TD Bank cutting 2% of workforce, posts Q2 profit

TD Bank Group said Thursday that it’s cutting about 2% of its workforce as the bank works to reduce costs and refocus spending under new leadership.

The job cuts amount to a little over 2,000 employees based on the roughly 101,800 it had last year.

TD made the announcement as it reported a second-quarter profit of $11.1 billion, though earnings included an $8.6-billion after-tax boost from the sale of its shares in the Charles Schwab Corp.

The share sale — and the job cuts — come as TD continues to move past a massive anti-money laundering oversight scandal that saw it pay more than US$3 billion in fines last year, led U.S. regulators to put limits on its assets there, and resulted in former CEO Bharat Masrani stepping down.

Current chief executive Raymond Chun, who took on the role at the start of the second quarter, said the bank is working to turn the page.

“We are structurally reducing costs across the bank by taking a disciplined look at our operations and processes,” said Chun on an earnings call Thursday.

“I want to thank our colleagues across the bank for their tremendous dedication and efforts. Together, we are writing the next chapter of this great institution’s story.”

The job cuts come as part of a wider restructuring that will also see the bank cut back on some real estate, wind down some business lines and write off certain assets as part of its strategic review, said chief financial officer Kelvin Tran.

He said the bank will aim to achieve the job reductions, when possible, through attrition, and will shift employees to areas where it is expanding capabilities.

TD took a $163-million pre-tax charge in the quarter related to the restructuring, mostly tied to real estate, and expects about $650 million in pre-tax charges over the next several quarters from severance and other costs.

It said the restructuring should lead to around $600 million in annual pre-tax savings once complete — money the bank plans to reinvest in areas such as artificial intelligence and technology, said Tran.

“Through this restructuring program and the strategic review more broadly, we are innovating to drive efficiency and structurally reduce the bank’s cost base,” he said.

The moves come as companies continue to grapple with macroeconomic uncertainty and cautious consumers and businesses.

Chun noted housing activity was down in the quarter, while the bank also saw moderated foreign currency spending as consumers pull back, especially on cross-border purchases.

The bank’s provisions for potentially bad loans rose modestly in the quarter, up $103 million from the previous quarter to $1.2 billion — an increase of $211 million from the same quarter last year.

The provisions build was lower than analysts expected, helping TD’s adjusted earnings of $1.97 per diluted share beat the $1.76-per-share profit forecast by analysts, according to LSEG Data & Analytics. The measure was still down from $2.04 a share in the same quarter last year.

Jefferies analyst John Aiken said in a note that TD came in ahead of expectations in most segments, though he questioned whether the market would see the provisions as adequate for the uncertainty ahead.

TD said the provisions increase was related to policy and trade uncertainty. Otherwise, it likely would have seen rates potentially coming down as consumers benefit from lower interest rates.

Revenue for the quarter totalled $22.9 billion, up from $13.8 billion in the same quarter last year.

TD said its Canadian personal and commercial banking business earned just under $1.7 billion in the latest quarter, down from just over $1.7 billion a year ago as it faced higher provisions for credit losses and non-interest expenses, partially offset by higher revenue.

TD’s U.S. retail operations earned $120 million in the second quarter, down from $507 million a year earlier. The bank’s wealth management and insurance business earned $707 million, up from $621 million a year ago. Its wholesale banking division earned $419 million, up from $361 million in the same quarter last year.

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