The Toronto-Dominion Bank

All participants, please stand by. Your conference is now ready to begin. Good morning, everyone, and welcome to the TD Bank Group Q1 2025 earnings conference call. I would now like to turn the meeting over to Ms. Brooke Hales, Head of Investor Relations. Please go ahead, Ms. Hales.

Thank you, Operator. Good morning, and welcome to TD Bank Group's first quarter 2025 results presentation. We will begin today's presentation with remarks from Raymond Chun, the bank CEO, followed by Leo Salam, President and CEO, TD Bank, America's most convenient bank, after which Kelvin Tran, the bank CFO, will present our first quarter operating results. Ajay Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from pre-qualified analysts and investors on the phone. Also present today to answer your questions are Sona Nida, Group Head, Canadian Personal Banking, Barbara Hooper, Group Head, Canadian Business Banking, Tim Wiggin, Group Head, Wholesale Banking, and President and CEO, TD Securities, and Paul Clark, Senior Executive Vice President, Wealth Management. Please turn to slide two. As noted on slide two, our comments during this call may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Ray, Leo, and Kelvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our Q125 report to shareholders. With that, let me turn the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. Before we discuss the quarter, I want to briefly comment on the current environment. There's no doubt that tariff and trade risks are clouding the economic outlook. Should these risks materialize, a lot depends on their depth and duration and on the actions governments may take to support Canadians and Canadian businesses. First and foremost, Whatever ultimately happens, we are focused on our customers and clients. We will continue to support the millions of businesses and households across Canada and the United States as they navigate uncertainty and new dynamics. Next, we are modeling multiple scenarios, including potential impacts on provisions. The bank is well capitalized, with a strong balance sheet, a resilient business model, and conservative risk appetite. all of which provide us with the ability to steer through unknowns and shifts in the macroeconomic environment. The current situation is also a clear signal that Canadian governments and businesses must pull together, remove the obstacles that hold back national productivity, and strengthen our competitiveness. Interprovincial trade barriers are something we must tackle. Accelerating critical projects to untap mineral, energy, and resource production and leadership is another key focus area. We also need to evaluate tax, regulatory, and other policies to retain talent, create the right conditions for businesses to grow, and make Canada a top destination for foreign investment. I believe Canada has an opportunity to build on its strength and create the right conditions for our economies to thrive in the future. With that, let's turn to the next slide. I'd like to start with an update on our strategic review. As we discussed, we are undertaking a comprehensive strategic review at the bank. This will culminate in an investor day in the second half of 2025, but we will provide updates along the way. The strategic review is organized around four pillars, and we are making steady progress in each. Earlier this month, we sold TD's entire 10.1% stake in Schwab. to pursue compelling opportunities to invest in our own business, both by buying back TD shares and by seizing opportunities to further support our customers, drive performance, and accelerate organic growth. And on Monday, we announced that the share buyback received regulatory approval to start on March 3rd. We also gave more authority and accountability to our lines of business for the end-to-end customer experience, streamlining TD's operating model. In a few minutes, you will hear from Leo on our US balance sheet restructuring. We are making great progress and are on track to complete the program along our previously communicated timeline. Leo will also provide an update on our AML remediation. Finally, we are focused on operational excellence and on driving efficiency. AML is our number one priority and we will continue to invest to accelerate momentum across our businesses We will also need to make strategic investments. We are identifying significant opportunities to restructure operations, reduce costs, and improve processes. Please turn to slide four. In Q1, the bank delivered earnings of $3.6 billion and EPS of $2.02. We saw volume growth in Canadian personal and commercial banking and strong trading and fee income in our markets-driven businesses. As you will hear from Ajay shortly, Q1 PCLs reflect certain overlays for policy and trade uncertainty. And Calvin will speak more about expense growth in his remarks. Expenses this quarter include the impact of TD shares issued to eligible non-executive colleagues in December to show our appreciation for their hard work and commitment to the bank in a challenging year. As of quarter end, the bank's CET1 ratio was 13.1%. Performa for the sale of our Schwab stake earlier this month and the completion of the proposed $8 billion share buyback, PDC to one ratio would be approximately 14.2%. PD is very well capitalized with the flexibility to complete a significant share buyback while investing to drive organic growth and maintaining prudent capital levels. Please turn to slide five. As I travel across our footprint and meet with colleagues, I am struck by their tremendous pride in TD. We have strong momentum across our businesses, and that was evident in our Q1 results. We operate Canada's premier banking franchise and are very proud that TD was once again named Canada's most valuable brand by Brand Finance. In Canadian personal and commercial banking, we introduce Resil specialists in-branch, to enhance our proprietary distribution strategy. The distribution ecosystem deepens customer relationships and improves retention while delivering a strong, profitable profile. And in credit cards, the team delivered a record quarter in active accounts and cardholder spend. TD Auto Finance saw record originations in Q1 and added dozens of new dealer floor plan relationships. Turning to US retail, AML remediation remains our number one priority. We have seen good customer momentum with five consecutive quarters of customer deposit growth. We're also seeing momentum in our US wealth business with total client assets of 52 billion US dollars, up 11% year over year. As you know, our IDA with Schwab remains unchanged. We are pleased with the current arrangement and confident that we can manage the Schwab balances while complying with the asset limitation. Wealth management and insurance at a strong quarter. Let me start by congratulating the direct investing team. For the third year in a row, we were named the number one digital broker in Canada by the Globe and Mail, a fantastic accomplishment that further extends our leadership in this critical category. Last year, TD introduced partial shares capability, unique among Canadian banks, and a big hit with young investors. Just over 50% of our clients that have traded partial shares are Gen Z and millennials. In TD Asset Management, we won $3.2 billion in new institutional mandates this quarter. Our strong performance was recognized with 24 fund-grade A-plus awards, including 15 for ETFs. a testament to our momentum in this rapidly growing segment of the market. Finally, in TD Insurance, we became the first Canadian issuer to sponsor a catastrophe bond solely focused on catastrophe perils in Canada. This $150 million issuance is an example of our One TD strategy, with TD Securities acting as joint book runner on this placement. Through the CAAT bond issuance, TD Insurance leveraged capital markets to manage risk exposure and support resilience against natural disasters. In wholesale banking, we continue to demonstrate the power of our broader platform with quarterly revenue over $2 billion for the first time. ESAT, TD's leading U.S. municipal bond trading dealer, expanded into a new asset class and is now trading U.S. investment-grade corporate bonds. TD Cowen was recently named IFR's 2024 U.S. Mid-Market Equity House of the Year, an award given to the leading underwriter of U.S. equity offerings between $50 and $500 million. And after quarter end, TD Securities acted as lead book runner on TD's sale of its Schwab stake. This critical role in a milestone transaction is already opening new opportunities for a wholesale banking business. Across our Canadian personal and commercial banking and wealth management insurance segments, we continue to make progress against the medium term financial targets that we laid out at our 2023 investor day. Slides 29 and 30 in the appendix provide an update on our progress. Please turn to slide six. Digital leadership is a critical component of both customer experience and business performance, and it's an area of focus and investment in our strategic review. TD Invent is our bank-wide umbrella effort to power innovation. Last year, we deployed a generative AI virtual assistant in our contact centers supporting the Canadian personal bank. We have seen reductions in called hold times, escalations to second-level support, driving efficiency, while enhancing the customer experience. We are now rolling out this GenAI virtual assistant to our contact center supporting our wealth and insurance businesses. We are determined to keep innovating, elevating the experience, and driving growth through digital leadership. Please turn to slide seven. Before I turn the call over to Leo, I want to note that we will release our 2024 sustainable report soon. It will outline our progress and our commitment to our clients as they adapt their businesses and seize new opportunities. Let me conclude with a quick comment. I've been CEO for just under a month. The strategic review is advancing as planned. We will continue to drive change and unlock new opportunities. What remains constant is the commitment of our colleagues. I want to thank them for their tremendous effort as together, We build the bank for the future. With that, Leo, over to you.