The Toronto-Dominion Bank

Good morning, everyone. Welcome to the TD Bank Group Second Quarter 2026 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Hales, Head of Investing Relations. Please go ahead, Ms. Hales.

Thank you, Operator. Good morning and welcome to TD Bank Group's Second Quarter 2026 Results Presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO, followed by Leo Salome, Group Head, U.S. Banking, after which Kelvin Tran, the bank's CFO, will present our second quarter operating results. Ajay Vambawale, 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, Paul Clark, Group Head, Wealth Management and Insurance, and Tim Wiggin, Group Head, Wholesale Banking. 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 materials factors and assumptions is available in our Q2 2026 MD&A. Please turn to the next slide. I will now hand the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. Thanks for joining us. In Q2, the bank delivered a strong quarter, reflecting continued momentum across our businesses and structural cost reduction. EPS was up 21% year-over-year, and ROE was 14.4%, up over 200 basis points year-over-year. TD is executing against the strategies and targets that we shared at Investor Day. In fact, in many cases, we're ahead of schedule. The bank is on track to outperform its 6% to 8% EPS growth and 13% ROE targets for fiscal 2026, provided that the current macroeconomic conditions continue. Strong revenue performance this quarter was driven by momentum in our markets-driven businesses, margin expansion, and volume growth in Canadian personal and commercial banking. Impaired PCLs declined quarter over quarter, reflecting strong credit performance. An update to our macroeconomic outlook resulted in a performing reserve build this quarter. We continue to expect total PCLs of 40 to 50 basis points in fiscal 2026. TD delivered positive operating leverage for the fourth consecutive quarter, excluding variable compensation FX in the US strategic cards portfolio. Expenses were up 3% year over year. We are well on our way to achieve our 3% to 4% expense growth target for fiscal 2026. The bank is driving structural cost reductions, enabling the team to deliver the smallest expense growth since 2022, while at the same time accelerating investments across AI, innovation, and frontline talent. Today, we announced a $0.04 dividend increase, bringing our dividend to $1.12 per share, reflecting confidence in TD's future growth and earnings power. The bank's CET1 ratio was 14.3%, with strong organic capital accretion offset by consistent share repurchases. It's been eight months since TD's Investor Day. We see strong momentum across our businesses and unparalleled opportunities to take market share on both sides of the border. TD remains committed to completing our $7 billion share buyback program. Please turn to slide three. Canadian personal and commercial banking delivered record Q2 revenue, PTPP, and earnings. In real estate secured lending, volumes grew 5% year over year, This disciplined growth is anchored in our strategy of speed and specialization. The bank has the largest portfolio of active credit cards and added the most cards in the market based on the annual Nielsen report. We again achieve record penetration rates for consumer and small business credit cards, coupled with strong credit quality. In the business bank, loans are up 7% year-over-year, driven by distribution expansion and broad-based momentum. Our clients continue to demonstrate resilience through macroeconomic uncertainty. In TD Auto Finance, we were proud to be recognized again this year by J.D. Power with the highest rank in dealer satisfaction. In US banking, AML remediation remains our top priority. You will hear more about our continued progress from Leo. The business is also building towards sustainable growth with increases in core loans expected to be more than offsetting balance sheet runoff beginning next quarter. We saw that momentum accelerated in Q2 with core business loans up 1.2% sequentially. This quarter, Middle market lending balances were up 13% year-over-year, and U.S. proprietary credit card balances were up 18% year-over-year, driven by strong acquisition. And in our U.S. wealth business, record mass affluent sales drove double-digit asset growth year-over-year. As we shared at Invest Today, U.S. banking has significant opportunities to accelerate commercial loan growth, scale our cards franchise, and deepen U.S. wealth relationships. delivering substantial upside to the bank's earnings over the medium term. Wealth management and insurance delivered record earnings and assets. We continue to drive innovation in TD Direct Investing, Canada's number one digital investing platform. TD is the only Canadian bank to offer partial share ownership. With as little as $1, clients can now invest in some of the biggest companies in the world. bringing down barriers and creating new opportunities for Canadians. This quarter, we launched a fully redesigned TD EasyTrade. The app offers market-leading capabilities, 100 free trades, helping to widen the gap to peers in direct investing. With this launch, the bank is positioned to continue to serve the next generation of investors. We continue to take share in ETFs with assets more than doubling since the end of fiscal 2024. We are well on our way to achieving our medium-term target of $54 billion in ETF assets. And in insurance, we continue to build on our position as Canada's leading digital direct insurer with over 80% of our clients digitally engaged, strong progress towards our investor-day target of 90% plus. Wholesale banking delivered record earnings this quarter, supported by strong client activity across global markets and corporate investment banking. Broad-based momentum across our platform enabled the business to earn through the almost $200 million in revenue from the Schwab transaction in Q2 last year. The team continued to execute against the strategies we laid out in Invest Today and placed in the top 10 in the U.S. Equity and Equity-Linked League Tables calendar year-to-date. Clients are entrusting TD Security with their largest and most complex transactions as they navigate the evolving macroeconomic environment. Please turn to slide four. We continue to make progress against our strategy to deepen relationships, make TD simpler and faster, and execute with discipline. This quarter, the Canadian Personal Bank delivered almost $9 billion in closed referrals to wealth, double-digit growth year over year, and well on our way to achieving our medium-term target. Within wealth itself, TD has an unparalleled pipeline from direct investing to advice. This quarter alone, direct investing referred $1.5 billion to advice, up 42% year-over-year, positioning TD to capture assets through the significant intergenerational wealth transfer currently underway. In Canada, we continue to invest in our small business banking franchise and attract clients, with net client acquisition of 15% year-over-year in the first half of 2026. Effective next week, we are moving our small business banking franchise to Canadian personal banking. Almost 90% of small business clients also do their personal banking with TD. This realignment will enable TD to deliver simpler and faster for our small business banking clients, the backbone of the Canadian economy. Across the bank, we have a clear strategy that is driving higher ROE. This quarter, U.S. banking and wholesale banking ROEs were up 130 basis points and 360 basis points year over year, respectively. As I said last quarter, TD may achieve its medium-term ROE target faster than we expected at investor day. Please turn to slide five. At our investor day, we share targets that take out $2 to $2.5 billion in structural costs and generate $1 billion in annualized value from AI over the medium term. We have strong momentum and are tracking ahead of pace on both targets. Across the bank, structural cost reductions are fueling accelerated investments in innovation and AI. GD is and will continue to be a leader in AI. I believe AI will transform our operations, make our colleagues more efficient, our processes faster, and our products and services better. We're already seeing it across our businesses. In Resil, re-reduced mortgage pre-adjudication cycle time from approximately 15 hours to 3 minutes using a Gentic AI. In insurance, TD continues to innovate. We set a new industry standard for AI adoption in Canada, becoming the first home and auto insurer to launch a client-facing generative AI virtual assistant. And across the bank, we have over 40,000 colleagues using Copilot, and over 7,000 engineers using AI for software development, with the most active achieving a 29% increase in throughput. TD is increasingly emphasizing AI opportunities that transform end-to-end experiences, drive lower unit costs, and are scalable across the enterprise. We see significant opportunities across credit, contact centers, fraud, and frontline productivity. among other focus areas. We are tracking well ahead of pace on our target to deliver $200 million in value from AI this year. At the halfway mark, we have already delivered almost $145 million in value across predictive, generative, and agentic AI use cases. Please turn to slide six. For the fourth consecutive year, TD was named the most valuable brand in Canada by Brand Finance. TD was also recently ranked number one on LinkedIn's list of the top 25 best Canadian companies to work for. These incredible accomplishments reflect the dedication and commitment of our colleagues across the bank. Thank you for continuing to deliver for our clients and shareholders every day. Now before I hand it over to Leo, I'd like to take a moment to honor the memory of Richard M. Thompson. He was one of TD's true architects, dedicating more than four decades to our organization, rising to become chairman and CEO. It was under his leadership TD launched the first bank-owned self-directed brokerage in Canada, laying the groundwork for today's TD Direct investing. TD's securities roots can also be traced back to his time leading the bank. Dick cared deeply about TD, its clients, its colleagues, and the community. His impact will be felt for generations to come. With that, I will hand it over to you, Leo.