Despite all the challenges currently facing Canadian banks, TD Bank Financial Group’s president and CEO Ed Clark is “cautiously optimistic” that the bank will be able to embrace opportunities from the crisis and emerge stronger, he said on Thursday.

At the bank’s annual meeting in Saint John, New Brunswick, Clark discussed the bank’s 2008 performance and its prospects going forward.

The bank’s earnings per share fell to $4.90 in 2008 from $5.53 in 2007; something Clark called a “disappointment.”

“TD wasn’t completely immune to the financial turmoil,” he said. In particular, the bank is currently facing significantly lower margins on deposits and loans, with the bank’s prime rate sitting at 2.5% — its lowest level in 74 years, according to Clark.

“These are unprecedented low rates,” he said. “Our margins are being squeezed as a result.”

But he added that TD Bank performed well compared to its Canadian and global competitors in 2008. “TD has outperformed in this crisis,” he said.

TD chairman John Thompson echoed this view. “Despite all the challenges, TD delivered great performance in 2008,” he said.

Thompson acknowledged that the company’s share price has plunged, but he said this has been a result of plummeting investor confidence. “It’s disappointing that our stock price doesn’t reflect this performance,” he said.

Clark pointed to figures showing that total shareholder returns at TD fell by 17% in 2008, compared to a 26% drop at other Canadian banks. He said TD’s heavily weighted retail activities have benefited the bank through the crisis.

TD continues to be active in the lending market, and is working to compensate for other credit market players that have stopped lending, Clark added. He said the bank’s loan book expanded by 16% in 2008.

But he admitted that TD has tightened its lending conditions. “How we run our business has to reflect the economic outlook. That’s the responsible thing to do.”

Clark added that TD expects greater provisions for credit losses going forward, particularly in the United States.

He expects the economic environment to remain challenging through 2009, and “well into 2010.” But Canada remains stronger than many other countries around the world, he added. “Canada does have the opportunity to emerge stronger.”

Thompson said the bank’s strategy of recent years to reduce risk has been instrumental in helping the bank perform well through the financial crisis.

“In our view, this strategy is working as it should,” he said. “TD has done very well without taking unnecessary amounts of risk.”

TD Bank announced in March that the company had decided to allow shareholders to vote on an advisory resolution on executive compensation, or ‘say on pay,’ for the first time in 2010. Thompson said this decision was a result of similar votes held at other Canadian banks, which indicated that the opinion of the investor community had moved in favour of say on pay.

“We’ve acted accordingly,” he said. “We truly hope that this power will be used judiciously, and not become politicized in the future.”

Thompson added that executive compensation at TD is tied to the bank’s performance to a large extent, since much of the compensation is in the form of long-term equity in the bank. Clark echoed this point, noting that much of his compensation is linked to regular feedback from TD customers.

IE