TD Bank tops profit estimates, announces job cuts
TD Bank signage is pictured in the financial district in Toronto on Sept. 8, 2023. (Andrew Lahodynskyj / The Canadian Press)
Canada's second largest lender TD Bank on Thursday reported better-than-expected quarterly earnings driven by growth at its capital markets business, as a volatile environment boosted trading activity.
The lender also announced a restructuring program to save up to $650 million annually, including layoffs of about 2% or some 2,000 of its employees, business wind-downs and exits.
Its wholesale banking arm - which houses its capital markets and investment banking businesses - reported a 16% jump in net income and record revenue of $2.13 billion, up 10% from a year earlier.
That reflected higher trading-related revenue and underwriting fees, including from the sale of its remaining equity investment in U.S. financial services firm Charles Schwab SCHW.N.
'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.
However, the bank set aside $1.34 billion in provisions to shield against future souring loans in an uncertain environment, up from $1.07 billion a year earlier.
It also expects to incur restructuring charges of $600 million to $700 million pre-tax over the next several quarters.
'The uncertainty in the market does cause clients to pause in the wait and see mode, and they're deferring some long-term decisions. We still see loan growth despite the uncertainty in the environment, but given the outlook, and given that there's uncertainty, we build reserves,' Tran said.
TD is undergoing a broad-based strategic review as the new leadership looks to simplify the business and turn around the bank after its anti-money laundering problems. Raymond Chun, a longtime TD Bank executive, took the helm in February.
Tran said the bank is in the advanced stages of its review, which looks at how TD can 'accelerate momentum and seize new opportunities.'
RBC Capital Markets bank analyst Darko Mihelic said he had a positive view on the results and the restructuring program was significant.
TD kicks off the earnings season for Canadian lenders, with others set to report next week. TD's results offer a glimpse into the impact of the tariffs chaos on the Canadian economy.
Adjusted earnings of $1.97 per share beat analysts' average estimates of $1.76, LSEG data showed.
Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shailesh Kuber and Jan Harvey, Reuters
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