The efficiency ratio measures the efficiency of our operations. It’s calculated by taking expenses (excluding non-cash goodwill and purchase-related intangible amortization and restructuring costs) as a percentage of total revenue (excluding special items). The lower the percentage, the greater the efficiency.
See supplementary information page 37, table 7
On an operating cash basis, the Bank’s overall efficiency ratio weakened to 64.9% in 2002 from 64.5% in 2001 and 61.8% in 2000. The Bank’s overall efficiency ratio is impacted by shifts in its business mix. The efficiency ratio is viewed as a more relevant measure for TD Canada Trust, which had an efficiency ratio of 58.9% this year as compared with 59.6% in 2001 and 60.9% in 2000, after excluding non-cash items and funding costs for the acquisition of Canada Trust. On a reported basis, the Bank’s overall efficiency ratio improved to 74.2% from 78.1% in 2001 and 79.6% in 2000. The improvement was a result of the discontinuation of the amortization of goodwill, lower intangible amortization and no restructuring costs in fiscal 2002.