The Toronto-Dominion Bank

This conference is recorded. All participants, please stand by. Your meeting is ready to begin. Good morning, everyone. Welcome to the TD Bank Group Q2 2025 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Ells, Head of Investor Relations. Please go ahead, Ms. Ells.

Thank you, Operator. Good morning, and welcome to TD Bank Group's second quarter 2025 results presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO, followed by Leo Salaam, President and CEO, TD Bank, America's most convenient bank, after which Kelvin Tran, the bank's CFO, will present our second quarter operating results. Ajay Bambawali, 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 Mehta, 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. 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 on our Q2 2025 report to shareholders. With that, let me turn the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. We had a strong quarter, and I'm looking forward to walking you through the details in a minute. Before we discuss that and share updates on our strategic review and AML remediation, I'd first like to comment on the current environment. Despite a recent tariff de-escalation between the US and China that's temporary in nature, there continues to be a high degree of macroeconomic and policy uncertainty. This has made it difficult for businesses to make long-term decisions and created economic distortions such as inventory stockpiling and purchases being pulled forward to avoid tariffs. This fluid environment has also driven volatility in capital markets and created angst for some households. In Canada, housing activity has slowed and the job market has continued to soften with notable losses in trade-exposed sectors. With the election in Canada now behind us, there's a new opportunity for bilateral discussions with the US. And I've been encouraged to see the new federal government working alongside the provinces on opportunities to create economic growth, including those that elimination of interprovincial trade barriers. There are no quick fixes to the challenges our country is confronting. This is going to take time and considerable effort. As a major employer and participant in the economic growth in both Canada and the United States, TD has an important role to play. We stand ready to engage and work productively with governments in both countries. Despite an uncertain external environment, our focus remains constant. We're staying close to our nearly 28 million clients, providing advice and supporting them through this period. Within TD, we will continue to prudently manage risk as we drive our businesses forward, ensuring we can be there for our clients as their needs evolve. With that, let's turn to the next slide. I'll start with an update on our strategic review. This quarter, we completed the sale of approximately 9 billion US dollars on correspondent loans. We also communicated plans to wind down our US point of sale financing business which services third-party retailers. This business is comprised of a series of bespoke arrangements with each retailer, which impacts its profitability and scalability. Exiting this business is accretive to U.S. retail ROE and free of capacity to invest in a proprietary bank card business. In addition, through the strategic review, we are identifying opportunities to innovate to drive efficiencies and operational excellence. 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. Calvin will provide more details on our restructuring program in his remarks. These efforts will create capacity to accelerate digital and AI investments to upgrade capabilities and scale relationship banking. We are identifying growth opportunities and making good progress across each of our four pillars of our strategic review. TD will host an investor day on September 29th, where we look forward to presenting a clear direction for the bank's future in our refreshed medium-term financial targets. Please turn to slide four. In Q2, the bank delivered a strong quarter with earnings of $3.6 billion and EPS of $1.97. We saw robust trading and fee income in our markets-driven businesses and volume growth year over year in Canadian personal and commercial banking. Impaired PCLs decreased quarter over quarter, reflecting strong credit performance broadly across asset classes. And we added to our performing reserves for policy and trade uncertainty, taking a prudent approach with more than a half a billion in reserves added over the past two quarters. Ajay will share more details shortly in his remarks. As of quarter end, the bank's CET1 ratio was 14.9%. We made good progress on our share buyback this quarter, repurchasing 30 million shares for a total of $2.5 billion. We still intend to deploy $8 billion of the proceeds from the Schwab share sale for our current NCIB. We have the capacity to execute the NCIB as planned while maintaining very strong capital levels in this uncertain environment. Please turn to slide five. This quarter, we saw strong execution across our businesses. The Canadian personal and commercial banking segment delivered growth on both sides of the balance sheet. In RESL, we continue to enhance speed to decision and to provide tailored customer advice by referring more complex deals to our mobile mortgage specialist. As you know, our single greatest opportunity is to deepen relationships with our more than 15 million customers in Canada. We are executing against that with continued strong referrals to the business bank and wealth. In addition, the personal bank achieved record credit card penetration rates with new checking account customers. In the business bank, loans were up 6% year over year, reflecting growth across our commercial business. In U.S. retail, we demonstrated resilience and momentum, with six consecutive quarters of consumer deposit growth and core loans up 2% year over year. Our U.S. wealth business also has momentum. Total client assets were up 15% year over year, with mass affluent client assets of 26% year over year. We continue to prioritize and execute on our AML remediation and have made significant progress on our US balance sheet restructuring. Leo will provide an update in his remarks. Wealth management and insurance had a strong quarter, reflecting our diversified business mix. TD Asset Management added $5.3 billion in net institutional assets and our advice business delivered strong net asset growth. We continue to innovate in TD Direct Investing, the only bank-owned brokerage in Canada to offer partial shares trading. We are seeing great momentum with an 83% increase in partial shares adoption by our Gen Z and millennial clients within the last six months. TD Insurance continued its digital transformation with over 46% of new sales this quarter completed digitally from end to end as we build on our position as the leading digital direct insurer in Canada. In wholesale banking, we continue to demonstrate the power of our broader platform with record revenue of $2.1 billion. This quarter, the trading business benefited from market volatility. We are navigating challenges in the market while executing against our strategy. Across the bank, we are delivering for our clients. This quarter, both TD Auto Finance in Canada and US Retail in Florida were recognized by J.D. Power with the highest ranking in customer satisfaction. Please turn to slide six. We recognize that leadership in digital and mobile is critical. We are investing in these areas and enabling capabilities such as trusted data and AI. This quarter, we announced plans to open a new office in New York City for Layer 6, TD's AI Research and Development Center. TD has over 800 AI patent filings, and according to Evident AI, our portfolio is in the top 10 amongst banks globally. Last quarter, I mentioned that we have deployed a generative AI virtual assistant in our contact centers to drive efficiency while enhancing the customer experience. We are now beginning to deploy this GenAI virtual assistant across our branch network, driving further colleague and customer experience and efficiency benefits. This year, we launched the next AI enhancement in our fraud operation and insurance claims. to enhance our detection of suspected fraudulent auto and residential claims. This helps improve our response time to customers of genuine claims and continues our development of AI and insurance, which has been heavily engaged in machine learning for over a decade. TD continues to innovate for our clients, colleagues, and communities. Please turn to slide seven. In March, we published our 2024 sustainability report. providing an update on our efforts to protect the bank while adapting business practices to meet changing market conditions and the evolving needs of our stakeholders. Before I turn it over to Leo, I want to thank our colleagues across the bank for their tremendous dedication and efforts. Together, we are writing the next chapter of this great institution's story. We will continue to invest in our talent and our culture. With that, over to you, Leo.