TD Bank reported a return on equity (ROE) of 16% in the third quarter, surpassing its annual target of 13% and aligning with medium-term outlooks. The efficiency ratio improved to 55% from 59.5%, with expense growth kept in the 3% to 4% range. Restructuring costs of CAD 900 million were recorded, meeting the annual target, with a medium-term goal of CAD 2 billion to CAD 2.5 billion. The CET1 ratio ended the quarter at 14.3%, with a longer-term target of about 13% by the end of 2027.
Wholesale banking earnings contribution increased to 15% of total bank earnings, up from 9% when Ray Chun became CEO. The long-term target is 20% to 25%. Wholesale quarterly revenue has doubled since the TD Cowen acquisition three years prior. The current wholesale earnings mix is approximately 50% U.S., 30% Canada, and 20% Europe, Asia, and other regions. Provisions for credit losses (PCLs) are expected to land at the low end of the 40 to 50 basis point range, with a CAD 500 million reserve set aside specifically for tariff-related uncertainty.
TD Bank's stock delivered a 66% return over the past year, trading at a P/E ratio of 17.67. The bank is adding 1,200 wealth advisors in Canada, 500 small business and commercial bankers in Canada, 1,000 specialized sales staff in Canadian branch banking, and 500 wealth advisors in the U.S., moving from ~220–230 to over 700 by 2029. Additionally, 200 commercial bankers are being added in the U.S.
AI initiatives are expected to deliver CAD 1 billion in benefits, with specific process metrics showing mortgage pre-adjudication cut from 15 human hours to 3 minutes, mortgage funding costs reduced from CAD 187 to CAD 46–CAD 47, and mortgage discharge costs dropped from CAD 22–CAD 23 to about CAD 11. Collections connect rates improved from 6%–7% to 20%–25% using AI agents.
TD Bank's primacy percentage is 700 basis points higher than the peer average in Canada, with non-term deposits making up about 70% of TD's deposits, compared to an industry average of 53%. TD banks one in every three Canadians, with 35% to 40% of all new-to-Canada customers choosing TD as their first account, opening about 500,000 new-to-Canada accounts annually over a two-year period.
Ray Chun, Chief Executive Officer of TD Bank, highlighted the potential of wholesale banking, stating that there probably isn't a global systemically important bank (G-SIB) that doesn't have around 25% of their earnings coming from the wholesale business. He also emphasized the transformative potential of agentic AI, stating that it allows for the reimagination of entire processes, which hasn't been seen with automation or digital initiatives before.
