- Key takeaway: The Toronto-based banking giant continues to report progress in remediating its U.S. regulatory issues.
- Supporting data: TD expects to spend $500 million on compliance during its 2026 fiscal year, which ends Oct. 31.
- Expert quote: "The credit performance in the U.S. was compelling, and management is confident lending in the region should begin to pick up." — Jefferies analyst John Aiken
Toronto-based TD Bank Group reported increased quarterly earnings Thursday, as improved asset quality and solid consumer loan growth in the United States boosted its bottom line.
The CA$2.1 trillion-asset TD reported net income totaling CA$4.3 billion for the three months ending April 30, up 5% over the first-quarter 2026 result. TD reported net income of CA$11.1 billion for the second quarter of 2025, when its results included US$14.4 billion in proceeds from the
"The bank delivered a strong quarter reflecting continued momentum across our businesses and structural cost reduction," President and CEO Raymond Chun said Wednesday on a conference call with analysts. Chun added that TD "is on track to outperform" the 6%-to-8% earnings-per-share growth and 13% return-on-equity targets for fiscal year 2026 that the company announced at its Investor Day in September.
"We are ahead of the vast majority of the metrics and the medium-term outlook that we had set at Investor Day," Chun said.
In its earnings press release, TD cited a "resilient" U.S. economy as a tailwind, pointing specifically to robust artificial intelligence-related capital expenditures. Looking ahead, TD is expecting continued U.S. expansion powered by AI spending and what the company characterized as a business-friendly regulatory environment.
That forecast tracks broadly with comments Wednesday from Wells Fargo Chairman and CEO Charlie Scharf, who said the U.S. economy continues to perform well.
"Things are still extremely strong," Scharf said during an appearance at the Bernstein Strategic Decisions Conference in New York. "It's really hard to find pockets of weakness in the actual results."
TD remains subject to a cease-and-desist order with U.S. banking regulators, who
Remediation costs have been significant and continue to weigh down the company's U.S. results. Indeed, TD is projecting US$500 million in compliance spending in fiscal 2026. However Leo Salom, the group head of U.S. banking, said Wednesday that his unit is beginning to turn the corner, with expenditures focused increasingly on validation and sustainability and less on implementation.
"We expect that trend to continue, with overall AML remediation costs moderating in the second half of the year," Salom said on the conference call.
TD's U.S. bank reported second-quarter profits totaling US$595 million, up from US$35 million a year ago, when results included US$572 million in balance sheet optimization expenses.
The U.S. loan portfolio totaled US$173.4 billion on April 30, down about 4.3% year-over-year but up modestly on a linked-quarter basis. Loan growth should accelerate in the second half of the year, according to Chun.
He said the bank's U.S. business "is building toward sustainable growth, with increases in core loans expected to more than offset balance sheet runoff" in the third quarter.
Meanwhile, TD's second-quarter numbers demonstrated mid-single-digit year-over-year growth in both home-equity and indirect auto lending in the U.S. Stateside middle-market commercial lending jumped a more substantial 13%.
The U.S. bank also outperformed TD's flagship Canadian operation in asset quality. U.S.-related gross impaired loans declined by CA$45 million on a linked-quarter basis, offsetting a modest increase in the larger Canadian portfolio.
"The credit performance in the U.S. was compelling, and management is confident lending in the region should begin to pick up," John Aiken, an analyst who covers the company for Jefferies, wrote in a research note.
Investors appeared satisfied with TD's second-quarter report. Shares were trading up about 1% at $113.34 Wednesday afternoon. Aiken boosted his TD price target by $9 to $151.
