1,855 3,143 1,787 7,012 2,930 – – 19,043 Total off-balance sheet commitments $ 17,867 $ 46,516 $ 33,860 $ 27,242 $ 25,301 $ 57,297 $ 180,059 $ 4,034 $ 2,002 $ 394,178 Amount has been recorded according to the remaining contractual maturity of the underlying security. 2 Certain contracts considered short-term are presented in ‘less than 1 month’ category. 3 Certain non-financial assets have been recorded as having ‘no specific maturity’. 4 As the timing of demand deposits and notice deposits is non-specific and callable by the depositor, obligations have been included as having ‘no specific maturity’. 5 Includes $ 70 billion of covered bonds with remaining contractual maturities of $ 10 billion in ‘over 3 months to 6 months’, $ 4 billion in ‘over 6 months to 9 months’, $ 5 billion in ‘over 9 months to 1 year’ $ 24 billion in ‘over 1 to 2 years’, $ 19 billion in ‘over 2 to 5 years’, and $ 8 billion in ‘over 5 years’. 6 Includes $ 623 million in commitments to extend credit to private equity investments. 7 Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank’s discretion at any time. 8 Includes various purchase commitments as well as commitments for leases not yet commenced, and lease-related payments. TABLE 58: REMAINING CONTRACTUAL MATURITY (continued) (millions of Canadian dollars) As at October 31, 2024 No Less than 1 to 3 3 to 6 6 to 9 9 months Over 1 to Over 2 to Over specific 1 month months months months to 1 year 2 years 5 years 5 years maturity Total Assets Cash and due from banks $ 6,437 $ – $ – $ – $ – $ – $ – $ – $ – $ 6,437 Interest-bearing deposits with banks 165,665 23 – – – – – – 4,242 169,930 Trading loans, securities, and other 1 3,773 4,852 6,777 4,852 4,729 11,756 28,458 27,484 83,089 175,770 Non-trading financial assets at fair value through profit or loss – 2 301 1,431 96 702 810 694 1,833 5,869 Derivatives 11,235 12,059 5,501 4,257 2,587 10,485 17,773 14,164 – 78,061 Financial assets designated at fair value through profit or loss 367 251 486 613 292 1,144 1,865 1,399 – 6,417 Financial assets at fair value through other comprehensive income 357 7,284 6,250 6,459 9,367 5,766 19,729 34,270 4,415 93,897 Debt securities at amortized cost, net of allowance for credit losses 1,620 4,237 4,763 6,367 4,072 30,513 93,429 126,617 (3) 271,615 Securities purchased under reverse repurchase agreements 2 134,310 35,360 19,897 10,119 5,299 1,722 482 – 1,028 208,217 Loans Residential mortgages 7,502 11,817 13,066 16,074 4,353 86,112 132,381 60,344 – 331,649 Consumer instalment and other personal 974 1,758 2,509 4,077 6,137 28,498 88,052 35,096 61,281 228,382 Credit card – – – – – – – – 40,639 40,639 Business and government 55,591 15,405 10,866 19,340 18,982 47,488 98,362 61,904 29,035 356,973 Total loans 64,067 28,980 26,441 39,491 29,472 162,098 318,795 157,344 130,955 957,643 Allowance for loan losses – – – – – – – – (8,094) (8,094) Loans, net of allowance for loan losses 64,067 28,980 26,441 39,491 29,472 162,098 318,795 157,344 122,861 949,549 Investment in Schwab – – – – – – – – 9,024 9,024 Goodwill 3 – – – – – – – – 18,851 18,851 Other intangibles 3 – – – – – – – – 3,044 3,044 Land, buildings, equipment, other depreciable assets, and right-of-use assets 3 – 8 1 4 12 81 562 3,130 6,039 9,837 Deferred tax assets – – – – – – – – 4,937 4,937 Amounts receivable from brokers, dealers, and clients 22,115 – – – – – – – – 22,115 Other assets 6,556 2,478 2,989 556 367 373 312 153 14,397 28,181 Total assets $ 416,502 $ 95,534 $ 73,406 $ 74,149 $ 56,293 $ 224,640 $ 482,215 $ 365,255 $ 273,757 $ 2,061,751 Liabilities Trading deposits $ 4,522 $ 2,516 $ 2,768 $ 2,101 $ 3,715 $ 5,488 $ 7,566 $ 1,736 $ – $ 30,412 Derivatives 9,923 11,556 5,740 3,319 2,783 8,800 12,877 13,370 – 68,368 Securitization liabilities at fair value – 1,004 328 644 97 3,313 9,443 5,490 – 20,319 Financial liabilities designated at fair value through profit or loss 50,711 25,295 51,967 40,280 37,964 1,477 – – 220 207,914 Deposits 4,5 Personal 14,229 31,997 30,780 16,971 19,064 15,120 15,590 7 497,909 641,667 Banks 14,714 4,287 2,434 16,343 6,954 – 3 – 12,963 57,698 Business and government 23,536 24,136 11,295 19,038 9,020 37,681 76,667 24,144 343,798 569,315 Total deposits 52,479 60,420 44,509 52,352 35,038 52,801 92,260 24,151 854,670 1,268,680 Obligations related to securities sold short 1 1,431 2,392 750 971 603 8,303 10,989 12,610 1,466 39,515 Obligations related to securities sold under repurchase agreements 2 173,741 21,172 2,096 1,036 30 1,225 23 – 2,577 201,900 Securitization liabilities at amortized cost 119 589 819 438 144 1,843 4,823 3,590 – 12,365 Amounts payable to brokers, dealers, and clients 26,598 – – – – – – – – 26,598 Insurance-related liabilities 224 448 671 671 705 1,184 1,656 727 883 7,169 Other liabilities 12,396 14,478 7,279 1,114 876 1,886 1,421 5,608 6,820 51,878 Subordinated notes and debentures – – – 200 – – – 11,273 – 11,473 Equity – – – – – – – – 115,160 115,160 Total liabilities and equity $ 332,144 $ 139,870 $ 116,927 $ 103,126 $ 81,955 $ 86,320 $ 141,058 $ 78,555 $ 981,796 $ 2,061,751 Off-balance sheet commitments Credit and liquidity commitments 6,7 $ 31,198 $ 28,024 $ 26,127 $ 24,731 $ 21,440 $ 52,706 $ 174,388 $ 4,743 $ 1,948 $ 365,305 Other commitments 8 113 266 270 400 254 1,019 1,591 403 50 4,366 Unconsolidated structured entity commitments – – – 125 766 490 19 – – 1,400 Total off-balance sheet commitments $ 31,311 $ 28,290 $ 26,397 $ 25,256 $ 22,460 $ 54,215 $ 175,998 $ 5,146 $ 1,998 $ 371,071 Amount has been recorded according to the remaining contractual maturity of the underlying security. 2 Certain contracts considered short-term are presented in ‘less than 1 month’ category. 3 Certain non-financial assets have been recorded as having ‘no specific maturity’. 4 As the timing of demand deposits and notice deposits is non-specific and callable by the depositor, obligations have been included as having ‘no specific maturity’. 5 Includes $ 75 billion of covered bonds with remaining contractual maturities of $ 2 billion in ‘over 3 months to 6 months’, $ 10 billion in ‘over 6 months to 9 months’, $ 18 billion in ‘over 1 to 2 years’, $ 37 billion in ‘over 2 to 5 years’, and $ 8 billion in ‘over 5 years’. 6 Includes $ 609 million in commitments to extend credit to private equity investments. 7 Commitments to extend credit exclude personal lines of credit and credit card lines, which are unconditionally cancellable at the Bank’s discretion at any time. 8 Includes various purchase commitments as well as commitments for leases not yet commenced, and lease-related payments.

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