TD taps helocs to regain clients in ‘leadership push’

Bloomberg

Toronto-Dominion Bank is seeking to win back customers with home-equity loans — even as concerns grow over elevated consumer debt amid a slowing Canadian economy.
A push for a greater market share of home-equity lines of credit, or helocs, is part of this year’s strategy for Teri Currie, group head of Canadian personal banking at the country’s largest lender by assets. She wants Toronto-Dominion to be No. 1 in all areas of banking, and she maintains the company’s No. 4 position for these hybrid home loans pitched as mortgage substitutes doesn’t cut it.
“Our goal is to be the undisputed leader in all categories of Canadian banking,” Currie, 54, said in an interview at the Toronto headquarters. “We are below our embedded growth opportunity in that product in particular, so I continue to feel comfortable that on a relative basis we’ll have pretty good growth.”
Canada’s economy is cooling after years of growth fueled by real estate investment and consumer borrowing, and as higher interest rates and regulations bite into the housing market. Such a backdrop, along with near-record household debt levels, is making policymakers skittish about borrowing burdens.
Government Watch
The government’s Financial Consumer Agency of Canada targeted home-equity credit lines in a report this month, noting that about a quarter of Canadians with such debt are paying only interest.
Over the past 15 years, helocs have been the largest contributor to household debt outside of mortgages.
That has investor David Baskin worried about government stepping in with more rules, bringing uncertainty to banks that have profited from this lending.
“Helocs have become something of a hot-button issue with the debt zealots,” said Baskin, whose firm Baskin Wealth Management oversees C$1.2 billion ($900 million).
“I personally don’t think they are a huge issue in Canada as long as rates are low and the loan-to-value ratios are reasonable, which they usually are.”
Toronto-Dominion has two types of helocs, and while the bank has seen little growth in its non-amortising product, another offering introduced four years ago as a heloc-mortgage hybrid has seen rapid growth.
The bank has been playing catch-up to others that have long offered such hybrid loans, and Currie’s effort is more designed to recapture lost business from customers who turned to rivals for those loans instead of an aggressive push for new clients.
Toronto-Dominion is likely to increase its home-loans portfolio by “mid single digits” in 2019, according to Currie.