The Toronto-Dominion Bank

Good morning, everyone. Welcome to the TD Bank Group fourth quarter 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 fourth quarter 2025 results presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO, followed by Leo Salam, Group Head, U.S. Retail, after which Kelvin Tran, the bank's CFO, will present our fourth quarter operating results. Ajay Bambuale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from analysts 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 Paul Clark, Senior Executive Vice President, Wealth Management. Please turn to the next slide. 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 Calvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our 2025 annual report. With that, let me turn the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. We ended the year with another strong quarter, which I'm looking forward to discussing in a minute, along with the progress we've made against our new strategic pillars. First, I'd like to share my perspective on the external environment. There continues to be a high degree of uncertainty around tariffs and Canada-U.S. trade dynamics. with important impacts, particularly to industries facing the highest tariffs, such as steel and aluminum. While economic uncertainty has impacted business and consumer confidence, Canada's economy and employment remain largely resilient. New government actions such as the Canadian mutual recognition agreement, defense spending increases, the major projects office and other measures to incentivize private sector and foreign investment will help support economic activity as Canada prepares for KUSMA renegotiations. As one of Canada's largest employers serving one in three Canadians, we will continue to work with our clients and governments to build a stronger economy. In the U.S., the economy continues to perform, with businesses and households benefiting from regulatory and monetary policy changes. And we're seeing a pickup in investment activity in some sectors. With a strong presence across the eastern seaboard of the U.S., serving more than 10 million American businesses and households, we are focused on helping them achieve their financial goals. Across our business, TD is well-positioned to manage through this period and help our clients successfully navigate a changing landscape. Now, before I move to our performance, on behalf of all of our colleagues on the board, I want to share our deepest condolences with the family and friends of Nadir Mohammed. We were fortunate to have him as a director from 2008 to 2023. And like in all of his other professional endeavors, he made a tremendous and lasting impact on our organization. Our thoughts are with everyone who had the privilege of knowing him. With that, let's turn to the next slide. At our investor day, we described our strategy to deepen relationships, make TD simpler and faster, and execute with discipline. I'm looking forward to providing updates on our progress each quarter. Our single greatest growth opportunity is to deepen relationships with clients across our businesses. This year, we achieved record personal credit card penetration rates and delivered record closed referrals from the Canadian Personal Bank to Wealth, and we're just getting started. In TD Securities, we are leveraging our platform to provide a full suite of services to our clients. including acting across advisory and financing products for national fuel gases, recent acquisition of the CenterPoint business. As you heard at Investor Day, AI is a massive opportunity for TD, and we have concrete plans that are already delivering clear outcomes. This year, we implemented approximately 75 AI use cases that generated $170 million in value. These use cases span from transforming loan underwriting to creating intelligent leads to deepening relationships to meet more of our clients' needs. For next year, we expect the AI use cases to generate $200 million in incremental value, including use cases to reimagine end-to-end processes as described at Investor Day. We are prioritizing our AI investments with use cases focused across categories such as customer acquisition, customer insights, and risk management. We are also delivering disciplined governance and controls. In fiscal 2025, fraud losses were down 26% year over year, driven by ongoing investments in fraud modernization across capabilities, data, systems, and processes. We have a clear strategy that will accelerate growth and returns and drive long-term shareholder value. I remain confident that we will achieve the medium-term targets that we laid out at our investor day. This year, we delivered 5% earnings growth, much stronger performance than we anticipated at this time last year, when we expected it would be challenging to deliver earnings growth through a transition year. Our year-over-year expense growth moderated this quarter, and we delivered positive operating leverage. We are on track to deliver 3% to 4% expense growth and positive operating leverage in fiscal 2026, aligned with the targets we shared at Investor Day. TD delivered a strong Q4, and we are carrying that momentum into fiscal 2026. We expect to achieve the 6% to 8% EPS growth and 13% ROE target targets for fiscal 2026 that we provided on Invest Today. And we see potential upside to these EPS and ROE targets from our strong business momentum and the outcomes we are driving by deepening relationships, delivering a simpler and faster bank, and executing with discipline. Supported by tailwinds if positive macroeconomic conditions continue and from PCLs if trade and tariff uncertainty reduces. Both Ajay and Kelvin will provide more details on our fiscal 2026 outlook and their remarks. Please turn to slide three. In Q4, the bank delivered a strong quarter with earnings of $3.9 billion, EPS of $2.18, and ROE up 110 basis points year over year. We saw robust fee and trading income in our markets-driven businesses and volume growth year over year in Canadian personal and commercial banking. TD delivered positive operating leverage this quarter. PCLs were stable quarter over quarter, reflecting strong credit performance. Ajay will share more details shortly in his remarks. We have moved from an annual dividend review cycle to a semi-annual cycle to support alignment of shareholder return with earnings growth. Today, we announced a $0.03 dividend increase, bringing our dividend to $1.08 per share. reflecting confidence in TD's future growth and earnings power. As we shared at Investor Day, we expect earnings growth to accelerate over the medium term. The bank's Q4 CET1 ratio was 14.7%, with strong capital generation in the quarter. As of quarter end, we were over three quarters of the way through our current $8 billion share buyback, with 65 million shares repurchased for a total of over $6 billion. We continue to expect to complete the share buyback by the end of the first quarter of 2026. At that time, we will announce about that time as we announced that investor date and subject to regulatory approval, we plan to initiate a new share buyback of six to 7 billion. Through these two share buyback programs, we will effectively return all the capital generated from the Schwab sale to our shareholders. For fiscal 2025, we delivered a total payout ratio of 93%, including share buybacks and common share dividends. Please turn to slide four. In Q4, we saw strong momentum across our businesses. Canadian personal and commercial banking delivered record revenue, deposits, and loan volumes. We had a record year in digital sales for day-to-day banking products, continuing our momentum in mobile leadership. Real estate secured lending posted robust sequential growth, delivering higher origination margin and record Q4 originations. In cards, we delivered strong momentum with the best year of cards acquisition in nearly a decade. In the business bank, loans were up 6% year over year, reflecting growth across our commercial business. We also saw strong small business checking account openings up 10% year over year. In U.S. retail, we delivered continued momentum and core loans were up 2% year over year. U.S. bank card balances were up 14% year over year with the strongest account acquisition in seven years. In our U.S. wealth business, total client assets were up 10% year over year with mass affluent client assets up 21% year over year. In addition, for the ninth year in a row, the bank ranked number one in small business administration lending in its footprint. As we continue to serve our communities from Maine to Florida, Leo will provide updates on our US balance sheet restructuring and AML remediation in his remarks. Wealth management delivered record earnings and assets. we had a particularly strong quarter in direct investing, with new accounts up 27% and trades per day were up 37% year-over-year, respectively. As you heard at Investor Day, direct investing is an acquisition engine for the bank and drives outsized opportunities to deepen relationships. This year, we saw record flows $3.9 billion from direct investing to advice. We saw record sales of $1.6 billion in ETFs this quarter. For the year, TD's ETF market share is up 48 basis points. In insurance, we continue to build on our position as Canada's leading digital direct insurer. This quarter, we saw record digital adoption, supported by the launch of the new usage-based program for auto insurance. This quarter, wholesale banking delivered a record $2.2 billion in revenue, showcasing the power of our client franchise and breadth of capabilities as we benefited from a more constructive backdrop, especially in capital markets. We also generated record net income in ROE over 12% and executed on RWA optimization opportunities to grow revenue well above RWA growth for the quarter and fiscal year overall. Another indicator of our strong momentum, we rose to number six in the U.S. corporate access rankings, which demonstrates the strength of our relationships across corporate and institutional clients and our ability to deepen our share of wallet. Please turn to slide five. Before I turn it over to Leo, I want to thank our colleagues across the bank. Every day, you come to work with a commitment to our clients and a dedication to our bank that is truly remarkable. At Investor Day, we outlined a clear strategy to accelerate growth and deliver peer-leading performance. You, our colleagues, are the source of TD strength and why I am confident we will deliver. With that, Leo, over to you.