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1. Diluted earnings per share (EPS) growth |
20%+ |
|
40% |
| |
2. Return on common equity (ROE) |
20%+ |
|
23.5% |
| |
3. Revenue growth |
6–8% |
|
8% |
| |
4. Operating leverage |
>3% |
|
1% |
| |
5. Portfolio quality (4) |
.40–.50% |
|
.23% |
| |
6. Capital management: Tier 1 capital ratio (5) |
8%+ |
|
9.6% |
| |
7. Dividend payout ratio |
40–50% |
|
40% |
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| Our 2006 financial objectives were established late in fiscal 2005 and reflected our economic and business outlooks for 2006. We established aggressive objectives for 2006 to position us as a top quartile performer with respect to total return to shareholders relative to our Canadian and U.S. peers. At the time these objectives were established, we expected an average Canadian dollar value of US$.817 in 2006; however, the actual dollar value was US$.883. |
| Based on 2005 total reported diluted EPS of $5.13, which has been retroactively adjusted to $2.57 to reflect a stock dividend of one common share on each of our issued and outstanding common shares, paid on April 6, 2006. |
| Operating leverage is the difference between revenue growth rate and non-interest expense growth rate. Our 2006 objective is based on 2005 non-interest expenses excluding the Enron litigation provision of $591 million recorded in Q4 2005. |
| Ratio of specific provisions for credit losses to average loans and acceptances. |
| Calculated using guidelines issued by the Office of the Superintendent of Financial Institutions Canada (OSFI). |
| Excluding the impact of the Enron Corp. litigation-related provision in 2005, diluted EPS increased 27%. |
| We have adjusted our 2007 operating leverage calculation to incorporate certain factors in order to more appropriately reflect the performance of our businesses going forward. If this new approach was applied to our 2006 results, our adjusted operating leverage would have been 2.5%. Adjusted operating leverage is a non-GAAP financial measure. For a further discussion and reconciliation, refer to the Key financial measures (non-GAAP) section in the Management’s Discussion and Analysis (MD&A). |
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1. Diluted earnings per share (EPS) growth |
10%+ |
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2. Adjusted operating leverage (1) |
>3% |
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3. Return on common equity (ROE) |
20%+ |
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4. Tier 1 capital ratio (2) |
8%+ |
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5. Dividend payout ratio |
40–50% |
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| Adjusted operating leverage is the difference between revenue growth rate (as adjusted) and non-interest expense growth rate (as adjusted). Revenue is based on a taxable equivalent basis, excluding consolidated variable interest entities (VIEs), accounting adjustments related to the new Financial Instruments Standard and insurance-related revenue, while non-interest expense excludes insurance-related expense. For further details, see Key financial measures (non-GAAP) section in the MD&A. |
| Calculated using guidelines issued by the OSFI. |
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1. Total shareholder return (1) |
Top quartile |
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Top quartile |
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| Total shareholder return is calculated based on share price appreciation plus reinvested dividend income. |
| Versus seven large Canadian financial institutions (Manulife Financial Corporation, Bank of Nova Scotia, TD Bank Financial Group, BMO Financial Group, Sun Life Financial Inc., Canadian Imperial Bank of Commerce and National Bank of Canada) and 13 U.S. financial institutions (Bank of America, JP Morgan Chase & Co., Wells Fargo & Company, Wachovia Corporation, US Bancorp, Sun Trust Banks, Inc., The Bank of New York, BB&T Corporation, Fifth Third Bancorp, National City Corporation, The PNC Financial Services Group, KeyCorp and Northern Trust Corporation). |
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