TD Bank Touts ‘Critical’ Digital Efforts Amid Tariff Uncertainties

TD Bank is focused on digital initiatives against the backdrop of tariff-related uncertainty.

The Canadian lender released quarterly earnings Thursday (Aug. 27) showing earnings of $3.3 billion, compared with a loss of $181 million in the third quarter of 2024, and adjusted earnings were $3.9 billion, a 6% increase.

Speaking during an earnings call, management emphasized TD’s technology efforts, with CEO Raymond Chun noting, “leadership in digital and mobile is absolutely critical.”

Among those efforts was the launch of TD AI Prism, designed to bolster client personalization through accelerated artificial intelligence (AI)-driven insights. TD Securities also unveiled a virtual AI assistant that the bank says can boost front office productivity by rapidly synthesizing 8,500 proprietary research reports, covering nearly 1,300 companies.

In house, TD deployed its first machine learning models in its U.S. anti-money laundering (AML) transaction monitoring environment, designed to improve program effectiveness and efficiency.

This came after deficiencies in the bank’s money laundering prevention practices caught the attention of U.S. authorities. TD agreed to pay more than $3 billion as part of its guilty plea.

Meanwhile, management noted that global trade dynamics remain a significant external factor. Chun told analysts that “tariffs and especially sector specific tariffs create business uncertainty, and economic distortions with significant impact to the most exposed sectors.”

In response, the bank has taken a prudent approach to credit, adding nearly $600 million in performing reserves year to date for “policy and trade uncertainty,” according to Chief Risk Officer Ajai Bambawale.

Bambwale said that these reserves, approximately $410 million for business and government and $190 million for the consumer sector, are based on “tariff assumptions and running it through our portfolio to determine what incremental migration or reserves would be required.”

He expects “impaired PCLs to gradually rise from these levels” as tariff impacts play out. Despite this, overall credit performance remained strong, with impaired PCLs decreasing quarter over quarter.

In the bank’s consumer segments, TD saw record revenue, earnings, deposits and loan volumes in its Canadian personal and consumer banking business

TD’s consumer segments demonstrated strength. In Canadian personal and commercial banking, the bank achieved record revenue, earnings, deposits, and loan volumes. Sona Mehta, head of Canadian personal banking, reported “strong 7% year over year growth in the credit card business” and “good growth both in that line [Mortgage and HELOC] as well as in the credit card business.”

U.S. retail banking also enjoyed momentum, with core loans up 2% year over year and U.S. bank card balances rising 12% to a new milestone of $3 billion.