TD Toronto Dominion Bank

Earnings News Release • Three and twelve months ended October 31, 2024

FOURTH QUARTER FINANCIAL HIGHLIGHTS, compared with the fourth quarter last year:

• Reported diluted earnings per share were $1.97, compared with $1.48.
• Adjusted diluted earnings per share were $1.72, compared with $1.82.
• Reported net income was $3,635 million, compared with $2,866 million.
• Adjusted net income was $3,205 million, compared with $3,485 million.

FULL YEAR FINANCIAL HIGHLIGHTS, compared with last year:

• Reported diluted earnings per share were $4.72, compared with $5.52.
• Adjusted diluted earnings per share were $7.81, compared with $7.91.
• Reported net income was $8,842 million, compared with $10,634 million.
• Adjusted net income was $14,277 million, compared with $14,995 million.

FOURTH QUARTER ADJUSTMENTS – CHARGE (GAIN) FOR ITEMS OF NOTE:

The fourth quarter reported earnings figures included the following items of note:

• Amortization of acquired intangibles of $60 million ($52 million after-tax or 3 cents per share), compared with $92 million ($83 million after-tax or 4 cents per share) in the fourth quarter last year.
• Acquisition and integration charges related to the Schwab transaction of $35 million ($26 million after-tax or 2 cents per share), compared with $31 million ($26 million after-tax or 1 cent per share) in the fourth quarter last year.
• Acquisition and integration charges related to the Cowen acquisition of $82 million ($64 million after-tax or 4 cents per share), compared with $197 million ($161 million after-tax or 9 cents per share) in the fourth quarter last year.
• Impact from the terminated First Horizon (FHN) acquisition-related capital hedging strategy of $59 million ($45 million after-tax or 2 cents per share), compared with $64 million ($48 million after-tax or 3 cents per share) in the fourth quarter last year.
• Gain on sale of Schwab shares of ($1,022) million (($1,022) million after-tax or (59) cents per share).
• U.S. balance sheet restructuring of $311 million ($234 million after-tax or 13 cents per share).
• Indirect tax matters of $226 million ($173 million after-tax or 10 cents per share).
• Federal Deposit Insurance Corporation (FDIC) special assessment of ($72) million (($54) million after-tax or (3) cents per share).
• Global resolution of the investigations into the Bank's U.S. BSA/AML program of $52 million ($52 million after-tax or 3 cents per share).

TORONTO, Dec. 5, 2024 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the fourth quarter ended October 31, 2024. Reported earnings were $3.6 billion, up 26.8% compared with the fourth quarter last year, and adjusted earnings were $3.2 billion, down 8.0%.

"Despite a challenging quarter, we are pleased with the Bank's underlying fundamentals, which were reflected in our revenue growth. This quarter, we delivered higher fee income in our markets-related businesses, volume growth in Canada, and stable deposits in the U.S.," said Bharat Masrani, Group President and CEO, TD Bank Group. "A key development this quarter was the resolution of our U.S. AML matters, bringing important clarity to our stakeholders. Remediation is our number one priority, and we continue to make meaningful progress in addressing the failures."

Canadian Personal and Commercial Banking delivered a strong quarter with record revenue and continued positive operating leverage

Canadian Personal and Commercial Banking net income was $1,823 million, an increase of 9% compared to the fourth quarter last year, reflecting higher revenue, partially offset by higher non-interest expenses and provisions for credit losses. Revenue was a record $5,064 million, an increase of 7%, primarily reflecting loan and deposit volume growth and margin expansion on deposits.

This quarter, Canadian Personal and Commercial Banking enhanced its credit card loyalty programs, teaming up with the Vancouver Canucks to offer exclusive perks at home games for eligible TD credit cardholders. Canadian Business Banking continued to drive innovation with the launch of TD eCommerce Solutions, a full-service e-commerce platform for businesses to sell online and take payments, and through a collaboration with TouchBistro to provide a streamlined payment and operations management platform for restaurant owners.

The U.S. Retail Bank delivered loan growth and stable deposits in a challenging quarter

U.S. Retail reported net income for the quarter was $863 million (US$634 million), down 32% (32% in U.S. dollars) compared with the fourth quarter last year. On an adjusted basis, net income was $1,095 million (US$803 million), down 14% (14% in U.S. dollars). Reported net income for the quarter from the Bank's investment in The Charles Schwab Corporation ("Schwab") was $154 million (US$114 million), down 22% (22% in U.S. dollars).

U.S. Retail Bank, which excludes the Bank's investment in Schwab, reported net income was $709 million (US$520 million), down 34% (34% in U.S. dollars) compared with the fourth quarter last year, reflecting higher PCL, higher non-interest expenses, and lower revenue. On an adjusted basis, net income was $941 million (US$689 million), down 12% (13% in U.S. dollars), reflecting higher PCL and higher non-interest expenses.

This quarter, the U.S Retail Bank announced an extension to its credit card program agreement with Nordstrom to continue as the exclusive issuer of Nordstrom's Visa and private label consumer credit cards through 2032. TD Bank, America's Most Convenient Bank^® (TD AMCB), ranked #1 for the eighth consecutive year in total number of approved U.S. Small Business Administration (SBA) loans in its Maine to Florida footprint and #2 in SBA loans nationally. In addition, TD AMCB earned the 2024 Great Places to Work Certification™ for the ninth year in a row.

Wealth Management and Insurance delivered strong underlying performance offset by impact of severe weather events

Wealth Management and Insurance net income was $349 million, down 29% compared with the fourth quarter last year. Revenue for the quarter was $3,937 million, an increase of $981 million, or 33%. Of the increase, $718 million, or 27%, was driven by reinsurance recoveries with the remainder reflecting higher insurance premiums, asset growth, increased transaction revenue and higher deposit margins. TD Insurance reported higher claims costs due to a significant hailstorm in Calgary and severe weather events in Quebec, in addition to increased claims severity.

This quarter, Wealth Management and Insurance continued its focus on client-centric innovation. TD Direct Investing launched TD Active Trader Live, a new weekly streaming program designed to enhance clients' trading experience with in-depth analysis, insights and strategies. TD Asset Management grew its ETF business, leading the Big 5 banks in market share growth this fiscal year[1]. TD Insurance continued its digital transformation, with over 40% of eligible customers now purchasing their insurance online. Additionally, TD Insurance provided support and advice to customers and communities impacted by severe weather events this quarter.

Wholesale Banking continued to demonstrate increased earnings power from combined TD Securities and TD Cowen capabilities

Wholesale Banking reported net income for the quarter was $235 million, an increase of $218 million compared with the fourth quarter last year, primarily reflecting higher revenue and lower non-interest expenses, partially offset by higher income taxes and PCL. On an adjusted basis, net income was $299 million, an increase of $121 million, or 68%. Revenue for the quarter was $1,771 million, an increase of $283 million, or 19%, compared with the fourth quarter last year, reflecting higher lending revenue, underwriting fees and trading-related revenue.

This quarter, TD Securities was joint lead on the Bank's secondary sale of Schwab shares in a US$2.5 billion block trade, one of the ten largest U.S. block trades since 2010. TD Cowen was recognized for its industry-leading research capabilities in the 2024 Extel Research Surveys, including #1 in Telecom & Media and third place overall in Canada. In the U.S. survey, TD Cowen's Washington Research team ranked #1. In addition, TD Securities was recognized in four categories at the Euromoney FX Awards, including Canada's Best FX Bank.

Capital

TD's Common Equity Tier 1 Capital ratio was 13.1%.

Looking Forward

For fiscal 2025, it will be challenging for the Bank to generate earnings growth as it navigates a transition year, advances AML remediation with investments in its risk and control infrastructure, and continues to invest in its businesses.

The Bank is currently undertaking a strategic review of organic opportunities and priorities, productivity and efficiency initiatives, and capital allocation alternatives. As a result, TD is suspending the following medium-term financial targets: 7-10% adjusted EPS growth, 16%+ return on equity and positive operating leverage. The Bank expects to update its medium-term financial targets in the second half of 2025.

"TD faced challenges in 2024, but we have a strong Bank, with well-positioned businesses serving millions of customers. Our AML remediation is our top priority, and we remain focused on strengthening our risk and controls to meet our obligations," said Raymond Chun, Chief Operating Officer, TD Bank Group. "I'm confident that in the year ahead, we will refresh our strategy, drive change, and enhance efficient execution to deliver for our shareholders and all stakeholders."

The foregoing contains forward-looking statements. Refer to the "Caution Regarding Forward-Looking Statements" on page 3.

Caution Regarding Forward-Looking Statements

From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the United States (U.S.) Securities and Exchange Commission (SEC), and in other communications. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media, and others. All such statements are made pursuant to the "safe harbour" provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements made in this document, the Management's Discussion and Analysis ("2024 MD&A") in the Bank's 2024 Annual Report under the heading "Economic Summary and Outlook", under the headings "Key Priorities for 2025" and "Operating Environment and Outlook" for the Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking segments, and under the heading "2024 Accomplishments and Focus for 2025" for the Corporate segment, and in other statements regarding the Bank's objectives and priorities for 2025 and beyond and strategies to achieve them, the regulatory environment in which the Bank operates, and the Bank's anticipated financial performance.

Forward-looking statements are typically identified by words such as "will", "would", "should", "believe", "expect", "anticipate", "intend", "estimate", "plan", "goal", "target", "may", and "could". By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, general and specific. Especially in light of the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and uncertainties – many of which are beyond the Bank's control and the effects of which can be difficult to predict – may cause actual results to differ materially from the expectations expressed in the forward-looking statements.

Risk factors that could cause, individually or in the aggregate, such differences include: strategic, credit, market (including equity, commodity, foreign exchange, interest rate, and credit spreads), operational (including technology, cyber security, process, systems, data, third-party, fraud, infrastructure, insider and conduct), model, insurance, liquidity, capital adequacy, legal and regulatory compliance (including financial crime), reputational, environmental and social, and other risks.

Examples of such risk factors include general business and economic conditions in the regions in which the Bank operates (including the economic, financial, and other impacts of pandemics); geopolitical risk; inflation, interest rates and recession uncertainty; regulatory oversight and compliance risk; risks associated with the Bank's ability to satisfy the terms of the global resolution of the civil and criminal investigations into the Bank's U.S. BSA/AML program; the impact of the global resolution of the civil and criminal investigations into the Bank's U.S. BSA/AML program on the Bank's businesses, operations, financial condition, and reputation; the ability of the Bank to execute on long-term strategies, shorter-term key strategic priorities, including the successful completion of acquisitions and dispositions and integration of acquisitions, the ability of the Bank to achieve its financial or strategic objectives with respect to its investments, business retention plans, and other strategic plans; the risk of large declines in the value of Bank's Schwab equity investment and corresponding impact on TD's market value; technology and cyber security risk (including cyber-attacks, data security breaches or technology failures) on the Bank's technologies, systems and networks, those of the Bank's customers (including their own devices), and third parties providing services to the Bank; data risk; model risk; fraud activity; insider risk; conduct risk; the failure of third parties to comply with their obligations to the Bank or its affiliates, including relating to the care and control of information, and other risks arising from the Bank's use of third-parties; the impact of new and changes to, or application of, current laws, rules and regulations, including without limitation consumer protection laws and regulations, tax laws, capital guidelines and liquidity regulatory guidance; increased competition from incumbents and new entrants (including Fintechs and big technology competitors); shifts in consumer attitudes and disruptive technology; environmental and social risk (including climate-related risk); exposure related to litigation and regulatory matters; ability of the Bank to attract, develop, and retain key talent; changes in foreign exchange rates, interest rates, credit spreads and equity prices; downgrade, suspension or withdrawal of ratings assigned by any rating agency, the value and market price of the Bank's common shares and other securities may be impacted by market conditions and other factors; the interconnectivity of Financial Institutions including existing and potential international debt crises; increased funding costs and market volatility due to market illiquidity and competition for funding; critical accounting estimates and changes to accounting standards, policies, and methods used by the Bank; and the occurrence of natural and unnatural catastrophic events and claims resulting from such events.

The Bank cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank's results. For more detailed information, please refer to the "Risk Factors and Management" section of the 2024 MD&A, as may be updated in subsequently filed quarterly reports to shareholders and news releases (as applicable) related to any events or transactions discussed under the headings "Significant Events" or "Significant and Subsequent Events" in the relevant MD&A, which applicable releases may be found on www.td.com.

All such factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, should be considered carefully when making decisions with respect to the Bank. The Bank cautions readers not to place undue reliance on the Bank's forward-looking statements. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2024 MD&A under the headings "Economic Summary and Outlook" and "Significant Events", under the headings "Key Priorities for 2025" and "Operating Environment and Outlook" for the Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking segments, and under the heading "2024 Accomplishments and Focus for 2025" for the Corporate segment, each as may be updated in subsequently filed quarterly reports to shareholders.

Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Bank's shareholders and analysts in understanding the Bank's financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation.

This document was reviewed by the Bank's Audit Committee and was approved by the Bank's Board of Directors, on the Audit Committee's recommendation, prior to its release.

SIGNIFICANT EVENTS

a) Global Resolution of the Investigations into the Bank's U.S. BSA/AML Program

On October 10, 2024, following active cooperation and engagement with authorities and regulators, the Bank reached a resolution with respect to previously disclosed investigations related to its U.S. Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs. The Bank and certain of its U.S. subsidiaries consented to orders with the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), and the Financial Crimes Enforcement Network (FinCEN) and entered into plea agreements with the Department of Justice (DOJ), Criminal Division, Money Laundering and Asset Recovery Section and the United States Attorney's Office for the District of New Jersey (collectively, the "Global Resolution"). Details of the Global Resolution include: (i) a total payment of US$3.088 billion (C$4.233 billion), all of which was provisioned during the 2024 fiscal year; (ii) TD Bank, N.A. (TDBNA) pleading guilty to one count of conspiring to fail to maintain an adequate AML program, fail to file accurate currency transaction reports (CTRs) and launder money and TD Bank US Holding Company (TDBUSH) pleading guilty to two counts of failing to maintain an adequate AML program and failing to file accurate CTRs; (iii) requirements to remediate the Bank's U.S. BSA/AML program, broadly aligned to its existing remediation program, which requirements the Bank has begun to address; (iv) a requirement to prioritize the funding and staffing of the remediation, which includes Board certifications for dividend distributions from certain of the Bank's U.S. subsidiaries to the Bank; (v) formal oversight of the U.S. BSA/AML remediation through an independent compliance monitorship; (vi) a prohibition against the average combined total assets of TD's two U.S. banking subsidiaries (TD Bank, N.A. and TD Bank USA, N.A.) (collectively, the "U.S. Bank") exceeding US$434 billion (representing the combined total assets of the U.S. Bank as at September 30, 2024) (the "Asset Limitation"), and if the U.S. Bank does not achieve compliance with all actionable articles in the OCC consent orders (and for each successive year that the U.S. Bank remains non-compliant), the OCC may require the U.S. Bank to further reduce total consolidated assets by up to 7%; (vii) the U.S. Bank being subject to OCC supervisory approval processes for any additions of new bank products, services, markets, and stores prior to the OCC's acceptance of the U.S. Bank's improved AML policies and procedures, to ensure the AML risk of new initiatives is appropriately considered and mitigated; (viii) requirements for the Bank and TD Group U.S. Holdings, LLC (TDGUS) to retain a third party to assess the effectiveness of the corporate governance and U.S. management structure and composition to adequately oversee U.S. operations; and (ix) requirements to comply with the terms of the plea agreements with the DOJ during a five-year term of probation (which could be extended as a result of the Bank failing to complete the compliance undertakings, failing to cooperate or to report alleged misconduct as required, or committing additional crimes); * an ongoing obligation to cooperate with DOJ investigations; and (xi) an ongoing obligation to report evidence or allegations of violations by the Bank, its affiliates, or their employees that may be a violation of U.S. federal law.

Refer to "Key Terms of the Global Resolution" below for additional information about the terms of the orders and plea agreements. 

Key Terms of the Global Resolution

 

 

Remediation of U.S. BSA/AML Program

As described in the DOJ Statement of Facts, between January 2014 and October 2023, the U.S. Bank's BSA/AML Program had long-term, pervasive, and systemic deficiencies and the U.S. Bank (a) failed to substantively update, and severely limited the types of activity screened through, the transaction monitoring system, and (b) failed to adequately train employees who served as the first line of defense against money laundering. TDBNA's failure to effectively manage its employee risk also contributed to insider misconduct. In addition, as noted in the OCC Consent Order, deficiencies in the U.S. Bank's BSA/AML Program included deficiencies related to: internal controls and risk management practices; risk assessments; customer due diligence; customer risk ratings; suspicious activity identification, evaluation, and reporting; governance; staffing; independent testing; and training, among others. There was a systemic breakdown in the policies, procedures, and processes to identify and report suspicious activity.

The Bank is focused on remediating its U.S. BSA/AML program to meet the requirements of the Global Resolution, and it has organized its remediation efforts consistent with the requirements of the Global Resolution. The redesign of the U.S. BSA/AML program is focused on improvements to capabilities across five core pillars, namely: (i) People and Talent, (ii) Governance and Structure, (iii) Policy and Risk Assessment, (iv) Process and Control, and (v) Data and Technology.

Progress to date on the remediation includes:

With the talent, governance, structure, and policy foundations in place, the Bank expects to have the majority of its management remediation actions implemented in calendar 2025, with additional management actions planned for calendar 2026. In addition, sustainability and testing activities are planned for calendar 2026 and calendar 2027. The Bank is also targeting to have the Suspicious Activity Report lookback to be completed in 2027 per the FinCEN Consent Order. All management remediation actions will be subject to validation by the Bank's internal audit function, followed by the review and acceptance by the appointed monitor, demonstrated sustainability, and, ultimately, the review and approval of the Bank's U.S. banking regulators and the DOJ. The following graph illustrates the Bank's expected remediation plan and progress.

The Bank's remediation timeline is based on the Bank's current plans, as well as assumptions related to the duration of planning activities, including the completion of external benchmarking and lookback reviews. The Bank's ability to meet its planned remediation milestones assumes that the Bank will be able to successfully execute against its U.S. BSA/AML remediation program plan, which is subject to inherent risks and uncertainties including the Bank's ability to attract and retain key employees, the ability of third parties to deliver on their contractual obligations, and the successful development and implementation of required technology solutions. Furthermore, the execution of the U.S. BSA/AML remediation plan, including these planned milestones, will not be entirely within the Bank's control including because of (i) the requirement to obtain regulatory approval or non-objection before proceeding with various steps, and (ii) the requirement for the various deliverables to be acceptable to the regulators and/or the monitors. For additional information on the risks associated with the remediation of the Bank's U.S. BSA/AML program, see "Risk Factors That May Affect Future Results – Global Resolution of the Investigations into the Bank's U.S. BSA/AML Program".

For information about estimated U.S. BSA/AML remediation and governance and control expenses for the 2025 fiscal year, see the "Key Priorities for 2025" section of the U.S. Retail segment; for additional information about the Bank's AML governance framework, see the "Managing Risk" section; and for information about the risks associated with the remediation of the Bank's U.S. BSA/AML program, see the "Risk Factors That May Affect Future Results – Global Resolution of the Investigations into the Bank's U.S. BSA/AML Program" section.

Assessment and Strengthening of the Bank's Enterprise AML Program

The Bank is undertaking several improvements to the Bank's enterprise-wide AML/Anti-Terrorist Financing and Sanctions Programs ("Enterprise AML Program"). These improvements are made in the context of the Bank's 2023 annual assessment of its Enterprise AML Program, which was rated unsatisfactory as of October 31, 2023. The depth and severity of U.S. BSA/AML program deficiencies contributed to the effectiveness rating of the Enterprise AML Program. Moreover, during fiscal 2024, Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) undertook a compliance examination of certain aspects of the Bank's AML program in Canada. FINTRAC imposed an administrative monetary penalty of $9.2 million and issued five violations: (i) FINTRAC found that TD failed to file suspicious transaction reports (STRs) in 20 of the cases it had reviewed and (ii) FINTRAC issued four inter-related violations that primarily stemmed from the Bank's failure to properly identify (i.e., assess and document) its full population of high-risk customers. Based on the Bank's work to date, the Bank (a) has not identified issues to the same extent in Canada, Europe or Asia as in the U.S., and (b) has not experienced the same severe AML-related events in Canada, Europe or Asia as those experienced in the U.S. However, the Bank has concluded that most of the pervasive AML related issues in the U.S. are, to a varying extent, also applicable to certain aspects of the Enterprise AML Program outside the U.S. The Bank has identified a number of areas in the Enterprise AML Program outside the U.S. that require improvement. Common themes requiring attention relate to governance and oversight of various components of the Enterprise AML Program, quality of reporting to senior management and the board of directors, quality control processes, adequacy of procedures in targeted areas, operational deficiencies in respect of high-risk customers, and certain aspects of transaction monitoring.

Improvements to the Enterprise AML Program outside the U.S. are underway, with corresponding investments and resourcing in place across all three lines of defence, including key technology initiatives, to ensure the Bank can address these deficiencies. The Bank is also applying learnings obtained from the deficiencies identified in its U.S. BSA/AML program to its Enterprise AML Program outside the U.S. In particular, these improvements to the Enterprise AML Program outside the U.S. fall under three main categories:

• Tactical Enhancements: The Bank has launched the implementation of a number of operational and business process enhancements across the enterprise, where necessary, that are similar to the initial enhancements made to its U.S. BSA/AML program. These enhancements are intended to provide interim risk mitigation and strengthen the control environment in specific key areas.
• Strategic Enhancements: A detailed plan has been developed to upgrade the Enterprise AML Program outside the U.S. and address the areas that require improvement, with ongoing updates.
• FINTRAC Remediation: As a result of the FINTRAC examination, the Bank has established a remediation program and submitted a detailed plan to FINTRAC to address the FINTRAC violations and ensure compliance with regulatory expectations.

Similar to the U.S. BSA/AML remediation program, the FINTRAC remediation and other planned strategic enhancements of the Enterprise AML Program outside the U.S. are organized under five core pillars:

Based on the Bank's current plans, the majority of the above-mentioned remediation and enhancement actions are anticipated to be implemented by the Bank by the end of calendar 2025, and will then be subject to internal review, challenge, and validation of the activities. See "Remediation of U.S. BSA/AML Program" for U.S. BSA/AML remediation timeline.

Impact on the Bank's Financial Performance Objectives

Reflecting a challenging macroeconomic environment and the impact of the resolution of investigations related to the Bank's AML program, in fiscal 2024, the Bank did not meet the Bank's medium-term financial targets to attain 7-10% adjusted EPS growth (the Bank's fiscal 2024 adjusted EPS growth was -1.3%), a 16%+ return on equity (the Bank's fiscal 2024 adjusted return on equity was 13.6%), and a positive operating leverage[3] (the Bank's fiscal 2024 adjusted revenue, net of insurance service expense, and adjusted expense growth were 7.1% and 10.5%, respectively).

The Bank expects that fiscal 2025 will be a transition year, is prioritizing the investments and work that are required to meet its regulatory commitments, and expects that elevated risk and control expenses will negatively impact earnings during the 2025 fiscal year. In addition, the Bank continues to invest in its businesses. Accordingly, for fiscal 2025, it will be challenging for the Bank to generate earnings growth. The Bank does not expect to meet the following three previously disclosed medium-term financial targets in fiscal 2025: 7-10% adjusted EPS growth, 16%+ return on equity and positive operating leverage. 

The Bank is currently undertaking a broad-based strategic review and will reassess organic opportunities and priorities, productivity and efficiency initiatives, and capital allocation alternatives, with the objective of delivering competitive returns for our shareholders. As a result of this review, the Bank is suspending the following medium-term financial targets: 7-10% adjusted EPS growth, 16%+ return on equity and positive operating leverage. The Bank expects to provide updates on its strategic review, and on the Bank's medium-term financial targets, in the second half of 2025. The Bank remains confident in the earnings growth potential of its Canadian Personal & Commercial Banking, Wealth Management & Insurance and Wholesale Banking segments. While the Bank expects that its balance sheet restructuring activities in the U.S. Retail segment and U.S. AML remediation will impact the U.S. Retail segment, it remains committed to the US market and confident in the strength of the US franchise.

As a result of the Bank's investments in its risk and control infrastructure and investments supporting business growth, including employee-related expenses, net of expected productivity and restructuring run-rate savings, the Bank expects that expense growth for the 2025 fiscal year will be in the range of 5-7%^[4].

Impact on the Bank's U.S. Priorities

The U.S. Retail segment's top priority remains remediating the U.S. BSA/AML program and strengthening the governance and control environment. In addition, to help ensure we can continue to support our customers' financial needs in the U.S. while not exceeding the limitation on the combined total assets of the U.S. Bank, the Bank is focused on executing multiple balance sheet restructuring actions in fiscal 2025. Refer to the "Key Priorities for 2025" section of the U.S. Retail segment section for additional information, including the loss associated with the balance sheet restructuring actions which is treated as an item of note in the U.S. Retail segment results.

Impact on the Bank's Operations

The plea agreements have resulted in one TD entity being disqualified from serving as an investment adviser or underwriter to registered investment companies in the United States, which has required TD to seek a waiver from the U.S. Securities and Exchange Commission ("SEC") and implement interim arrangements until a waiver is obtained. Another TD entity has become disqualified from relying on the U.S. Department of Labor's "qualified professional asset manager" exemption for purposes of providing asset management services to employee benefit plans subject to the U.S. Employee Retirement Income Security Act of 1974 ("ERISA"). As a result, TD is relying on alternative exemptions for purposes of ERISA compliance, which are expected to allow TD to continue to operate these businesses without disruption. In addition, TD has made minor modifications to its U.S. registered securities programs. None of these changes had a material impact on the Bank's fourth quarter of 2024 results.

The terms of the Global Resolution and the financial, operational and business impact that those terms have had on the Bank have led to the Bank exceeding certain internal risk metrics, resulting in additional escalation and monitoring activities within the Bank, including with respect to the Bank's remediation activities.

b) Restructuring Charges

The Bank continued to undertake certain measures in 2024 to reduce its cost base and achieve greater efficiency. In connection with these measures, the Bank incurred $566 million of restructuring charges for the year ended October 31, 2024 (October 31, 2023 – $363 million), which primarily relate to employee severance and other personnel-related costs and real estate optimization. This restructuring program concluded in the third quarter of 2024.

c) Federal Deposit Insurance Corporation Special Assessment

On November 16, 2023, the Federal Deposit Insurance Corporation (FDIC) announced a final rule that implements a special assessment to recover the losses to the Deposit Insurance Fund arising from the protection of uninsured depositors during the U.S. bank failures in the spring of 2023. The special assessment resulted in the recognition of $411 million (US$300 million) pre-tax in non-interest expenses in the first quarter of fiscal 2024.

On February 23, 2024, the FDIC notified all institutions subject to the special assessment that its estimate of total losses increased compared to the amount communicated with the final rule in November 2023. Accordingly, the Bank recognized an additional expense for the special assessment of $103 million (US$75 million) in the second quarter of fiscal 2024. During the fourth quarter of fiscal 2024, the Bank updated the special assessment estimate based on actual invoices received during the year and recognized an expense recovery of $72 million (US$52 million).

The final amount of the Bank's special assessment may be further updated as the FDIC determines the actual losses to the Deposit Insurance Fund.

d) Sale of Schwab Common Shares

On August 21, 2024, the Bank sold 40.5 million shares of common stock of The Charles Schwab Corporation ("Schwab") for proceeds of approximately $3.4 billion (US$2.5 billion). The share sale reduced the Bank's ownership interest in Schwab from 12.3% to 10.1%. The Bank recognized approximately $1.0 billion (US$0.7 billion) as other income (net of $0.5 billion (US$0.4 billion) loss from accumulated other comprehensive income (AOCI), reclassified to earnings), in the fourth quarter of fiscal 2024.

HOW WE PERFORMED

ECONOMIC SUMMARY AND OUTLOOK

The global economy remains on track for a modest slowdown in calendar 2024, as high interest rates continue to weigh on growth. Alongside slower growth, inflation across the G-7 has cooled, and central banks have started to lower interest rates. TD Economics expects future interest rate reductions to be gradual, as central banks assess how growth and inflation respond. In addition, the evolution of geopolitical risks maintains a degree of uncertainty on both the economic outlook and the inflation trajectory.

The U.S. economy has continued to grow at a solid pace in calendar 2024 supported by resilient consumer spending and strength in business investment. High borrowing costs have curtailed residential investment, which has weighed on overall growth. With U.S. domestic demand outpacing many of its advanced economy peers, import growth has also run ahead of exports, leading to little support to growth from international trade.

Based on the October 2024 data, the U.S. job market has stabilized recently, with the unemployment rate at 4.1%, up modestly from a year ago. This can be characterized as a normalization following tight conditions that persisted for longer than expected after the pandemic. The U.S. economy carries the markings of a "soft landing" that is allowing inflation pressures to gradually drift lower and opened the door to interest rate cuts by the U.S. Federal Reserve. The U.S. central bank lowered its policy rate by half a point in September and another quarter point in October.

TD Economics expects the U.S. Federal Reserve to continue to lower interest rates over the next year. However, the pace of interest rate reductions has become more uncertain following the November election. Given the likelihood of increased tariffs under the new administration, and the potential for tax cuts, the risk that inflation experiences renewed upward pressure has increased. This could slow the pace of interest rate reductions. TD Economics expects the federal funds rate to be lowered to 3.25-3.50% by the end of calendar 2025 – a level that is still on the restrictive side.

After Canada's economy slowed notably in calendar 2023, strong population gains have lifted economic growth in the first half of calendar 2024. Population increases have also contributed to labour force growth outpacing job creation, taking the unemployment rate higher and cooling labour market conditions. The unemployment rate was 6.5% in October, above its pre-pandemic level, but still below its long-run average. Looking ahead, TD Economics expects population growth to slow sharply over the next few years as the federal government reduced its targets for permanent and non-permanent residents. The negative impact of the weaker population inflows on consumer spending and housing activity is likely to be more than offset by the boost to activity from lower interest rates. As such, TD Economics forecasts a modest pickup in overall economic growth in calendar 2025 from this year's estimated tepid rate of around 1%.

As a result of favourable inflation dynamics alongside a softening economy, the Bank of Canada has cut interest rates four times in calendar 2024, taking the overnight rate to 3.75% in October. TD Economics expects the Bank of Canada to continue lowering interest rates over the next year, reaching between 2.25% to 2.50% by the end of calendar 2025. Interest rates differentials between Canada and the U.S. have widened, weakening the Canadian dollar. TD Economics expects the Canadian dollar will trade in the 71 to 73 U.S. cent range over the next few quarters.

HOW THE BANK REPORTS

The Bank prepares its Consolidated Financial Statements in accordance with IFRS, the current GAAP, and refers to results prepared in accordance with IFRS as "reported" results.

Non-GAAP and Other Financial Measures

In addition to reported results, the Bank also presents certain financial measures, including non-GAAP financial measures that are historical, non-GAAP ratios, supplementary financial measures and capital management measures, to assess its results. Non-GAAP financial measures, such as "adjusted" results, are utilized to assess the Bank's businesses and to measure the Bank's overall performance. To arrive at adjusted results, the Bank adjusts for "items of note", from reported results. Items of note are items which management does not believe are indicative of underlying business performance and are disclosed in Table 3. Non-GAAP ratios include a non-GAAP financial measure as one or more of its components. Examples of non-GAAP ratios include adjusted basic and diluted earnings per share (EPS), adjusted dividend payout ratio, adjusted efficiency ratio, and adjusted effective income tax rate. The Bank believes that non-GAAP financial measures and non-GAAP ratios provide the reader with a better understanding of how management views the Bank's performance. Non-GAAP financial measures and non-GAAP ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers. Supplementary financial measures depict the Bank's financial performance and position, and capital management measures depict the Bank's capital position, and both are explained in this document where they first appear.

U.S. Strategic Cards

The Bank's U.S. strategic cards portfolio is comprised of agreements with certain U.S. retailers pursuant to which TD is the U.S. issuer of private label and co-branded consumer credit cards to their U.S. customers. Under the terms of the individual agreements, the Bank and the retailers share in the profits generated by the relevant portfolios after credit losses. Under IFRS, TD is required to present the gross amount of revenue and provisions for credit losses (PCL) related to these portfolios in the Bank's Consolidated Statement of Income. At the segment level, the retailer program partners' share of revenues and credit losses is presented in the Corporate segment, with an offsetting amount (representing the partners' net share) recorded in Non-interest expenses, resulting in no impact to Corporate's reported Net income (loss). The Net income (loss) included in the U.S. Retail segment includes only the portion of revenue and credit losses attributable to TD under the agreements.

Investment in The Charles Schwab Corporation and IDA Agreement

On August 21, 2024, the Bank sold 40.5 million shares of common stock of Schwab for proceeds of approximately $3.4 billion (US$2.5 billion). The share sale reduced the Bank's ownership interest in Schwab from 12.3% to 10.1%. The Bank recognized approximately $1.0 billion (US$0.7 billion) as other income (net of $0.5 billion (US$0.4 billion) loss from AOCI reclassified to earnings), in the fourth quarter of fiscal 2024.

The Bank accounts for its investment in Schwab using the equity method. The U.S. Retail segment reflects the Bank's share of net income from its investment in Schwab. The Corporate segment net income (loss) includes amounts for amortization of acquired intangibles, the acquisition and integration charges related to the Schwab transaction, and the Bank's share of restructuring and other charges incurred by Schwab. The Bank's share of Schwab's earnings available to common shareholders is reported with a one-month lag. For further details, refer to Note 12 of the 2024 Consolidated Financial Statements.

On November 25, 2019, the Bank and Schwab signed an insured deposit account agreement (the "2019 Schwab IDA Agreement"), with an initial expiration date of July 1, 2031. Under the 2019 Schwab IDA Agreement, starting July 1, 2021, Schwab had the option to reduce the deposits by up to US$10 billion per year (subject to certain limitations and adjustments), with a floor of US$50 billion. In addition, Schwab requested some further operational flexibility to allow for the sweep deposit balances to fluctuate over time, under certain conditions and subject to certain limitations.

On May 4, 2023, the Bank and Schwab entered into an amended insured deposit account agreement (the "2023 Schwab IDA Agreement" or the "Schwab IDA Agreement"), which replaced the 2019 Schwab IDA Agreement. Pursuant to the 2023 Schwab IDA Agreement, the Bank continues to make sweep deposit accounts available to clients of Schwab. Schwab designates a portion of the deposits with the Bank as fixed-rate obligation amounts (FROA). Remaining deposits are designated as floating-rate obligations. In comparison to the 2019 Schwab IDA Agreement, the 2023 Schwab IDA Agreement extends the initial expiration date by three years to July 1, 2034 and provides for lower deposit balances in its first six years, followed by higher balances in the later years. Specifically, until September 2025, the aggregate FROA will serve as the floor. Thereafter, the floor will be set at US$60 billion. In addition, Schwab had the option to buy down up to $6.8 billion (US$5 billion) of FROA by paying the Bank certain fees in accordance with the 2023 Schwab IDA Agreement, subject to certain limits.

By the end of the first quarter of fiscal 2024, Schwab had fully exercised its option buy down up to US$5 billion of FROA and had paid a total of $337 million (US$250 million) in termination fees to the Bank in accordance with the 2023 Schwab IDA Agreement. The fees were intended to compensate the Bank for losses incurred from discontinuing certain hedging relationships and for lost revenues. The net impact was recorded in net interest income. Refer to the "Related Party Transactions" section in the Bank's 2024 MD&A for further details.

The following table provides the operating results on a reported basis for the Bank.

 

The following table provides a reconciliation between the Bank's adjusted and reported results. For further details refer to the "Significant Events" or "How the Bank Reports" section.

 

 

RETURN ON COMMON EQUITY

The consolidated Bank ROE is calculated as reported net income available to common shareholders as a percentage of average common equity. The consolidated Bank adjusted ROE is calculated as adjusted net income available to common shareholders as a percentage of average common equity. Adjusted ROE is a non-GAAP ratio and can be utilized in assessing the Bank's use of equity.

ROE for the business segments is calculated as the segment net income available to common shareholders as a percentage of average allocated capital. The Bank's methodology for allocating capital to its business segments is largely aligned with the common equity capital requirements under Basel III. Capital allocated to the business segments increased to 11.5% of Common Equity Tier 1 (CET1) Capital effective in the first quarter of 2024, compared with 11% in fiscal 2023.

RETURN ON TANGIBLE COMMON EQUITY

Tangible common equity (TCE) is calculated as common shareholders' equity less goodwill, imputed goodwill and intangibles on the investments in Schwab and other acquired intangible assets, net of related deferred tax liabilities. ROTCE is calculated as reported net income available to common shareholders after adjusting for the after-tax amortization of acquired intangibles, which are treated as an item of note, as a percentage of average TCE. Adjusted ROTCE is calculated using reported net income available to common shareholders, adjusted for all items of note, as a percentage of average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in assessing the Bank's use of equity. TCE is a non-GAAP financial measure, and ROTCE and adjusted ROTCE are non-GAAP ratios.

IMPACT OF FOREIGN EXCHANGE RATE ON U.S. RETAIL SEGMENT TRANSLATED EARNINGS

The following table reflects the estimated impact of foreign currency translation on key U.S. Retail segment income statement items. The impact is calculated as the difference in translated earnings using the average US to Canadian dollars exchange rates in the periods noted.

 

HOW OUR BUSINESSES PERFORMED

For management reporting purposes, the Bank's operations and activities are organized around the following four key business segments: Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results of each business segment reflect revenue, expenses, assets, and liabilities generated by the businesses in that segment. Where applicable, the Bank measures and evaluates the performance of each segment based on adjusted results and ROE, and for those segments the Bank indicates that the measure is adjusted. For further details, refer to Note 28 of the Bank's Consolidated Financial Statements for the year ended October 31, 2024. Effective fiscal 2024, certain asset management businesses which were previously reported in the U.S. Retail segment are now reported in the Wealth Management and Insurance segment. Comparative period information has been adjusted to reflect the new alignment.

PCL related to performing (Stage 1 and Stage 2) and impaired (Stage 3) financial assets, loan commitments, and financial guarantees is recorded within the respective segment.

Net interest income within Wholesale Banking is calculated on a taxable equivalent basis (TEB), which means that the value of non-taxable or tax-exempt income, including dividends, is adjusted to its equivalent before-tax value. Using TEB allows the Bank to measure income from all securities and loans consistently and makes for a more meaningful comparison of net interest income with similar institutions. The TEB increase to net interest income and provision for income taxes reflected in Wholesale Banking results is reversed in the Corporate segment. The TEB adjustment for the quarter was $19 million, compared with $44 million in the fourth quarter last year, and $27 million in the prior quarter.

Share of net income from investment in Schwab is reported in the U.S. Retail segment. Amounts for amortization of acquired intangibles, the Bank's share of acquisition and integration charges associated with Schwab's acquisition of TD Ameritrade, and the Bank's share of Schwab's restructuring charges are recorded in the Corporate segment.

Quarterly comparison – Q4 2024 vs. Q4 2023

Canadian Personal and Commercial Banking net income for the quarter was $1,823 million, an increase of $144 million, or 9%, compared with the fourth quarter last year, reflecting higher revenue, partially offset by higher non-interest expenses and PCL. The annualized ROE for the quarter was 32.0%, compared with 35.1%, in the fourth quarter last year.

Revenue for the quarter was $5,064 million, an increase of $310 million, or 7%, compared with the fourth quarter last year. Net interest income was $4,058 million, an increase of $353 million, or 10%, primarily reflecting volume growth and higher deposit margins, partially offset by lower loan margins. Average loan volumes increased $25 billion, or 5%, reflecting 4% growth in personal loans and 6% growth in business loans. Average deposit volumes increased $24 billion, or 5%, reflecting 6% growth in personal deposits and 4% growth in business deposits. Net interest margin was 2.80%, an increase of 2 basis points (bps), primarily due to higher margins on deposits, partially offset by changes to balance sheet mix reflecting the transition of Bankers' Acceptances (BAs) to Canadian Overnight Repo Rate Average (CORRA)-based loans and lower margins on loans. Non-interest income was $1,006 million, a decrease of $43 million, or 4%, compared with the fourth quarter last year, primarily reflecting lower fees due to the transition of BAs to CORRA-based loans, the impact of which is offset in net interest income.

PCL for the quarter was $430 million, an increase of $40 million compared with the fourth quarter last year. PCL – impaired was $456 million, an increase of $182 million, or 66%, reflecting credit migration in the commercial and consumer lending portfolios. PCL – performing was a recovery of $26 million, compared with a build of $116 million in the prior year. The performing release this quarter was largely recorded in the consumer lending portfolios, reflecting improvement in the economic outlook, including the impact of lower interest rates. Total PCL as an annualized percentage of credit volume was 0.30%, an increase of 2 bps compared with the fourth quarter last year.

Non-interest expenses for the quarter were $2,102 million, an increase of $63 million, or 3%, compared with the fourth quarter last year, primarily reflecting higher technology and marketing spend supporting business growth, partially offset by lower non-credit provisions.

The efficiency ratio for the quarter was 41.5%, compared with 42.9% in the fourth quarter last year.

Quarterly comparison – Q4 2024 vs. Q3 2024

Canadian Personal and Commercial Banking net income for the quarter was $1,823 million, a decrease of $49 million, or 3%, compared with the prior quarter, primarily reflecting higher non-interest expenses, partially offset by higher revenue. The annualized ROE for the quarter was 32.0%, compared with 34.1% in the prior quarter.

Revenue increased $61 million, or 1%, compared with the prior quarter. Net interest income increased $64 million, or 2%, mainly driven by volume growth. Average loan volumes increased $6 billion, or 1%, reflecting 1% growth in personal loans and 1% growth in business loans. Average deposit volumes increased $7 billion, or 2%, reflecting 1% growth in personal deposits and 3% growth in business deposits. Net interest margin was 2.80%, a decrease of 1 basis point compared with the prior quarter, primarily due to changes in balance sheet mix reflecting the transition of BAs to CORRA-based loans. Non-interest income decreased $3 million, relatively flat compared with the prior quarter.

PCL for the quarter was $430 million, a decrease of $5 million compared with the prior quarter. PCL – impaired was $456 million, an increase of $118 million, or 35%, reflecting credit migration in the commercial and consumer lending portfolios. PCL – performing was a recovery of $26 million, compared with a build of $97 million in the prior quarter. The performing release this quarter was largely recorded in the consumer lending portfolios, reflecting improvement in the economic outlook, including the impact of lower interest rates. Total PCL as an annualized percentage of credit volume was 0.30%, flat compared with the prior quarter.

Non-interest expenses increased $135 million, or 7% compared with the prior quarter, primarily reflecting higher marketing and technology spend supporting business growth, and various other operating expenses.

The efficiency ratio was 41.5%, compared with 39.3% in the prior quarter. 

Quarterly comparison – Q4 2024 vs. Q4 2023

U.S. Retail reported net income for the quarter was $863 million (US$634 million), a decrease of $406 million (US$303 million), or 32% (32% in U.S. dollars) compared with the fourth quarter last year. On an adjusted basis, net income for the quarter was $1,095 million (US$803 million), a decrease of $174 million (US$134 million), or 14% (14% in U.S. dollars). The reported and adjusted annualized ROE for the quarter were 7.6% and 9.6%, respectively, compared with 12.2% in the fourth quarter last year.

U.S. Retail net income includes contributions from the U.S. Retail Bank and the Bank's investment in Schwab. Reported net income for the quarter from the Bank's investment in Schwab was $154 million (US$114 million), a decrease of $43 million (US$32 million), or 22% (22% in U.S. dollars), compared with the fourth quarter last year.

U.S. Retail Bank reported net income was $709 million (US$520 million), a decrease of $363 million (US$271 million), or 34% (34% in U.S. dollars), compared with the fourth quarter last year, primarily reflecting higher PCL, higher non-interest expenses, and lower revenue. U.S. Retail Bank adjusted net income was $941 million (US$689 million), a decrease of $131 million (US$102 million), or 12% (13% in U.S. dollars), compared with the fourth quarter last year, reflecting higher PCL and higher non-interest expenses.

Reported revenue for the quarter was US$2,353 million, a decrease of US$243 million, or 9%, compared with the fourth quarter last year, primarily reflecting the impact of U.S. balance sheet restructuring. On an adjusted basis, revenue for the quarter was US$2,579 million, a decrease of US$17 million, or 1%. Net interest income of US$2,141 million, decreased US$34 million, or 2%, primarily driven by lower deposit volumes, partially offset by higher deposit margins, and higher loan volumes and margins. Net interest margin of 2.77% decreased 30 bps, primarily due to maintaining elevated liquidity levels, partially offset by higher deposit and loan margins. Reported non-interest income of US$212 million decreased US$209 million, or 50%, compared with the fourth quarter last year, reflecting the impact of U.S. balance sheet restructuring, partially offset by higher fee revenue. On an adjusted basis, non-interest income of US$438 million increased US$17 million, or 4%, compared with the fourth quarter last year, reflecting higher fee revenue.

Average loan volumes increased US$5 billion, or 3%, compared with the fourth quarter last year. Personal loans increased 4% reflecting good mortgage and auto originations, and business loans increased 1%. Average deposit volumes decreased US$18 billion, or 5%, reflecting a 17% decrease in sweep deposits, and a 4% decrease in business deposits, partially offset by a 3% increase in personal deposit volumes. Excluding sweep deposits, average deposits remained relatively stable.

Assets under administration (AUA) were US$43 billion as at October 31, 2024, an increase of US$3 billion, or 8%, compared with the fourth quarter last year, reflecting net asset growth. Assets under Management (AUM) were US$8 billion as at October 31, 2024, an increase of US$2 billion, or 33%, compared with the fourth quarter last year, reflecting net asset growth.

PCL for the quarter was US$285 million, an increase of US$72 million, or 34%, compared with the fourth quarter last year. PCL – impaired was US$306 million, an increase of US$79 million, or 35%, largely reflecting credit migration in the commercial lending portfolio. PCL – performing was a recovery of US$21 million, compared with a recovery of US$14 million in the fourth quarter last year. The performing release this quarter reflects improvement in the economic outlook, including the impact of lower interest rates, and migration from performing to impaired, and was largely recorded in the commercial lending portfolio. U.S. Retail PCL including only the Bank's share of PCL in the U.S. strategic cards portfolio, as an annualized percentage of credit volume was 0.60%, an increase of 14 bps, compared with the fourth quarter last year.

Reported non-interest expenses for the quarter were US$1,546 million, an increase of US$41 million, or 3%, compared with the fourth quarter last year, reflecting the impact of the charges for the global resolution of the investigations into the Bank's U.S. BSA/AML program, costs associated with the extension of our credit card program agreement with Nordstrom, higher legal and regulatory expenses, and higher operating expenses, partially offset by ongoing productivity initiatives and the expense recovery of the FDIC special assessment charge. On an adjusted basis, non-interest expenses increased US$55 million, or 4%, reflecting costs associated with the extension of our credit card program agreement with Nordstrom, higher legal and regulatory expenses, and higher operating expenses, partially offset by ongoing productivity initiatives.

The reported and adjusted efficiency ratios for the quarter were 65.7% and 60.5%, respectively, compared with 58.0%, in the fourth quarter last year.

Quarterly comparison – Q4 2024 vs. Q3 2024

U.S. Retail reported net income of $863 million (US$634 million) increased $3,138 million (US$2,292 million), compared with the prior quarter. On an adjusted basis, net income for the quarter was $1,095 million (US$803 million), a decrease of $196 million (US$139 million), or 15% (15% in U.S. dollars). The reported and adjusted annualized ROE for the quarter were 7.6% and 9.6%, respectively, compared with (19.8)% and 11.3%, respectively, in the prior quarter.

The contribution from Schwab of $154 million (US$114 million) decreased $24 million (US$15 million), or 13% (12% in U.S. dollars), compared with the prior quarter.

U.S. Retail Bank reported net income was $709 million (US$520 million), an increase of $3,162 million (US$2,307 million), compared with the prior quarter, reflecting the higher impact of the charges for the global resolution of the investigations into the Bank's U.S. BSA/AML program from the prior quarter, partially offset by lower revenue and higher operating expenses. U.S. Retail Bank adjusted net income was $941 million (US$689 million), a decrease of $172 million (US$124 million), or 15% (15% in U.S. dollars), reflecting higher operating expenses and lower revenue.

Reported revenue decreased US$241 million, or 9%, compared with the prior quarter, primarily reflecting the impact of U.S. balance sheet restructuring. On an adjusted basis, revenue decreased US$15 million, or 1%. Net interest income of US$2,141 million decreased US$3 million, reflecting lower investment margins, partially offset by an increase in deposit and loan margins. Net interest margin of 2.77% decreased 25 bps, which differs from the estimated modest expansion of net interest margin communicated in the third quarter of 2024, primarily due to maintaining elevated liquidity levels. Reported non-interest income of US$212 million decreased US$238 million, or 53%, reflecting the impact of U.S. balance sheet restructuring and higher valuation of certain investments in the prior quarter. On an adjusted basis, non-interest income of US$438 million decreased US$12 million, or 3%, reflecting higher valuation of certain investments in the prior quarter.

Average loan volumes were flat, compared with the prior quarter. Personal loans increased 1% and business loans decreased 1%. Average deposit volumes were relatively flat, compared with the prior quarter, reflecting a 3% decline in sweep deposits, partially offset by a 1% increase in business deposits. Personal deposits were relatively flat.

AUA were US$43 billion as at October 31, 2024, an increase of US$2 billion, or 5%, compared with the prior quarter, reflecting net asset growth. AUM were US$8 billion as at October 31, 2024, relatively flat compared with the prior quarter.

PCL for the quarter was US$285 million, an increase of US$9 million, or 3%, compared with the prior quarter. PCL – impaired was US$306 million, an increase of US$64 million, or 26%, reflecting credit migration in the commercial lending portfolio. PCL – performing was a recovery of US$21 million, compared with a build of US$34 million in the prior quarter. The performing release this quarter reflects improvement in the economic outlook, including the impact of lower interest rates, and migration from performing to impaired, and was largely recorded in the commercial lending portfolio. U.S. Retail PCL including only the Bank's share of PCL in the U.S. strategic cards portfolio, as an annualized percentage of credit volume, was 0.60%, an increase of 2 bps, compared with the prior quarter.

Reported non-interest expenses for the quarter were US$1,546 million, a decrease of US$2,465 million, or 61%, reflecting the higher impact of the charges for the global resolution of the investigations into the Bank's U.S. BSA/AML program in the prior quarter, partially offset by higher legal and regulatory expenses, costs associated with the extension of our credit card program agreement with Nordstrom, higher operating expenses, and the expense recovery of the FDIC special assessment charge in the current quarter. On an adjusted basis, non-interest expenses increased US$149 million, or 11%, reflecting costs associated with the extension of our credit card program agreement with Nordstrom, higher legal and regulatory expenses, and higher operating expenses.

The reported and adjusted efficiency ratios for the quarter were 65.7% and 60.5%, respectively, compared with 154.6% and 54.4%, respectively, in the prior quarter.

Quarterly comparison – Q4 2024 vs. Q4 2023

Wealth Management and Insurance net income for the quarter was $349 million, a decrease of $143 million, or 29%, compared with the fourth quarter last year, reflecting higher estimated losses from catastrophe claims, partially offset by higher revenue from both business lines. The annualized ROE for the quarter was 22.5%, compared with 33.9% in the fourth quarter last year.

Revenue for the quarter was $3,937 million. This represents an increase of $981 million, or 33%, compared with the fourth quarter last year, of which $718 million, or 24%, was driven by reinsurance recoveries for catastrophe claims. Non-interest income was $3,616 million. This represents an increase of $925 million, or 34%, compared with the fourth quarter last year, of which $718 million, or 27%, was driven by reinsurance recoveries for catastrophe claims. The remaining increase was driven by higher insurance premiums, fee-based revenue, and transaction revenue. Net interest income was $321 million, an increase of $56 million, or 21%, compared with the fourth quarter last year, reflecting higher deposit margins.

AUA were $651 billion as at October 31, 2024, an increase of $120 billion, or 23%, compared with the fourth quarter last year, reflecting market appreciation and net asset growth. AUM were $530 billion as at October 31, 2024, an increase of $89 billion, or 20%, compared with the fourth quarter last year, primarily reflecting market appreciation.

Insurance service expenses for the quarter were $2,364 million. This represents an increase of $1,018 million, or 76%, compared with the fourth quarter last year, of which $893 million, or 66%, was driven by estimated losses from catastrophe claims. The remaining increase reflects less favourable prior years' claims development and increased claims severity.

Non-interest expenses for the quarter were $1,107 million, an increase of $150 million, or 16%, compared with the fourth quarter last year, reflecting higher variable compensation and higher technology and marketing spend supporting business growth initiatives.

The efficiency ratio for the quarter was 28.1%, compared with 32.4% in the fourth quarter last year. The efficiency ratio, net of ISE for the quarter was 70.4%, compared with 59.4% in the fourth quarter last year.

Quarterly comparison – Q4 2024 vs. Q3 2024

Wealth Management and Insurance net income for the quarter was $349 million, a decrease of $81 million, or 19%, compared with the prior quarter, primarily reflecting higher estimated losses from catastrophe claims, partially offset by higher revenue. The annualized ROE for the quarter was 22.5%, compared with 27.1% in the prior quarter.

Revenue increased $588 million, or 18%, compared with the prior quarter, primarily as a result of reinsurance recoveries for catastrophe claims which drove $718 million of the increase. Non-interest income increased $583 million, or 19%, compared with the prior quarter, reflecting reinsurance recoveries for catastrophe claims and higher fee-based revenue, partially offset by the cost of reinsurance reinstatement premiums and lower insurance revenue. Net interest income increased $5 million, or 2%.

AUA increased $19 billion, or 3%, compared with the prior quarter, reflecting market appreciation and net asset growth. AUM increased $7 billion, or 1%, compared with the prior quarter, primarily reflecting market appreciation.

Insurance service expenses for the quarter increased $695 million, or 42%, compared with the prior quarter, primarily the result of estimated losses from catastrophe claims of $834 million, partially offset by more favourable claims experience.

Non-interest expenses were relatively flat compared with the prior quarter.

The efficiency ratio for the quarter was 28.1%, compared with 33.0% in the prior quarter. The efficiency ratio, net of ISE for the quarter was 70.4%, compared with 65.7% in the prior quarter.

 

Quarterly comparison – Q4 2024 vs. Q4 2023

Wholesale Banking reported net income for the quarter was $235 million, an increase of $218 million, compared with the fourth quarter last year, primarily reflecting higher revenue and lower non-interest expenses, partially offset by higher income taxes and PCL. On an adjusted basis, net income was $299 million, an increase of $121 million, or 68%.

Revenue for the quarter was $1,771 million, an increase of $283 million, or 19%, compared with the fourth quarter last year, primarily reflecting higher lending revenue, underwriting fees and trading-related revenue, partially offset by the net change in fair value of loan underwriting commitments in the prior year.

PCL for the quarter was $134 million, an increase of $77 million compared with the fourth quarter last year. PCL – impaired was $134 million, an increase of $134 million compared with the prior year, primarily reflecting a few impairments across various industries. PCL – performing was nil, a decrease of $57 million from the prior period build.

Reported non-interest expenses for the quarter were $1,336 million, a decrease of $105 million, or 7%, compared with the fourth quarter last year, primarily reflecting lower acquisition and integration-related costs, and lower variable compensation, partially offset by penalties arising from a trading regulatory matter. On an adjusted basis, non-interest expenses were $1,254 million, an increase of $10 million, or 1%.

Quarterly comparison – Q4 2024 vs. Q3 2024

Wholesale Banking reported net income for the quarter was $235 million, a decrease of $82 million, or 26%, compared with the prior quarter, reflecting higher non-interest expenses, lower revenue, higher income taxes and PCL. On an adjusted basis, net income was $299 million, a decrease of $78 million, or 21%.

Revenue for the quarter decreased $24 million, or 1%, compared with the prior quarter, primarily reflecting lower trading-related revenue, partially offset by higher lending revenue and equity underwriting fees.

PCL for the quarter was $134 million, an increase of $16 million compared with the prior quarter. PCL – impaired was $134 million, an increase of $25 million, primarily reflecting a few impairments across various industries. PCL – performing was nil, a decrease of $9 million from the prior quarter build.

Reported non-interest expenses for the quarter increased $26 million, or 2%, compared with the prior quarter, primarily reflecting penalties arising from a trading regulatory matter, and the impact of foreign exchange translation, partially offset by lower variable compensation. On an adjusted basis, non-interest expenses increased $22 million or 2%.

Quarterly comparison – Q4 2024 vs. Q4 2023

Corporate segment's reported net income for the quarter was $365 million, compared with a net loss of $591 million in the fourth quarter last year. The year-over-year increase primarily reflects the impacts of current quarter's gain on sale of Schwab shares and prior year's restructuring charges, partially offset by the impact of the provision for indirect tax matters in the current quarter. Net corporate expenses increased $323 million compared to the prior year, primarily reflecting higher investments in risk and control infrastructure. The adjusted net loss for the quarter was $361 million, compared with an adjusted net loss of $133 million in the fourth quarter last year.

Quarterly comparison – Q4 2024 vs. Q3 2024

Corporate segment's reported net income for the quarter was $365 million, compared with a net loss of $525 million in the prior quarter. The quarter-over-quarter increase primarily reflects the impacts of current quarter's gain on sale of Schwab shares and prior quarter's restructuring charges, partially offset by the impact of the provision for indirect tax matters in the current quarter. Net corporate expenses increased $124 million compared to the prior quarter, primarily reflecting higher investments in risk and control infrastructure. The adjusted net loss for the quarter was $361 million, compared with an adjusted net loss of $324 million in the prior quarter.

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

Appendix A – Segmented Information

For management reporting purposes, the Bank reports its results under four key business segments: Canadian Personal and Commercial Banking, which includes the results of the Canadian personal and commercial banking businesses, and TD Auto Finance Canada; U.S. Retail, which includes the results of the U.S. personal and commercial banking businesses, U.S. credit cards, TD Auto Finance U.S., U.S. wealth business, and the Bank's investment in Schwab; Wealth Management and Insurance; and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results for these segments for the years ended October 31, 2024 and October 31, 2023 are presented in the following tables.

 

SHAREHOLDER AND INVESTOR INFORMATION 

Shareholder Services

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Annual Report on Form 40-F (U.S.)

A copy of the Bank's Annual Report on Form 40-F for fiscal 2024 will be filed with the Securities and Exchange Commission later today and will be available at http://www.td.com. You may obtain a printed copy of the Bank's Annual Report on Form 40-F for fiscal 2024 free of charge upon request to TD Shareholder Relations at 416-944-6367 or 1-866-756-8936 or e-mail tdshinfo@td.com.

Access to Quarterly Results Materials
Interested investors, the media, and others may view this fourth quarter earnings news release, results slides, supplementary financial information, supplemental regulatory disclosure, and the 2024 Consolidated Financial Statements and MD&A documents on the TD website at www.td.com/investor/.

General Information
Products and services: Contact TD Canada Trust, 24 hours a day, seven days a week: 1-866-567-8888 French: 1-866-233-2323
Cantonese/Mandarin: 1-800-328-3698
Telephone device for the hearing impaired (TTY): 1-800-361-1180

Website: www.td.com
Email: customer.service@td.com

Media contacts: https://stories.td.com/media-contacts

Quarterly Earnings Conference Call
TD Bank Group will host an earnings conference call in Toronto, Ontario on December 5, 2024. The call will be available live via TD's website at 9:30 a.m. ET. The call and audio webcast will feature presentations by TD executives on the Bank's financial results for the fourth quarter, followed by a question-and-answer period with analysts. The presentation material referenced during the call will be available on the TD website at www.td.com/investor on December 5, 2024 at approximately 6:30 a.m. ET. A listen-only telephone line is available at 416-340-2217 or 1-800-806-5484 (toll free) and the passcode is 2829533#.

The audio webcast and presentations will be archived at www.td.com/investor. Replay of the teleconference will be available from 5:00 p.m. ET on December 5, 2024, until 11:59 p.m. ET on December 20, 2024 by calling 905-694-9451 or 1-800-408-3053 (toll free). The passcode is 8753393#.

Annual Meeting
Thursday, April 10, 2025
Toronto, Ontario

About TD Bank Group

The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the sixth largest bank in North America by assets and serves over 27.9 million customers in four key businesses operating in a number of locations in financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Auto Finance Canada; U.S. Retail, including TD Bank, America's Most Convenient Bank^®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; Wealth Management and Insurance, including TD Wealth (Canada), TD Direct Investing, and TD Insurance; and Wholesale Banking, including TD Securities and TD Cowen. TD also ranks among the world's leading online financial services firms, with more than 17 million active online and mobile customers. TD had $2.06 trillion in assets on October 31, 2024. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

[1] IFIC. As of September 30^th, 2024.

[2] Under the terms of the plea agreements and consent orders, the selection of the monitor will be made by the DOJ and FinCEN. Accordingly, the timing of the appointment of the monitorship is not entirely within the Bank's control.

[3] Operating leverage is a non-GAAP measure. At the total Bank level, TD calculates operating leverage as the difference between the % change in adjusted revenue (U.S. Retail in source currency) net of insurance service expense, and adjusted expenses (U.S. Retail in US$) grossed up by the retailer program partners' share of PCL for the Bank's U.S. strategic card portfolio. Collectively, these adjustments provide a measure of operating leverage that management believes is more reflective of underlying business performance.

[4] The Bank's expectations regarding expense growth is based on the Bank's assumptions regarding risk and control investments, employee-related expenses, foreign exchange impact, and productivity and restructuring savings. These assumptions are subject to inherent uncertainties and may vary based on factors both within and outside the Bank's control including the accuracy of the Bank's employee compensation and benefit expense forecasts, impact of business performance on variable compensation, inflation, the pace of productivity initiatives across the organization, and unexpected expenses such as legal matters. Refer to the "Risk Factors that May Affect Future Results" section in the Bank's 2024 MD&A for additional information about risks and uncertainties that may impact the Bank's estimates.

 

SOURCE TD Bank Group