Toronto-Dominion Bank (TD), Canada’s second-largest lender and a major player in the US banking sector, announced on Thursday it will cut approximately 2% of its global workforce as part of a broad restructuring initiative following a record US anti-money laundering (AML) settlement.
The job cuts will impact around 1,900 employees out of TD’s 95,000-strong global workforce. The bank said the restructuring will incur pre-tax charges of up to C$700 million over the next few quarters.
The move follows intensified regulatory scrutiny and a costly resolution of AML compliance failures in the US, marking a significant shift in the bank’s operational priorities and cost structure.
The initiative is expected to generate a pre-tax benefit of C$100 million this fiscal year and annual recurring savings of as much as C$650 million thereafter, TD said.
Restructuring driven by strategic review under new CEO
The plan to cut costs comes from a strategic review that was started under new CEO Raymond Chun.
The review comes in the wake of TD paying US regulators US$3.1 billion last year to settle allegations of deficiencies in its anti-money laundering systems.
The bank is still operating under that agreement, which prohibits it from increasing its US retail banking assets and has directed it to concentrate on domestic operations and the capital markets unit.
Kevin Tran, TD’s Chief Financial Officer, called out automation and structural cost reductions, as very much in the picture as the team restructures.
“We’re looking at how we can structurally reduce costs across the bank,” Tran said, noting that some of the job reductions will occur through attrition”, said Tran.
Currently, TD has recorded C$163 million of real estate optimisation, employee severance, asset impairment and the winding down of certain business lines restructuring charges.
Earnings exceeded expectations despite rising credit provisions
Despite the restructuring, TD reported higher-than-expected profitability in the fiscal second quarter, driven by strong trading and fee income.
The bank reported adjusted earnings of C$1.97 per share, which exceeded the average analyst forecast of C$1.78.
Provisions for credit losses, a carefully watched statistic amid slowing economic growth, amounted to C$1.34 billion for the April quarter.
That sum came in lower than the analysts’ projection of C$1.41 billion, which helped the bank’s bottom line.
“TD delivered strong results this quarter, with robust trading and fee income in our markets-driven businesses as well as deposit and loan growth in Canadian personal and commercial banking,” new Chief Executive Officer Raymond Chun said to shareholders in a statement.
Restructuring under economic headwinds
TD is the first large Canadian bank to publish quarterly earnings after the United States put tariffs on a variety of Canadian products, sparking concerns about slower economic development and growing unemployment.
The economic uncertainty is focusing investors’ attention on credit quality and probable defaults.
While TD’s strong capital foundation and diverse activities provide stability, the restructuring highlights the constraints that global banks face in the current climate, including regulatory scrutiny, cost inflation, and digital transformation needs.
Toronto-Dominion shares are up almost 18% year to date, bolstered by market optimism following the AML settlement resolution and signs of increased operating efficiency.
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