TD delivered record Q1 results with net earnings of CAD 4.2 billion, EPS of CAD 2.44 and ROE of 14.2%, while revenue rose 11% YoY and adjusted pre‑tax pre‑provision profit grew 19% amid positive operating leverage and a 3–4% FY26 expense growth target.
Aggressive capital returns weighed on capital ratios: TD completed an $8 billion buyback, launched a new $7 billion program and repurchased ~84 million shares, contributing to a CET1 ratio of 14.5% (down 15 bps sequentially) and a target to manage toward ~13% CET1 by H2 FY2027.
Restructuring and strategic investments underway: the bank recorded CAD 200 million of restructuring charges this quarter (CAD 886 million total) and expects CAD 775 million of annual pre‑tax savings with a medium‑term CAD 2.2–2.5 billion savings target, while planning ~CAD 500 million of AML remediation spend in FY26 and targeting CAD 1 billion of medium‑term value from AI deployments.
Toronto Dominion Bank (NYSE:TD) reported record first-quarter fiscal 2026 results, with management pointing to broad-based revenue momentum, moderating expense growth, and continued progress on strategic priorities, including U.S. anti-money laundering (AML) remediation and structural cost reduction.
During the earnings call, CEO Raymond Chun said the bank delivered record earnings of CAD 4.2 billion and EPS of CAD 2.44. He also cited ROE of 14.2%, up 100 basis points year-over-year, and highlighted strong performance in markets-driven businesses, volume growth in Canadian personal and commercial banking, and margin expansion.
TD reported a common equity Tier 1 (CET1) ratio of 14.5% at quarter-end, which CFO Kelvin Tran said was down 15 basis points sequentially. Tran attributed the decline in part to share repurchases that reduced CET1 by 38 basis points in the quarter.
Chun emphasized capital return plans, noting that TD completed an $8 billion share buyback in January and launched a new $7 billion buyback. By the end of the quarter, the bank had repurchased approximately 84 million shares across the two programs. Management said it is aiming to manage toward a 13% CET1 ratio by the second half of fiscal 2027.
Tran said revenue rose 11% year-over-year, reflecting growth across all businesses. Total bank pre-tax, pre-provision profit (PTPP) increased 19% year-over-year after removing specified impacts (including the U.S. strategic card portfolio, foreign exchange, and insurance service expenses, as referenced on the bank’s slide materials).
Expenses increased 7% year-over-year, with management attributing about 1% of that growth to variable compensation, FX, and the impact of the U.S. strategic card portfolio. The bank posted positive operating leverage for the third consecutive quarter, and Chun reiterated TD remains on track for its 3% to 4% expense growth target for fiscal 2026.
TD recorded CAD 200 million pre-tax in restructuring charges in the quarter tied to workforce optimization. Tran said the bank has now concluded the restructuring program with total charges of CAD 886 million pre-tax, and it expects fully realized annual cost savings of CAD 775 million pre-tax. Management also reiterated a broader medium-term target of CAD 2.2 billion to CAD 2.5 billion in annualized cost savings, with initiatives spanning AI, process improvements, vendor optimization, and procurement.
Canadian Personal and Commercial Banking posted record revenue, PTPP, earnings, deposits, and loan volumes, according to both Chun and Tran. Tran said average deposits increased 3% year-over-year (personal deposits up 3% and business deposits up 5%), while average loans grew 5% year-over-year (personal volumes up 5% and business volumes up 6%). Net interest margin was described as stable, up 1 basis point quarter-over-quarter, and the segment delivered more than 200 basis points of operating leverage. Management also cited continued progress in real estate-secured lending and strong credit card acquisition activity.
US Banking (a renamed segment beginning this quarter) reported earnings up 22% year-over-year, PTPP up 7%, and ROTCE of 14.7%, up 330 basis points. Net interest margin was 3.38%, up 13 basis points sequentially. Management said the quarter’s margin expansion was driven by the remaining impact of loan repositioning actions taken last year, selective repricing across deposits and loans, and “tracker on rates” tailwinds, partially offset by Fed rate cuts. Looking ahead, the bank guided to a modest NIM increase in Q2.
On volume trends, executives said core loans grew 2% year-over-year while total loans declined due to runoff and other factors. In Q&A, TD’s U.S. leadership highlighted growth in bank cards (with 15% balance growth and 33% unit sales growth year-over-year) and said the bank is targeting net total loan growth in the U.S. by the third quarter, including runoff portfolios.
TD also discussed a strategic milestone in its U.S. credit card business: the completion of the conversion of Nordstrom card clients onto TD’s servicing platform. Management said TD will have a higher share of revenue and expected losses going forward, and it expects a $145 million receivable adjustment to be treated as an item of note in Q2, consistent with similar transactions. Executives also said the Nordstrom conversion drove an increase in U.S. staffing—particularly in call centers, collections, and fraud—to support the larger volume now managed directly by TD.
Wealth Management and Insurance delivered record earnings and assets, with management citing market share gains. Tran noted Direct Investing revenue share growth of 97 basis points year-over-year and said trades per day rose 10% year-over-year. ETF assets exceeded CAD 31 billion, up from CAD 17 billion at the end of fiscal 2024. In insurance, the bank said it remained focused on profitable growth and increased ROE by 80 basis points year-over-year, while also pursuing claims cost reductions through vendor optimization, AI, and fraud detection.
Wholesale Banking produced record revenue and earnings, driven by client activity across global markets and corporate and investment banking. Tran cited strength in commodities, global equity derivatives, advisory fees, and equity underwriting, along with constructive market conditions. Segment ROE was 12.6%. Management noted impaired provisions increased due to a small number of borrowers across various industries.
Chief Risk Officer Ajai Bambawale said the bank’s credit performance was “in line with expectations,” with provision for credit losses (PCLs) of 43 basis points, within guidance. Gross impaired loan formations were 27 basis points, up four basis points sequentially, largely tied to wholesale banking and U.S. commercial lending exposures involving a small number of borrowers.
Impaired PCLs rose to CAD 1.16 billion, up CAD 221 million quarter-over-quarter. Bambawale said more than half of the increase was tied to a single wholesale borrower and added that management does not expect the quarter’s wholesale impaired provisions to represent a typical run rate. The bank recorded a performing PCL recovery of CAD 125 million, which management attributed to an improved macroeconomic forecast and migration from performing to impaired in certain wholesale and U.S. commercial exposures.
TD reiterated its expectation that fiscal 2026 PCLs will remain in a 40 to 50 basis point range. Bambawale also said the bank maintains more than CAD 500 million in reserves related to elevated policy and trade uncertainty.
Group Head of U.S. Banking Leo Salom said the bank continues to make progress on its U.S. AML remediation program, with improvements in efficiency, efficacy, and accuracy. Salom noted that TD’s new KYC platform went live to business users, creating a centralized customer information profile. He also said TD has deployed machine learning models in transaction monitoring and expects to roll out additional models in coming quarters. TD continues to expect $500 million of AML remediation spend in fiscal 2026, while noting spending will shift toward validation work and look-back costs.
Management repeatedly pointed to AI as a driver of both growth and cost reduction. Chun said TD’s medium-term AI target is $1 billion in value, and indicated the bank may ultimately exceed that figure as deployments scale, including agentic AI use cases such as simplifying real estate-secured lending (RESL) pre-adjudication processes.
In closing remarks, Chun said fiscal 2026 is “off to a strong start,” citing robust top-line growth, continued positive operating leverage, and record earnings.
Toronto-Dominion Bank (TD) is a Canadian multinational banking and financial services company headquartered in Toronto, Ontario. Formed through the 1955 merger of the Bank of Toronto (founded 1855) and the Dominion Bank (founded 1869), TD is one of Canada’s largest banks and offers a broad range of financial products and services to individual, small business, commercial and institutional clients.
TD’s core businesses include Canadian and U.S. personal and commercial banking, wealth management, wholesale banking and insurance.
