TD Bank on Thursday said it would lay off 2% of its workforce to cut costs and scale up its digital and AI investments, as the bank restructures following its historic anti-money laundering settlement under new CEO Ray Chun.
The layoff involving some 2,000 employees is part of a new restructuring program that will help TD save up to C$650 million ($470 million) annually, including winding down its point of sale financing business in the U.S.
TD’s shares were up about 3.7% in Toronto.
TD expects to incur pre-tax restructuring charges between C$600 million and C$700million pre-tax over the next several quarters.
“We are structurally reducing costs across the bank by taking a disciplined look at our operations and processes to find opportunities to automate and to re engineer them,” Chun told analysts.
“We are identifying opportunities to innovate, to drive efficiencies and operational excellence.”
The review follows TD’s anti-money laundering settlement in the United States that lead to several changes including a new CEO. TD did not say if the layoffs were predominantly in the United States or Canada.
Analysts viewed the restructuring program positively and said it would help offset TD’s prior investments related to its anti-money laundering programs.
Chun, who took charge in February, initiated a strategic review to simplify the business. The bank is expected to share more at its investor day in September.
TD reported better than expected earnings for the second quarter powered by strength at its wholesale banking arm - which houses its capital markets and investment banking businesses.
The unit reported record revenue of C$2.13 billion, up 10% from a year earlier, reflecting higher trading-related revenue and underwriting fees, including from the sale of its remaining equity investment in U.S. financial services firm Charles Schwab SCHW.N.
However, the bank set aside C$1.34 billion ($965.5 million) in provisions to shield against future souring loans in an uncertain environment, up from C$1.07 billion a year earlier, as businesses pause spending and defer long-term decisions.
“We still see loan growth despite the uncertainty in the environment, but given the outlook, and given that there’s uncertainty, we build reserves,” CFO Kelvin Tran said in an interview.
TD’s results, which kick off Canadian banking earnings, offer a glimpse into the impact of the tariffs chaos on the Canadian economy.
Adjusted earnings of C$1.97 per share beat analysts’ average estimates of C$1.76, LSEG data showed.
Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shailesh Kuber and Jan Harvey, Reuters
