Toronto Dominion Bank (NYSE:TD) executive Raymond Chun said the bank is seeing stronger-than-expected momentum coming out of its fourth quarter and believes there may be “tailwind opportunities” for earnings per share and return on equity, assuming macroeconomic conditions remain relatively stable. Speaking in an interview following the company’s September Investor Day, Chun pointed to performance across Canadian personal banking, wealth, and capital markets, while emphasizing that anti-money laundering (AML) remediation in the U.S. remains TD’s top priority.
Momentum exiting 2025: deposits, cards, mortgages and markets
Chun said TD’s momentum exiting 2025 was “better than I would have anticipated” at Investor Day. In Canadian Personal Banking, he said TD ranked number one year-over-year in personal deposit growth, credit card growth, and residential secured lending (RESL) growth. In Wealth Management’s Direct Investing business, he cited 27% account growth year-over-year and 37% growth in trades per day.
Mortgage strategy: shifting channel mix, adding specialists, speeding approvals
Chun described changes aimed at boosting mortgage growth and profitability, arguing that winning in RESL helps deepen customer relationships across the bank. He said TD’s mortgage customers are “2x more likely” to also have a checking account, savings account, and credit card.
He attributed TD’s mortgage performance to operational and staffing changes, including a shift in channel mix away from brokers toward more proprietary mortgages. Chun said TD is adding 500 mortgage specialists inside its 500 largest mortgage branches and has 1,000 mortgage mobile specialists. He added that TD moved its mortgage sales force back into branches, citing complexity in a portion of mortgage applications that can be difficult for newer branch staff to handle.
Despite what he called a “down home market” in 2025, Chun said TD delivered record closed deals in mortgages due to these changes. On profitability, he said the bank is seeing margin expansion on mortgages on both acquisition and renewal.
He also outlined levers behind margin improvement:
- Rebalancing portfolio mix, including shifting toward higher-margin HELOC exposure versus mortgages.
- Reducing over-concentration in the broker channel by moving toward proprietary origination.
- More sophisticated pricing tools, including machine learning and real-time pricing engines for brokers.
- Shortening the end-to-end RESL process, which he said supports both higher close rates and profitability.
Commercial outlook and distribution build-out
On commercial banking, Chun said TD saw good momentum in the fourth quarter on both sides of the border. In Canada, he cited deposit and loan growth in the 5% to 6% range in Q4. Looking forward, he said loan demand appears stronger in Canada at present, though TD continues to grow in the U.S., particularly in mid-market segments.
Chun tied growth expectations to expanded frontline distribution investments, saying TD is redirecting resources toward sales capacity where it “underinvested potentially … over the last number of years.” He reiterated Investor Day hiring plans, including:
- 1,200 wealth advisors in Canada over three years (with 880 to be added over that period, as he described).
- 880 business bankers in Canada (small business and commercial).
- 1,000 specialists inside Canadian branches (including mortgage and investment specialists).
- In the U.S.: 500 wealth advisors and 200 commercial bankers.
He said TD added 200 business bankers in the prior year and 50 hires in wealth management, noting TD had “intentionally slowed the machine” in wealth but plans to accelerate. Chun said about half of hires are expected to come from internal progression and half from external recruiting.
Cost management: unit-cost approach, restructuring charges, AI savings
Chun said TD is managing costs differently under his leadership, emphasizing structural cost reductions through “unit cost management” rather than temporary measures like hiring freezes or reduced marketing. He described a six-bucket framework that includes items such as distribution transformation, AI/automation, data and technology, global resourcing strategies, and procurement.
As an example, he detailed TD’s progress reducing mortgage process unit costs from two years ago to 2025:
- Adjudication cost: CAD 514 per unit to CAD 390 (down 21%).
- Funding cost: CAD 124 per unit to CAD 97.
- Discharge cost: CAD 24 per unit to CAD 19.
He said “agentic AI” will begin layering into these processes over the next two quarters, including a goal to reduce discharge costs further to roughly CAD 9 per unit. Chun also cited AI-driven reductions in pre-adjudication steps, saying tasks that historically took “a day and a half to two days” are now down to minutes under the new process.
On AI targets, Chun said TD completed 75 use cases in 2025, generating CAD 170 million of value, and has CAD 200 million booked in initiatives to drive CAD 200 million of value in 2026. He reaffirmed a CAD 1 billion medium-term target for AI-related value and said he is seeing more opportunity than expected at Investor Day.
Chun also addressed TD’s restructuring charges, saying the bank recorded CAD 825 million in restructuring charges and expects to finish related write-offs by the end of Q1. He said the actions are expected to generate CAD 750 million in pre-tax annualized benefits, and that there will be no further restructuring charges related to that program afterward.
Rates, fees, and priorities: AML remediation remains “number one”
On the rate environment, Chun said TD Economics expects two U.S. rate reductions likely in the first half of the year, while TD’s plan assumes Canada rates stay stable for 2026. He said TD expects “moderate expansion” in U.S. net interest margin, supported in part by the bond investment portfolio actions already taken. In Canada, he said TD’s guidance suggests net interest margin stability in the first half and potential expansion in the second half, driven by factors including RESL margin improvement.
Chun emphasized TD’s desire to increase fee revenue and rely less on net interest income, highlighting investments in TD Securities, Wealth Management, and TD Insurance. He said TD Securities has been delivering record revenues “every quarter,” wealth management posted “record earnings in 2025,” and TD is developing a next-generation direct investing offering he referred to as “TD Easy Trade” aimed at new-to-investing clients.
In insurance, Chun said 50% of TD’s home and auto policies last year were underwritten digitally with straight-through processing and “no human intervention,” after modernization of the technology stack over the past several years. He said this shifts the business toward a lower marginal-cost model and positions insurance for further efficiency gains through AI in areas such as pricing, fraud, and claims management.
When asked about growth after U.S. loan reduction efforts, Chun said balance sheet restructuring is “for the most part” finished and cited $52 billion of asset cap room. However, he underscored that AML remediation remains TD’s “number one priority” in the U.S. and said the bank will not be distracted from completing required commitments in 2026.
Closing the discussion, Chun said investors should hold TD accountable in 2026 to Investor Day targets for EPS, ROE, cost management, and delivering positive operating leverage. He also said TD intends to operate capital more deliberately, exit non-core businesses, hold businesses to ROE standards, and return excess capital to shareholders “consistently” when there is no need for it after organic investment.
About Toronto Dominion Bank (NYSE:TD)
Toronto-Dominion Bank (TD) is a Canadian multinational banking and financial services company headquartered in Toronto, Ontario. Formed through the 1955 merger of the Bank of Toronto (founded 1855) and the Dominion Bank (founded 1869), TD is one of Canada’s largest banks and offers a broad range of financial products and services to individual, small business, commercial and institutional clients.
TD’s core businesses include Canadian and U.S. personal and commercial banking, wealth management, wholesale banking and insurance.
