TD Bank Reports C$3.87 Billion Adjusted Net Income in Q3 2025, Exceeds EPS Estimates

Toronto-Dominion Bank (TD.US) reported adjusted net income of C$3.87 billion for Q3 2025, marking a 6% increase compared to C$3.65 billion in Q3 2024. This performance significantly exceeded the reported net loss of C$181 million in the prior year's third quarter. Adjusted diluted EPS for the quarter was C$2.20, surpassing the analyst estimate of C$1.46.

Segment Performance Highlights

Canadian Personal and Commercial Banking delivered a strong quarter with record revenue, earnings, deposit, and loan volumes. Net income for this segment reached a record C$1.95 billion, a 4% year-over-year increase, driven by higher revenue and partially offset by increased non-interest expenses and provisions for credit losses (PCL). Revenue for the segment was a record C$5.24 billion, up 5% year-over-year, reflecting robust loan and deposit volume growth.

Wealth Management and Insurance also showed strong underlying business performance, with net income rising 63% year-over-year to C$703 million. This increase was attributed to record assets and earnings in Wealth Management, strong insurance premium growth, and lower estimated losses from catastrophe claims. Wholesale Banking reported net income of C$398 million, a 26% year-over-year increase, primarily due to higher revenue and lower PCL.

Balance Sheet Restructuring in U.S. Retail

U.S. Retail sustained business momentum and made significant progress on balance sheet restructuring. Reported net income for U.S. Retail was C$760 million (US$554 million), reflecting the impact of prior year charges related to the U.S. BSA/AML program investigations and higher current quarter revenue. The Bank completed its bond repositioning program and achieved its target 10% asset reduction, with total assets of the U.S. Bank at US$386 billion as of July 31, 2025.

The Bank expects the net interest income benefit from these sales to be approximately US$500 million pre-tax in fiscal 2025. Additionally, the Bank anticipates reducing the U.S. Bank's assets by modestly more than 10% from the September 30, 2024, level, which is expected to reduce net interest income in the U.S. Retail segment by approximately US$150 million pre-tax in fiscal 2025.

Management Outlook and Strategic Review

The Bank is conducting a strategic review focused on evolving its operations and financial performance. Key pillars of this review include adjusting business mix and capital allocation, simplifying the portfolio to drive ROE focus, evolving the Bank to accelerate capabilities, and innovating for efficiency and operational excellence. Management will provide a further update on its strategic review and medium-term financial targets at an Investor Day on September 29, 2025.

Regarding expenses, the Bank continues to expect fiscal 2025 adjusted expense growth to be at the upper end of the previously communicated 5% to 7% range. This reflects investments in governance and control, and business growth initiatives, net of expected productivity and restructuring savings. For fiscal 2026, non-interest expenses in the U.S. Retail segment are expected to grow in the mid-single digit range.