It was a case of a double edged sword for Toronto-Dominion Bank (TD Bank) as it announced its latest set of financials – with earnings above estimates, but accompanied by an announcement of job losses.
The bank said it will reduce its workforce by about 2%, or roughly 2,000 positions, as part of a restructuring programme launched in the second quarter. TD said that the restructuring is expected to cost up to CA$700 million ($505 million) on a pre-tax basis over several quarters.
The bank anticipates approximately CA$100 million in pre-tax savings this fiscal year from the restructuring, with annual savings of up to CA$650 million thereafter. The average number of full-time equivalent employees reached 101,272 at the end of April, according to the bank’s financial results.
TD said it will disclose its revised strategy and new financial targets at an investor day on September 29.
Kelvin Tran, TD’s chief financial officer, said the cost-cutting measures form part of the strategic review and aim to improve efficiency through process automation.
“We’re looking at how we can structurally reduce costs across the bank,” he said in an interview, adding some job reductions will be managed through attrition.
The bank reported adjusted earnings of CA$1.97 per share for the fiscal second quarter, above the CA$1.78 consensus estimate.
The company set aside CA$1.34 billion for loan provisions in the three months through April, below the CA$1.41 billion expected by analysts. This occurred despite what chief executive officer Raymond Chun described as a “high degree of macroeconomic and policy uncertainty” related to US tariffs.
“There are no quick fixes to the challenges our country is confronting,” Chun said during a call with analysts. He added that, while he expects discussions with the US to be productive following Canada’s recent federal election, “this is going to take time and considerable effort.”
Chun, who became CEO in February, is conducting a strategic review following TD’s agreement last year to pay nearly $3.1 billion to settle with US authorities over anti-money-laundering failures. The bank is restricted from expanding its US retail assets and plans to prioritise capital spending on domestic banking and capital markets operations.
TD is the first major Canadian bank to report earnings since US tariffs on various Canadian imports took effect, raising concerns about slowing economic growth and potential job losses. This has heightened scrutiny on the credit quality of businesses and consumers, and on the provisions lenders set aside for potential loan defaults.
While TD set aside less than expected for impaired loans this quarter, it added CA$395 million in provisions for performing loans that may face risks, compared with a release of CA$4 million in the previous quarter.
