TD Bank Group’s restructuring is well underway, said chief executive Raymond Chun, as the bank works to complete its anti-money laundering reforms and prepare for growth despite imposed U.S. limitations.
“The strategic review is advancing as planned,” said Chun, who took on the CEO job in February following the fallout from the bank’s US$3.1 billion settlement last year on money-laundering deficiencies.
“We are identifying significant opportunities to restructure operations, reduce costs, and improve processes,” he said on an earnings call Thursday.
The efforts to fix the bank have led to heightened expenses, including a 12% adjusted jump from last year, along with guidance for elevated expense growth next quarter because of the ramp-up in governance and control investments.
The costs weighed somewhat on earnings, which came in at $2.79 billion, down from $2.82 billion in the same quarter last year, or flat on both an adjusted and per share basis.
Revenue for the quarter totalled $14.05 billion, up from $13.71 billion.
But the bigger question than a single quarter result is what’s ahead for TD as it looks to put the anti-money laundering scandal behind it, and as Chun moves to shape a new direction for the bank.
As part of those efforts, TD announced in February it was selling its full stake in The Charles Schwab Corp. for proceeds of about $20 billion, with about $8 billion going to share buybacks and the rest going back into company expansion.
Since the bank is still going through a strategic review, Chun declined to give specifics on where it will be putting the rest of the money.
The bank is also working to reduce its assets in the U.S. to give it more options, since as part of its settlement with U.S. regulators, the bank has a U.S. asset limit of US$434 billion.
So far the bank has reduced its assets by about 10%, including US$25 billion of borrowings paid down during the first quarter, while it has also since announced a deal to sell a US$9 billion mortgage portfolio.
Tackling expenses is also part of the longer-term strategy, and one of its key priorities, even as it works to expand some operations, said Chun.
“From a cost optimization, we’re going deep to rightsize our cost base,” he said.
“As we move forward, we will continue to invest in our business, but then manage our expenses back down to a more normalized growth.”
While expenses were a pressure, the bank also benefited somewhat from the elevated trading levels seen at other banks, and growth in some lines of business.
Revenue for the first quarter totalled $14.05 billion, up from $13.71 billion.
The bank says its profit amounted to $1.55 per diluted share for the quarter ended Jan. 31, the same as a year earlier.
The bank’s provision for credit losses amounted to $1.21 billion, up from $1 billion in the same quarter last year.
On an adjusted basis, TD says it earned $2.02 per diluted share in its latest quarter, up from an adjusted profit of $2.00 per diluted share a year earlier.
The average analyst estimate had been for an adjusted profit of $1.96 per share, according to LSEG Data & Analytics.
Jeffries analyst John Aiken said TD had a solid quarter, though not as strong as its peers.
“TD is progressing on its AML remediation and restructuring of its balance sheet. While expenses are at a higher run-rate, we note that operationally, profitability is improving and the restructuring has not had a dire impact on earnings.”
‘Transition year’
Leo Salom, head of TD’s U.S. division, said the measures the bank is taking is setting itself up for the future.
“Our focus here is to leverage 2025 as that transition year, to make the investments we need to in the core franchise to be able to address some of our remediation activities,” said Salom on the call.
“We’re doing those things to be able to enter into 2026 with a more normalized profile.”
TD said its Canadian personal and commercial banking business earned $1.83 billion in its latest quarter, up from $1.79 billion a year earlier, while its U.S. retail bank division earned $342 million, down from $870 million a year ago.
The bank’s wealth management and insurance business earned $680 million, up from $555 million a year earlier. The increase was driven by record revenue, earnings and assets in wealth management and strong insurance premiums growth.
Wealth management and insurance revenue was $3.6 billion for the quarter, up 15% from the same quarter last year. The rise was mainly attributed to insurance premiums growth, higher fee-based revenue from market and asset growth, higher interest income from deposits and increased transaction revenue.
TD had $749 billion in assets under administration at the end of the first quarter, up from $629 billion at the same time last year. Assets under management were $569 billion, compared to $489 billion.
The bank reported 100,424 full-time equivalent staff as of Jan. 31, down from 103,179 at the same time in 2024.