TD's High Costs Hurt Q2 Results, Restructuring Plan Revealed, Stock Up

Shares of Toronto-Dominion Bank TD have risen 4.5% on the NYSE since the unveiling of its restructuring program to boost efficiency last week. Further, the company announced its second-quarter fiscal 2025 (ended April 30) results.

The company’s quarterly adjusted net income of C$3.6 billion ($2.63 billion) fell 4.3% year over year.

Higher provisions for credit losses and expenses acted as undermining factors. Also, lower loan balances were another negative. Nonetheless, growth in net interest income (“NII”) and non-interest income was positive.

TD’s Revenues Rise, Expenses Up

Adjusted revenues were C$15.1 billion ($11.02 billion), increasing 9% year over year.

NII grew 8.8% year over year to C$8.13 billion ($5.91 billion). Non-interest income of C$14.81 billion ($10.78 billion) jumped 133.1%.

Adjusted non-interest expenses rose 11.6% to C$7.91 billion ($5.76 billion).

The adjusted efficiency ratio was 57.6 as of April 30, 2025, up from 56.1 recorded in the prior-year period.

In the reported quarter, Toronto-Dominion recorded a provision for credit losses of C$1.34 billion ($0.98 billion), which surged 25.2% from the year-ago quarter.

Toronto-Dominion’s Balance Sheet Weakens

Total assets were C$2.06 trillion ($1.5 trillion) as of April 30, 2024, down 1.4% sequentially.

Net loans declined 3% from the fiscal first quarter to C$936.4 billion ($681.6 billion) and deposits fell 1.8% to C$1.27 trillion ($0.9 trillion).

As of April 30, 2025, the common equity Tier I capital ratio was 14.9, up from 13.4 as of April 30, 2024. The total capital ratio was 18.5 compared with the prior-year quarter's 17.1.

TD’s Restructuring Plan

TD unveiled a restructuring program to mitigate costs, which included the reduction of roughly 2% of its workforce. The bank will incur approximately C$700 million ($505 million) on a pre-tax basis to implement the plan over the next quarters.

Further, the bank anticipates pre-tax savings of about C$100 million in fiscal 2025 and annual savings of up to C$650 million beyond that.
 
Moreover, the bank will present its revised strategy and financial targets in the Investor Day presentation on Sept. 29, 2025.

Our Viewpoint on Toronto-Dominion

Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues and market share seem impressive. Relatively high interest rates, restructuring efforts and decent loan demand will also likely aid its financials.

However, concerns related to tough regulatory requirements following the settlement of the AML probe are expected to weigh on its financials. Further, weakening asset quality due to an uncertain macroeconomic backdrop is a headwind.

Toronto Dominion Bank (The) Price, Consensus and EPS Surprise

Toronto Dominion Bank (The) price-consensus-eps-surprise-chart | Toronto Dominion Bank (The) Quote

TD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Foreign Banks

HSBC Holdings HSBC reported first-quarter 2025 pre-tax profit of $9.48 billion, which declined 25% from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

HSBC’s results were affected by a fall in revenues, higher expected credit losses and other credit impairment charges, partially offset by a fall in expenses.

Deutsche Bank DB reported first-quarter 2025 earnings attributable to its shareholders of €1.78 billion ($2.01 billion), up 39.2% year over year.

DB’s results were aided by a rise in revenues and lower expenses. However, higher provision for credit losses was a spoilsport.

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