TD Bank (TD.TO) revealed Thursday that it will lay off 2% of its workforce, equating to approximately 2,000 employees, as part of a broader restructuring effort. This move aims to reduce costs and accelerate investments in digital technologies and AI, following the bank’s historic anti-money laundering settlement and the appointment of new CEO Ray Chun.
Restructuring for Savings and Innovation
The restructuring program is projected to save TD Bank up to C$650 million ($470 million) annually. As part of the program, the bank will also wind down its point of sale financing business in the U.S. The company expects to incur pre-tax restructuring charges between C$600 million and C$700 million over the next several quarters.
Chun emphasized the need to cut operational costs through automation and process re-engineering. “We are structurally reducing costs across the bank by taking a disciplined look at our operations and processes to find opportunities to innovate, drive efficiencies, and operational excellence,” he told analysts.
Positive Response from Analysts
Despite the layoffs, analysts have viewed the restructuring positively, citing it as a way for TD to offset prior costs related to its anti-money laundering programs. The bank’s strategic review, which began after Chun’s appointment in February, is expected to lead to more changes, with further details likely to be shared at the investor day in September.
Quarterly Performance and Provisions for Future Losses
TD Bank reported better-than-expected earnings for the second quarter, fueled by strong performance from its wholesale banking arm. The unit posted record revenue of C$2.13 billion, up 10% from the previous year, reflecting higher trading-related revenue and underwriting fees.
However, the bank set aside C$1.34 billion ($965.5 million) in provisions to protect against potential loan defaults in the face of an uncertain economic environment. This was an increase from C$1.07 billion set aside the previous year.
Outlook Amid Economic Uncertainty
While TD Bank continues to see loan growth, CFO Kelvin Tran highlighted that businesses are delaying long-term decisions, contributing to the increase in loan loss provisions. The bank’s results provide insight into the broader impact of the current economic environment, especially in relation to tariffs and other global uncertainties.
