Toronto-Dominion Bank (TD) reported strong fourth-quarter earnings, exceeding analysts’ expectations, despite facing challenges from restructuring efforts. The bank experienced a profit decline of 10% year-over-year, totaling $3.3 billion, or $1.82 per share, for the quarter ending October 31.
Strong Performance Amid Restructuring
When adjusted for specific restructuring costs, TD’s profit actually rose by 22%, resulting in earnings of $2.18 per share. This figure surpassed the analysts’ predicted earnings of $2.01 per share, according to S&P Capital IQ. TD’s CEO Raymond Chun commented on the bank’s robust performance, highlighting strong trading income and year-over-year growth in the Canadian personal and commercial banking sectors.
Dividend Increase
In light of its performance, TD raised its quarterly dividend from $1.05 to $1.08 per share. This decision aligns with the bank’s focus on returning value to shareholders amidst ongoing restructuring.
U.S. Business Restructuring Efforts
- TD achieved a 10% reduction in its U.S. asset base, part of a broader strategy to comply with regulatory caps.
- Total assets in the U.S. business were reported at $382 billion, significantly below the $434 billion asset cap.
Kelvin Tran, the bank’s CFO, stated that the restructuring aims to enhance resource allocation and exit less profitable areas. The initiative included staff layoffs and a 3% workforce reduction due to the bank’s necessity to streamline operations following anti-money-laundering remediation efforts.
Restructuring Costs and Future Outlook
During the fourth quarter, TD incurred a restructuring charge of $190 million, with an anticipated final charge of $125 million expected in the first quarter of 2026. The bank is navigating a cost-cutting environment while maintaining focus on growth and client support.
Comparative Earnings Among Major Canadian Banks
TD is the sixth major bank to report its fourth-quarter results. Other banks, such as Bank of Nova Scotia, Royal Bank of Canada, and National Bank of Canada, have also reported profits that exceeded expectations. Expenses at TD rose by 9%, totaling $8.8 billion, influenced by increased employee-related costs and governance investments linked to remediation.
Capital Markets Growth
The bank saw a significant increase in capital markets profit, which more than doubled to $494 million from the previous year. Revenue in this sector rose by 24%, reaching $2.2 billion.
Overall, TD’s mixed performance reflects a strategic balance between addressing challenges and capitalizing on market opportunities, marking a crucial phase in its operational evolution.
