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01/10 05:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows a positive outlook with record assets in wealth management, strong loan and deposit growth, and a commitment to an $8 billion buyback program. Despite some headwinds in expenses and AML remediation, the bank's strategic initiatives like digital investments and balance sheet restructuring are likely to drive growth. The Q&A session highlights management's confidence in revenue growth and disciplined expense management, which supports a positive sentiment. While there are some uncertainties, the overall positive developments suggest a likely stock price increase of 2% to 8%.
Earnings $3.9 billion, EPS of $2.20. Robust fee and trading income in markets-driven businesses and volume growth year-over-year in Canadian Personal and Commercial Banking.
CET1 Ratio 14.8%, reflecting strong capital generation in the quarter.
Share Buyback 46 million shares repurchased for a total of over CAD 4 billion.
Canadian Personal and Commercial Banking Revenue Record revenue, earnings, deposits, and loan volumes. RESL volumes surpassed $400 billion, driven by strong performance across distribution channels. Loan growth in cards was the highest in almost a decade.
Business Bank Loans Up 6% year-over-year, reflecting growth across Commercial business.
TD Auto Finance Retail Originations Record retail originations.
U.S. Retail Core Loans Up 2% year-over-year.
U.S. Bank Card Balances Up 12% year-over-year, reaching USD 3 billion in balances.
U.S. Wealth Business Total Client Assets Up 12% year-over-year, with mass affluent client assets up 26% year-over-year.
Direct Investing Trades Per Day Up 18% year-over-year.
TD Insurance Premium Growth Strong premium growth year-over-year.
Wholesale Banking Revenue Over $2 billion for the third consecutive quarter, with broad-based revenue growth.
Restructuring Charges $333 million pretax in Q3, part of a total expected $600 million to $700 million pretax over several quarters. Expected annual run rate savings of $550 million to $650 million pretax.
Canadian Personal and Commercial Banking Deposits Average deposits rose 4% year-over-year, with 4% growth in personal deposits and 6% growth in business deposits.
Canadian Personal and Commercial Banking Loan Volumes Average loan volumes rose 4% year-over-year, with 3% growth in personal volumes and 6% growth in business volumes.
U.S. Retail Net Interest Margin (NIM) 3.19%, up 15 basis points quarter-over-quarter.
U.S. Retail Expenses Increased USD 199 million or 13% year-over-year, reflecting higher governance and control investments and employee-related expenses.
Wealth Management Assets Record assets driven by market appreciation and strong account origination.
Direct Investing Trading Volumes Up 23% year-over-year, led by active trader clients.
Wholesale Banking Revenue Growth Broad-based growth across Global Markets and Corporate and Investment Banking.
Provision for Credit Losses (PCL) Decreased $370 million or 17 basis points quarter-over-quarter to 41 basis points.
Allowance for Credit Losses $9.7 billion, an increase of $116 million quarter-over-quarter, reflecting additional performing reserves and higher impaired allowance.
TD AI Prism: Launched to deliver greater client personalization through AI-driven insights and support client services and growth.
Virtual AI Assistant: Introduced in TD Securities to enhance productivity by synthesizing equity research reports for institutional sales, trading, and research professionals.
U.S. Retail Core Loans: Grew 2% year-over-year, with U.S. bank card balances reaching $3 billion, up 12% year-over-year.
Canadian Personal and Commercial Banking: Achieved record revenue, earnings, deposits, and loan volumes, with RESL volumes surpassing $400 billion.
TD Asset Management: Won key institutional mandates globally and domestically, and expanded its ETF franchise.
Strategic Relationship with Fiserv: Simplified TD's portfolio, reduced costs, and improved financial performance over time.
Restructuring Program: Expected to generate $550-$650 million in annual savings through workforce and real estate optimization, asset write-offs, and business wind-downs.
U.S. AML Remediation Program: Achieved milestones including new transaction monitoring processes and machine learning models to improve efficiency.
Balance Sheet Restructuring: Completed investment portfolio repositioning, sold $25 billion in assets, and achieved a 10% asset reduction to improve return on equity.
Share Buyback Program: Repurchased 46 million shares for over CAD 4 billion, enhancing shareholder value.
Global trade dynamics and tariffs: Ongoing trade challenges and the upcoming CUSMA/USMCA renegotiation create business uncertainty and economic distortions, particularly in exposed sectors. The full impact of tariffs remains unclear, posing risks to operations and financial performance.
AML remediation program: The U.S. AML remediation program requires significant ongoing investments, with major milestones extending into 2026 and 2027. This includes compliance with regulatory reviews by the DOJ and FinCEN, which could impact operational focus and financial resources.
Balance sheet restructuring: Efforts to comply with asset limitations and improve returns involve significant loan sales and asset reductions, which may constrain growth and require careful execution to avoid operational disruptions.
Governance and control costs: Elevated expenses driven by governance and control investments, including AML remediation, could pressure profitability and limit financial flexibility.
Credit quality and provisions: Increased gross impaired loans and provisions for credit losses related to policy and trade uncertainty highlight potential risks in credit performance, particularly in Wholesale Banking and U.S. Commercial Lending portfolios.
Restructuring program: The restructuring program involves workforce and real estate optimization, asset write-offs, and business wind-downs, which could disrupt operations and employee morale during implementation.
Economic environment: Slowing momentum in Canadian and U.S. economies, coupled with policy and trade-related risks, could impact loan growth, credit performance, and overall financial stability.
Revenue Growth: TD expects to generate an NII benefit of approximately $500 million pretax in fiscal 2025 from investment portfolio repositioning. Canadian Personal and Commercial Banking NIM is expected to remain stable in Q4, while U.S. Retail NIM is expected to moderately expand.
Cost Savings: The restructuring program is expected to generate annual run rate savings of $550 million to $650 million pretax, with $100 million pretax savings anticipated in fiscal 2025.
Expense Growth: Fiscal 2025 expense growth is projected to be at the upper end of the 5% to 7% range, reflecting investments in governance, control, and business growth. U.S. Retail expense growth is expected to be in the mid-single-digit range in fiscal 2026.
Capital Position: The bank's CET1 ratio is expected to remain strong, with continued share buybacks and normalized liquidity levels.
U.S. AML Remediation: The majority of management remediation actions are expected to be completed by the end of calendar 2025, with significant work continuing into 2026 and 2027.
Loan Growth: U.S. Retail segment core loans are expected to grow at a rate consistent with historical performance through the medium term, supported by asset reduction initiatives.
Credit Performance: Fiscal 2025 PCL results are expected to fall within the range of 45 to 55 basis points, reflecting strong credit performance and prudent provisioning.
Investor Day Outlook: TD plans to share its medium-term strategy and outlook at the upcoming Investor Day on September 29, 2025.
Dividend Program: No specific mention of a dividend program or changes to dividend payouts was made during the call.
Share Buyback Program: The bank repurchased 16 million common shares under its share buyback program in Q3, reducing the CET1 ratio by 25 basis points. As of quarter end, the bank was over halfway through its share buyback program, with 46 million shares repurchased for a total of over CAD 4 billion.
The earnings call reflects a stable financial performance with positive elements like share buybacks and strong credit performance. However, there are concerns about weaker insurance results, slight declines in U.S. deposit growth, and unclear guidance on asset cap relief. The Q&A session did not reveal significant negative sentiment but highlighted uncertainties in regulatory timelines. Overall, the mix of positive and negative factors, along with stable but not exceptional financial metrics, suggests a neutral stock price movement over the next two weeks.
The earnings call shows a positive outlook with record assets in wealth management, strong loan and deposit growth, and a commitment to an $8 billion buyback program. Despite some headwinds in expenses and AML remediation, the bank's strategic initiatives like digital investments and balance sheet restructuring are likely to drive growth. The Q&A session highlights management's confidence in revenue growth and disciplined expense management, which supports a positive sentiment. While there are some uncertainties, the overall positive developments suggest a likely stock price increase of 2% to 8%.
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