“Thebankalso continued to prioritize and execute on our (anti-money laundering) remediation.”
It completed a number of remediation efforts including implementing new anti-money laundering tools, improved investigative capabilities and a newly launched transaction monitoring platform.
“This quarter, we deployed our first machine learning models in our transaction monitoring environment. This tool will continue to improve the effectiveness and efficiency of our program, allowing our AML team to focus their investigative expertise and intelligence,” TD’s U.S. chief Leo Salom said on the same call as Chun.
He added that TD established a new financial crimes risk management subcommittee and new training programs regarding “suspicious customer activity.”
TD was ordered to pay more than US$3-billion in penalties by U.S. regulators last year after pleading guilty to multiple charges related to failures in its anti-money laundering program.
At the time, it also received non-financial sanctions from the U.S. Office of the Comptroller of the Currency that curtailed its growth south of the border after it found the bank’s monitoring program had systemic breakdowns.
Thebankreported a third-quarter profit of $3.34 billion, compared with a loss of $181 million in the same quarter last year. Thebanksays the profit amounted to $1.89 per diluted share for the quarter ended July 31, compared with a loss of 14 cents per diluted share a year earlier.
The lender also reported a $262-million restructuring of its U.S. balance sheet, along with restructuring charges of $333 million.
Salom said the restructuring efforts were undertaken to comply with U.S. asset restraints. The bank’s U.S. assets totalled US$386 billion at the end of the quarter, under the US$434 billion limit.
Earlier this year, TD had announced other restructuring efforts focused on reducing costs, which included cutting 2% of its workforce.
“We are undertaking a restructuring program to reduce structural costs and create capacity to invest to build thebankof the future. We expect to incur total restructuring charges of $600 million to $700 million pre-tax over several quarters,” Kelvin Tran, TD’s chief financial officer, said on the earnings call Thursday.
Ongoing trade uncertainty
The company’s third-quarter results come amid Canada-U.S. trade tensions and uncertainty.
Chun said that global trade dynamics “continue to be fluid” and there is “still much work ahead” with a CUSMA review set for next year.
“While Canadian companies have benefited from that trade agreement, tariffs and especially sector-specific tariffs create business uncertainty and economic distortions with significant impacts to the most exposed sectors,” he said.
The Canadian and U.S. economies have shown resilience despite the uncertainty, but momentum has eased.
“These remain early days. It will likely be a long road before the full impact of tariffs is well understood,” Chun said.
On an adjusted basis, TD says it earned $2.20 per diluted share for its third quarter, up from an adjusted profit of $2.05 per diluted share a year ago.
Analysts on average had expected an adjusted profit of $2.05 per share, according to LSEG Data & Analytics.
Revenue for the quarter totalled $15.3 billion, up from $14.2 billion in the same quarter last year.
The bank’s provisions for credit loss totalled $971 million, down from $1.07 billion last year.
The bank’s wealth management and insurance segment reported a net income of $703 million, up 63% from last year. Non-interest income was $3.3 billion, up $267 million from the same quarter last year, reflecting higher insurance premiums, fee-based revenue and transaction revenue. Net interest income was $373 million, up $57 million, mainly from higher deposit volumes and margins.
As of July 31, the segment had $709 billion in assets under administration (up from $632 billion the same time last year) and $572 billion in assets under management (up from $527). Both increases reflected market appreciation and net asset growth, TD said.
The bank’s Canadian personal and commercial banking segment reported a net income of $1.95 billion in the third quarter, up 4% from a year earlier.
Its wholesale banking profit was $398 million, up 26% from last year.
— With files from IE.
Source: investmentexecutive.com
