The ratings on The Toronto-Dominion Bank (TD Bank) reflect our view of the bank's formidable domestic retail operations, which continue to be the core growth engine with a substantial base of stable earnings, and a conservative risk culture including very modest exposure to U.S. subprime-related risks. The U.S. retail strategy continues to be the bank's largest challenge, with rising credit costs and low returns on cost of capital. Despite this important dilemma, we believe that TD Bank is more solidly positioned than some of its Canadian peers to weather continuing credit difficulties. TD Bank's significant retail franchise forms the backbone of its operations and has provided it with a stable and reliable earnings and growth engine amid a rapidly deteriorating
