Layoffs part of $650M cost-cutting plan focused on AI and digital investment
Toronto-Dominion Bank (TD) will lay off approximately 2% of its global workforce, around 2,000 employees, as part of a broader restructuring plan aimed at cutting costs and accelerating investments in digital technology and artificial intelligence, the bank announced Thursday.
The layoffs come as TD works to streamline operations following a historic anti-money laundering (AML) settlement in the US and under the leadership of new CEO Ray Chun, who took over in February.
“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 during an earnings call.
“We are identifying opportunities to innovate, to drive efficiencies and operational excellence.”
The cost-cutting initiative is expected to generate up to $650 million in annual savings, and includes the wind-down of TD’s point-of-sale financing business in the United States. TD expects to take $600 million to $700 million in pre-tax restructuring charges over the coming quarters.
TD did not specify whether the job cuts will be concentrated in Canada, the US, or distributed across both markets.
“We’ve successfully done that [layoffs] in the past and we’ll look for opportunities to redeploy impacted colleagues across the bank,” said TD chief financial officer Kelvin Tran.
“This restructuring effort is to create capacity to accelerate digital and AI investments to upgrade our capabilities and scale relationship with our customers.”
The restructuring follows heightened regulatory scrutiny and leadership changes triggered by the AML settlement, which prompted Chun’s appointment and a strategic review to simplify the bank’s business structure. TD plans to release more details at its upcoming investor day in September.
Read next: TD Bank replaces three anti-money laundering executives after multibillion-dollar settlement
Q2 results beat expectations
Despite restructuring costs, TD reported better-than-expected earnings for its fiscal second quarter, driven largely by a strong performance in its wholesale banking division, which includes capital markets and investment banking.
The division posted record revenue of $2.13 billion, a 10% year-over-year increase, buoyed by trading gains, underwriting fees, and proceeds from the sale of TD’s remaining stake in Charles Schwab.
TD also increased its loan-loss provisions to $1.34 billion, up from $1.07 billion a year ago, to prepare for potential credit deterioration in a slowing economy.
“We still see loan growth despite the uncertainty in the environment,” Tran said. “But given the outlook, and given that there’s uncertainty, we build reserves.”
Adjusted earnings came in at $1.97 per share, beating analyst expectations of $1.76, according to LSEG data.
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