Growth ambitions are suspended by TD Bank after a record settlement

Growth ambitions are suspended by TD Bank after a record settlement. In October, the bank and US regulators came to an agreement.


Analyst John Aiken of Jefferies Financial Group noted that  TD's fourth-quarter results were  "insignificant for its  outlook," highlighting the  bank's difficulties in generating  profit growth for fiscal 2025.  Investors they have to be patient for a catalyst to  unlock the  accumulated value in  TD. Aiken said in a note to  clients.
Restructuring of American assets
Bloomberg reported that the settlement and subsequent restructuring  comes at a time when TD is also reducing its US assets by 10% to  meet the asset  limit set by US  regulators.
Spending in the US  division was also  affected by  the allegations related to the  money laundering case. In its  financial markets division,  TD's adjusted net  profit of  $299 million  came in below forecasts, but showed a 68% increase from  a year earlier, thanks to lower expenses  for the integration of Cowen Inc.,  an American investment bank  acquired by TD. TD's loan loss provisions for the quarter were C$1.11 billion, in line with analysts'  expectations. This was a more moderate result compared to Bank of Montreal's C$1.52  billion provisions, which had  largely exceeded  expectations.
Transition at TD's top
The resolutions also come  ahead of the expected retirement of CEO Bharat  Masrani in April 2025, with Chun, who has been  at TD for three decades,  expected to take over. RBC Capital Markets analyst Darko Mihelic noted that Chun will  have to address the strategic challenges facing the bank and restore employee morale, which has been  hit by  recent scandals.
With the  U.S. asset  curb remaining in place indefinitely,  TD shares are trading at a significant valuation discount to its peers, a trend Mihelic  expects to continue until the situation  improves. In addition to legal  issues, TD  has also faced  difficulties in its insurance business. The bank  reported a  CA$388 million increase in  natural disaster losses due to extreme weather and wildfires,  which worsened its financial performance.

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