Management's Discussion and Analysis (MD&A) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) TD Bank Group reported a Q3 2024 net loss of $181 million due to a $3.57 billion AML provision, while adjusted net income remained stable Q3 2024 vs. Q3 2023 Financial Highlights | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Reported Diluted EPS | $(0.14) | $1.53 | | Adjusted Diluted EPS | $2.05 | $1.95 | | Reported Net Income (Loss) | $(181) million | $2,881 million | | Adjusted Net Income | $3,646 million | $3,649 million | Year-to-Date (9 Months) 2024 vs. 2023 Financial Highlights | Metric | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Reported Diluted EPS | $2.76 | $4.04 | | Adjusted Diluted EPS | $6.09 | $6.09 | | Reported Net Income | $5,207 million | $7,768 million | | Adjusted Net Income | $11,072 million | $11,510 million | - The third quarter reported earnings included a **significant provision** of **$3,566 million** (**$2.04 per share**) for investigations related to the Bank's AML program[2](index=2&type=chunk) [Significant and Subsequent Events](index=6&type=section&id=Significant%20and%20Subsequent%20Events) The Bank is addressing U.S. AML investigations, concluded a $110 million restructuring program, and sold 40.5 million Schwab shares for $3.4 billion post-quarter - The Bank is undertaking a **multi-year remediation** of its U.S. AML Program, involving investments in leadership, procedures, data, and technology[12](index=12&type=chunk) - Restructuring charges of **$110 million** were incurred in Q3 2024, primarily for employee severance and real estate optimization, and the program has now concluded[13](index=13&type=chunk) - Subsequent to the quarter's end, on August 21, 2024, the Bank sold **40.5 million** shares of Schwab common stock for approximately **$3.4 billion**, reducing its ownership from **12.3%** to **10.1%**[13](index=13&type=chunk) [How We Performed](index=6&type=section&id=How%20We%20Performed) The Bank uses non-GAAP 'adjusted' results to show underlying performance, detailing its Schwab investment and presenting ROE and ROTCE, with adjusted figures showing stability - The Bank utilizes **non-GAAP financial measures**, referred to as "**adjusted**" results, to assess performance by removing "**items of note**" that management believes are not indicative of underlying business performance[16](index=16&type=chunk) Q3 2024 Performance Ratios (Reported vs. Adjusted) | Ratio | Reported | Adjusted | | :--- | :--- | :--- | | Return on Common Equity (ROE) | (1.0)% | 14.1% | | Return on Tangible Common Equity (ROTCE) | (1.0)% | 18.8% | - The Bank accounts for its investment in The Charles Schwab Corporation using the **equity method**, with earnings reported on a **one-month lag**[18](index=18&type=chunk) [Financial Results Overview](index=10&type=section&id=Financial%20Results%20Overview) The reported net loss was driven by the AML provision, while adjusted net income was flat YoY, with revenue growth offset by higher PCL, insurance expenses, and non-interest expenses [Net Income](index=10&type=section&id=Net%20Income) Q3 2024 reported net loss was $181 million due to the AML provision, a sharp decline from Q3 2023, while adjusted net income remained stable at $3,646 million - Q3 2024 reported net loss was **$181 million**, compared with net income of **$2,881 million** in Q3 2023, and adjusted net income was relatively flat at **$3,646 million**[29](index=29&type=chunk) - The decrease in reported net income was primarily driven by the U.S. Retail segment, which saw a decline of **$3,580 million**[29](index=29&type=chunk) [Net Interest Income](index=11&type=section&id=Net%20Interest%20Income) Net interest income (NII) for Q3 2024 increased by 4% year-over-year to $7,579 million, driven by volume growth and higher deposit margins in Canadian P&C Banking and higher loan volumes in U.S. Retail - Reported net interest income for Q3 2024 was **$7,579 million**, an increase of **4%** compared to Q3 2023, mainly due to volume growth and higher deposit margins in Canadian Personal and Commercial Banking[31](index=31&type=chunk) [Non-Interest Income](index=11&type=section&id=Non-Interest%20Income) Reported non-interest income for Q3 2024 saw a significant increase of 17% year-over-year, reaching $6,597 million, fueled by higher trading-related revenue, lending revenue, advisory and underwriting fees in Wholesale Banking, and increased insurance premiums - Reported non-interest income for Q3 2024 increased by **17%** YoY to **$6,597 million**, driven by strong performance in Wholesale Banking and higher insurance premiums[34](index=34&type=chunk) [Provision for Credit Losses (PCL)](index=11&type=section&id=Provision%20for%20Credit%20Losses) The Provision for Credit Losses (PCL) for Q3 2024 was $1,072 million, an increase of $306 million from Q3 2023, reflecting credit migration in consumer and wholesale lending portfolios, with PCL as an annualized percentage of credit volume at 0.46% Provision for Credit Losses (in millions) | Period | PCL - Impaired (Stage 3) | PCL - Performing (Stage 1 & 2) | Total PCL | | :--- | :--- | :--- | :--- | | Q3 2024 | $920 | $152 | $1,072 | | Q3 2023 | $663 | $103 | $766 | [Non-Interest Expenses and Efficiency Ratio](index=12&type=section&id=Non-Interest%20Expenses%20and%20Efficiency%20Ratio) Reported non-interest expenses surged 50% to $11.01 billion due to the AML provision, while adjusted expenses rose 7% to $7.21 billion, impacting efficiency ratios - Reported non-interest expenses increased by **50%** YoY to **$11.0 billion**, mainly due to the AML provision, while adjusted non-interest expenses rose **7%** to **$7.2 billion**[40](index=40&type=chunk) Efficiency Ratio Comparison | Ratio | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Reported Efficiency Ratio | 77.7% | 57.0% | | Adjusted Efficiency Ratio (net of ISE) | 57.3% | 57.2% | [How Our Businesses Performed](index=14&type=section&id=How%20Our%20Businesses%20Performed) This section details segment performance: Canadian P&C achieved record income, U.S. Retail reported a net loss due to AML, Wealth Management saw record revenue offset by claims, and Wholesale Banking grew revenue [Canadian Personal and Commercial Banking](index=14&type=section&id=Canadian%20Personal%20and%20Commercial%20Banking) The Canadian Personal and Commercial Banking segment achieved a record quarter, with net income increasing 13% year-over-year to $1,872 million, driven by a 9% rise in revenue to $5,003 million, fueled by strong volume growth and higher deposit margins, improving the efficiency ratio to 39.3% Canadian P&C Banking - Q3 2024 Financials (vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $1,872M | $1,655M | +13% | | Total Revenue | $5,003M | $4,570M | +9% | | PCL | $435M | $379M | +15% | | Efficiency Ratio | 39.3% | 41.5% | -2.2 p.p. | [U.S. Retail](index=15&type=section&id=U.S.%20Retail) U.S. Retail reported a net loss of $2.28 billion due to the AML provision, a reversal from prior year, while adjusted net income decreased 6% to $1.29 billion U.S. Retail - Q3 2024 Financials (vs. Q3 2023) | Metric (CAD) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Reported Net Income (Loss) | $(2,275)M | $1,305M | | Adjusted Net Income | $1,291M | $1,368M | | Share of net income from Schwab | $178M | $191M | - The U.S. Retail Bank (excluding Schwab) reported a net loss of **$2,453 million**, primarily reflecting the impact of the provision for investigations related to the Bank's AML program[51](index=51&type=chunk) [Wealth Management and Insurance](index=18&type=section&id=Wealth%20Management%20and%20Insurance) Wealth Management and Insurance net income was relatively flat year-over-year at $430 million, achieving record revenue of $3,349 million (up 13%), offset by a 20% increase in insurance service expenses to $1,669 million due to increased claims severity and severe weather events Wealth Management & Insurance - Q3 2024 Financials (vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $430M | $431M | ~0% | | Total Revenue | $3,349M | $2,958M | +13% | | Insurance Service Expenses | $1,669M | $1,386M | +20% | [Wholesale Banking](index=19&type=section&id=Wholesale%20Banking) Wholesale Banking reported a 17% increase in net income to $317 million for the quarter, with revenue growing 14% to $1,795 million due to higher trading-related revenue, lending revenue, and advisory and underwriting fees, partially offset by higher PCL and non-interest expenses, resulting in flat adjusted net income year-over-year at $377 million Wholesale Banking - Q3 2024 Financials (vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Reported Net Income | $317M | $272M | +17% | | Adjusted Net Income | $377M | $377M | 0% | | Total Revenue | $1,795M | $1,568M | +14% | [Corporate](index=20&type=section&id=Corporate) The Corporate segment's reported net loss narrowed to $525 million from $782 million in Q3 2023, mainly due to a prior-year payment related to the terminated First Horizon transaction, while the adjusted net loss widened to $324 million from $182 million, reflecting higher investments in risk and control infrastructure Corporate Segment Net Loss (in millions) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Reported Net Loss | $(525) | $(782) | | Adjusted Net Loss | $(324) | $(182) | [Balance Sheet Review](index=22&type=section&id=Balance%20Sheet%20Review) Total assets increased to **$1.97 trillion**, driven by higher loans and trading assets, while total liabilities rose to **$1.86 trillion**, mainly due to increased deposits Selected Balance Sheet Items (vs. Oct 31, 2023) | Item | July 31, 2024 | Oct 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,967.2B | $1,955.1B | | Loans, net of allowance | $938.3B | $895.9B | | Total Deposits | $1,220.6B | $1,198.2B | | Total Equity | $111.6B | $112.1B | [Credit Portfolio Quality](index=23&type=section&id=Credit%20Portfolio%20Quality) Credit quality normalized with gross impaired loans increasing **40%** to **$4.17 billion**, and total ACL rising to **$8.84 billion** to reflect current credit conditions and volume growth - Gross impaired loans increased by **40%** YoY to **$4,170 million** as of July 31, 2024, reflecting formations outpacing resolutions in commercial and consumer lending portfolios[64](index=64&type=chunk) Allowance for Credit Losses (ACL) | Date | Stage 1 & 2 Allowance (Performing) | Stage 3 Allowance (Impaired) | Total ACL | | :--- | :--- | :--- | :--- | | July 31, 2024 | $7,556M | $1,278M | $8,838M | | July 31, 2023 | $7,283M | $989M | $7,774M | [Capital Position](index=26&type=section&id=Capital%20Position) The Bank's capital remains robust with a CET1 ratio of **12.8%**, despite a decrease from **15.2%** due to AML provisions and repurchases of **13.3 million** shares Key Capital Ratios | Ratio | July 31, 2024 | Oct 31, 2023 | July 31, 2023 | | :--- | :--- | :--- | :--- | | CET1 Capital Ratio | 12.8% | 14.4% | 15.2% | | Tier 1 Capital Ratio | 14.6% | 16.2% | 17.2% | | Total Capital Ratio | 16.3% | 18.1% | 19.6% | | Leverage Ratio | 4.1% | 4.4% | 4.6% | - The Bank repurchased **13.3 million** common shares in Q3 2024 for a total of **$1.0 billion** under its NCIB program[76](index=76&type=chunk) [Managing Risk](index=29&type=section&id=Managing%20Risk) The Bank manages various risks, with gross credit risk at **$2.18 trillion**, average one-day VaR at **$32.7 million**, and strong liquidity with LCR of **129%** and NSFR of **115%** [Credit Risk](index=29&type=section&id=Credit%20Risk) Gross credit risk exposure, or Exposure at Default (EAD), stood at $2,178 billion as of July 31, 2024, a slight increase from $2,154 billion at October 31, 2023, with growth primarily in the retail portfolio Gross Credit Risk Exposure (EAD) | Portfolio | July 31, 2024 | Oct 31, 2023 | | :--- | :--- | :--- | | Retail | $818.8B | $792.6B | | Non-retail | $1,359.5B | $1,361.9B | | **Total** | **$2,178.3B** | **$2,154.4B** | [Market Risk](index=30&type=section&id=Market%20Risk) Average one-day VaR for Q3 2024 was **$32.7 million**, down from **$42.0 million**, reflecting changes in interest rate positions; a **100 bps** rate increase would negatively impact EVE by **$2.49 billion** Average Total Value-at-Risk (one-day) | Period | Average VaR | | :--- | :--- | | Q3 2024 | $32.7M | | Q2 2024 | $27.9M | | Q3 2023 | $42.0M | - As of July 31, 2024, an immediate and sustained **100 bps** increase in interest rates would have a negative impact on the Bank's EVE of **$2,485 million** and a positive impact on NII of **$785 million**[86](index=86&type=chunk) [Liquidity Risk](index=32&type=section&id=Liquidity%20Risk) The Bank maintains strong liquidity with **$521.8 billion** in liquid assets, LCR of **129%**, and NSFR of **115%**, with diversified funding primarily from personal and commercial deposits - The Bank held **$521.8 billion** in unencumbered liquid assets as of July 31, 2024[90](index=90&type=chunk)[91](index=91&type=chunk) Key Liquidity Ratios | Ratio | Q3 2024 (Average) | As of July 31, 2024 | | :--- | :--- | :--- | | Liquidity Coverage Ratio (LCR) | 129% | - | | Net Stable Funding Ratio (NSFR) | - | 115% | [Securitization and Off-Balance Sheet Arrangements](index=44&type=section&id=Securitization%20and%20Off-Balance%20Sheet%20Arrangements) The Bank engages in securitization and off-balance sheet arrangements in the normal course of business, with no significant changes during the quarter, and its total potential exposure to loss through liquidity facilities for its Canadian multi-seller conduits was $15.7 billion, with a funded exposure of $13.8 billion as of July 31, 2024 - The Bank's total potential exposure to loss from liquidity facilities for its Canadian multi-seller conduits was **$15.7 billion**, with **$13.8 billion** funded as of quarter-end[110](index=110&type=chunk) [Accounting Policies and Estimates](index=44&type=section&id=Accounting%20Policies%20and%20Estimates) The Bank adopted IFRS 17 for insurance contracts on November 1, 2023, restating comparative periods, and noted the cessation of CDOR on June 28, 2024, with no significant exposure - The Bank adopted **IFRS 17 (Insurance Contracts)** effective **November 1, 2023**, changing the accounting for insurance contract liabilities and revenue recognition[111](index=111&type=chunk)[128](index=128&type=chunk) - As part of the interest rate benchmark reform, the **Canadian Dollar Offered Rate (CDOR)** ceased on **June 28, 2024**, and the Bank's exposure to financial instruments referencing CDOR is no longer significant[115](index=115&type=chunk)[134](index=134&type=chunk) Interim Consolidated Financial Statements [Notes to Interim Consolidated Financial Statements](index=55&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements) Notes detail IFRS 17 adoption, Schwab investment, Cowen acquisition, a further **$3.57 billion** AML provision (totaling over **$4.1 billion**), and segment results - The Bank adopted **IFRS 17 (Insurance Contracts)** on **November 1, 2023**, applying the full retrospective approach, which resulted in an after-tax increase to retained earnings of **$112 million** as of the transition date[128](index=128&type=chunk)[130](index=130&type=chunk) - The Bank's investment in Schwab had a carrying value of **$10.0 billion** and a fair value of **$20 billion** as of July 31, 2024[167](index=167&type=chunk) - In Q3, the Bank took a further provision of **$3.57 billion** (US**$2.60 billion**) related to U.S. AML investigations, following an initial provision of **$615 million** in Q2 2024[196](index=196&type=chunk) Shareholder and Investor Information [General Information](index=82&type=section&id=General%20Information) This section provides shareholder contact details, information on the Q3 earnings call, and announces the next Annual Meeting on **April 10, 2025**, in Toronto - Contact information is provided for registered and beneficial shareholders through **TSX Trust Company** and **Computershare**[202](index=202&type=chunk) - The next Annual Meeting is scheduled for **April 10, 2025**, in Toronto, Ontario[202](index=202&type=chunk)

In anticipation of a year-end global resolution of the investigations into its anti-money laundering (AML) practices by U.S. regulators, Toronto-Dominion Bank (TD) has taken a further provision of $2.6 billion in its fiscal third-quarter results. In addition to the $450-million provision announced in April, TD estimates that it will have to pay $3 billion in connection with its compliance failures. Bharat Masrani, the CEO of TD Bank, stated, "We recognize the seriousness of our US AML program deficiencies. ...

Financial Data and Key Metrics Changes - The company reported earnings of $3.6 billion and EPS of $2.05, with revenue growth of 8% year-over-year driven by higher fee income and deposit margins [6][19] - The Common Equity Tier 1 (CET1) ratio was 12.8%, reflecting the impact of AML provisions and share buybacks during the quarter [9][27] - Adjusted earnings were flat year-over-year, while adjusted expenses increased due to investments in risk and control infrastructure [19][20] Business Line Data and Key Metrics Changes - Canadian Personal and Commercial Banking achieved record revenues of $5 billion, with net income up 13% year-over-year, driven by loan and deposit growth [10][21] - U.S. Retail Bank saw consumer loans grow by 8% year-over-year, with proprietary bank card balances up 16% [13][23] - Wealth Management and Insurance segment reported record revenue growth of 13% year-over-year, despite increased claims from severe weather events [14][24] Market Data and Key Metrics Changes - The Canadian market showed strong loan and deposit growth, with average loan volumes rising 6% year-over-year [22] - In the U.S. market, average loan volumes increased by 5% year-over-year, with stable deposit volumes [23] - Wholesale Banking revenues increased by 14% year-over-year, reflecting broader capabilities and higher trading-related revenue [16][26] Company Strategy and Development Direction - The company is focused on enhancing its AML remediation program, with significant investments in data, technology, and staffing to improve transaction monitoring [7][51] - The strategy includes a commitment to maintaining a strong capital position and prudent management of capital levels amidst economic volatility [34][62] - The company aims to leverage its digital banking capabilities and customer experience to drive future growth [10][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging economic environment with significant market volatility and evolving rate expectations [16][17] - There is a cautious approach from retail and business clients, but the company remains committed to supporting them through the upcoming months [17] - The management expressed confidence in the strength of the franchise and the ability to navigate through uncertainties [16][56] Other Important Information - The company completed its restructuring program, delivering efficiencies across the enterprise while prioritizing investments in risk and control infrastructure [8][20] - The company has made donations to support communities affected by severe weather events, reflecting its commitment to corporate social responsibility [14] Q&A Session Summary Question: Capital considerations regarding the sale of Schwab stake - Management explained the need to maintain a well-capitalized position due to economic volatility and the prudent approach to capital management [34][36] Question: Future capital levels and AML provisions - Management confirmed that the current estimate for AML provisions is $2.6 billion, with a target CET1 ratio between 12% and 12.5% [35][36] Question: Expense growth guidance - Management indicated that high single-digit expense growth is driven by increased risk and control costs, strong performance in markets-related businesses, and litigation expenses [40][41] Question: Impact of AML investments on operational expenses - Management clarified that while some AML-related hires may be temporary, a structural increase in operational expenses is expected to support a robust AML program [41][52] Question: Concerns about U.S. franchise performance amid potential asset caps - Management reassured that the U.S. franchise continues to perform well, with strong loan growth and stable deposits, despite ongoing AML investments [55][56]

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, The ...

Key Takeaways TD Bank shares fell Thursday morning after the bank reported a surprise loss for the third quarter of fiscal 2024. The net loss was driven by one-time expenses, including billions of dollars set aside for expected fines over investigations into its anti-money laundering practices. TD's earnings also missed estimates after adjusting for one-time expenses. TD Bank (TD) shares lost ground in early trading Thursday after reporting a surprise third-quarter loss, thanks to billions of dollars the co ...

Toronto-Dominion Bank (TD) came out with quarterly earnings of $1.50 per share, beating the Zacks Consensus Estimate of $1.49 per share. This compares to earnings of $1.48 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 0.67%. A quarter ago, it was expected that this retail and wholesale bank would post earnings of $1.35 per share when it actually produced earnings of $1.50, delivering a surprise of 11.11%. Over the last four ...

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Toronto-Dominion Bank (TD) , which belongs to the Zacks Banks - Foreign industry, could be a great candidate to consider. When looking at the last two reports, this retail and wholesale bank has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 7.32%, on average, in the last two quarters. For the last report ...

If you are looking at the financial sector, here's why this bank, with a 5.1% yield, should be on top of your investment wish list. Toronto-Dominion Bank (TD 0.79%) is yielding 5.1% right now, which is at the high end of the stock's historical yield range. If that's not enough to entice you to invest $1,000, that yield is also around twice the 2.5% yield you'd collect from the average bank, using SPDR S&P Bank ETF as a benchmark. Before you run out and buy the stock, here's a deeper look at why TD Bank is t ...

The market expects Toronto-Dominion Bank (TD) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended July 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be r ...

Core Insights - TD Bank provides a diverse range of mortgage products tailored for various borrowers and financial objectives, with competitive mortgage rates compared to many rivals. However, its services are limited to 15 states and Washington, D.C., restricting its accessibility to a smaller borrower segment [1][6][24]. Mortgage Product Offerings - TD Bank offers multiple types of home loans, including conventional, FHA, VA, jumbo, and medical professional loans, as well as home equity loans and HELOCs. The bank also provides low-down-payment options and down payment assistance programs to enhance affordability [6][8][9]. - The bank's home equity loans come with fixed interest rates and terms ranging from five to 30 years, while HELOCs start at $25,000 with no minimum draw required [10][12]. Borrower Assistance and Tools - TD Bank has various down payment assistance options and offers up to $10,000 in lender credits, which can help borrowers avoid mortgage insurance costs and reduce interest rates [9][25]. - The bank provides online tools and resources for homebuyers, although these can be challenging to locate. The resources include a home lending learning center and mobile apps for managing loans [22][25]. Application and Preapproval Process - Borrowers can apply for a mortgage through TD Bank's website, in person, or over the phone. The application process requires personal information and details about the desired mortgage [18][19]. - TD Bank refers to its preapproval process as "prequalification," which involves a hard credit pull and requires a meeting with a loan officer [20][21]. Rate and Cost Assessment - TD Bank scored 2 out of 5 stars for mortgage rates, indicating a higher-than-median mortgage rate of 6.625% in 2024, and a total loan costs score of 3 out of 5 stars, with near-median total loan costs of $4,966.51 [17][31]. - The bank's rates can be personalized based on location, credit score, and down payment, making it easier for borrowers to understand potential costs [13][25]. Comparison with Competitors - Compared to Bank of America, TD Bank offers a wider variety of mortgage products, including construction loans and second home loans, but has a more limited geographic footprint [24][27]. - While Rocket Mortgage has standout features like a 1%-down loan for first-time buyers, TD Bank provides a broader range of loan options, including HELOCs and medical professional loans [27].