TD Cuts Thousands Of Jobs, Takes Restructuring Charge; Earnings Miss

Toronto-Dominion Bank missed analysts’ earnings estimates after setting aside more money than forecast for potentially souring loans and announcing a restructuring charge related to a planned 3% cut to the lender’s workforce.

The bank, Canada’s second-largest lender, said Thursday that it took C$266 million ($195 million) in after-tax restructuring charges in the fiscal fourth quarter related to the staff reductions as well as reworking its real estate footprint, including a reduction of 1.2 million square feet (111,000 square meters) of office space in its US operations.

Toronto-Dominion also warned that it will be “challenging” for the bank to meet its medium-term earnings targets for fiscal 2024.

The layoffs, which the Toronto-based bank said will come through attrition as well as targeted cuts, follow similar announcements by other Canadian banks, including Royal Bank of Canada, Bank of Montreal and Bank of Nova Scotia. Toronto-Dominion’s workforce reduction would amount to more than 3,000 positions. On a pretax basis, Toronto-Dominion said that it expects the restructuring to generate C$400 million in savings in the current fiscal year and C$600 million annually.

“We’ve undertaken a restructuring program to streamline and deliver efficiency, to create capacity to invest in the future,” Toronto-Dominion Chief Financial Officer Kelvin Tran said in an interview. Some job cuts have already been made and others will happen in 2024, he said, declining to specify any particular area where the bank is trimming.

The bank’s shares slipped 1.8% to C$81.84 at 9:43 a.m. in Toronto trading. They have dropped 6.6% this year, compared with a 5.9% decline for the S&P/TSX Commercial Banks Index.

Also reporting results Thursday were Royal Bank, Canada’s biggest lender, and Canadian Imperial Bank of Commerce, both of which beat analysts’ estimates. Royal Bank’s earnings for the three months through October got a significant boost from C$578 million in deferred tax adjustments. The shares of both lenders climbed.

At Toronto-Dominion, provisions for credit losses totaled C$878 million in the quarter, more than the C$844.5 million analysts had expected. Toronto-Dominion earned C$1.83 a share on an adjusted basis, it said in a statement Thursday, less than the C$1.90 average estimate of analysts in a Bloomberg survey.

‘Complex’ Environment

For fiscal 2024, it will be difficult for the bank to meet its medium-term adjusted earnings-per-share growth target of 7% to 10% and return-on-equity target of more than 16% “as it navigates a complex macroeconomic environment” along with “expected further normalization” in loan-loss provisions, Toronto-Dominion said in the statement.

Adjusted non-interest expenses came in at C$7.24 billion for the fourth quarter, more than the C$6.89 billion analysts expected.