TD Bank Surpasses Profit Forecasts, Reveals Job Cuts in Canada
By Nivedita Balu and Arasu Kannagi Basil
() – On Thursday, Canada’s second-largest bank, TD Bank, announced higher-than-predicted quarterly profits. This positive outcome was fueled by expansion in its capital markets division, amid increased trading activities due to the fluctuating market conditions.
The lending institution also unveiled a restructuring plan aimed at saving around C$650 million each year. This initiative includes downsizing by approximately 2%, equating to roughly 2,000 staff members, as well as scaling back certain operations and exiting specific businesses.
The division responsible for its wholesale banking activities—which includes capital markets and investment banking—saw a 16% increase in net income. It also achieved record revenues totaling C$2.13 billion, marking a rise of 10% compared to the previous year’s figures.
This was due to increased revenues related to trading activities and underwriting fees, which included proceeds from the disposal of its final equity stake in the American financial services company Charles Schwab.
“When there is uncertainty in the market, people take views on the direction, so you actually see more trading volume happening. TD, both on the securities side and wealth management side, will benefit from that,” CFO Kelvin Tran said in an interview.
Nevertheless, the bank allocated CA$1.34 billion ($965.5 million) as provisions to protect against potential deteriorating loans amid an unpredictable economic climate, which is higher than the CA$1.07 billion recorded in the previous year.
The company anticipates incurring pre-tax restructuring costs ranging from $600 million to $700 million over the coming few quarters.
“Market uncertainties lead clients to adopt a ‘wait and see’ approach, causing them to postpone certain long-term choices. Despite these ambiguities in our surroundings, we continue observing growth in loans. However, considering future prospects and acknowledging this unpredictability, we establish additional reserves,” Tran stated.
TD is currently conducting an extensive strategic review as the newly appointed leadership aims to streamline operations and revitalize the bank following its issues with money-laundering compliance. Raymond Chun, who has been with TD Bank for many years, assumed the top position in February.
Tran mentioned that the bank is well into its assessment process, focusing on ways for TD to “boost its progress and capitalize on fresh prospects.”
Darko Mihelic, an RBC Capital Markets banking analyst, expressed optimism regarding the outcomes and emphasized that the restructuring initiative was substantial.
TD sets the stage for the earnings season among Canadian banks, with remaining institutions scheduled to announce their figures the following week. The bank’s performance provides insight into how tariff turmoil has affected the Canadian economy.
LSEG data indicated that adjusted earnings of C$1.97 per share surpassed the analysts’ average forecast of C$1.76.
(1 CAD = 0.7205 USD)
(Reported by Arasu Kannagi Basil in Bengaluru; Edited by Shailesh Kuber and Jan Harvey)