Toronto Dominion Bank

Record financial performance; capital still strong despite regulatory “CET1 haircut” pressure - TD reported record Q3 earnings of $4.7B and record EPS of $2.77; revenue up 8% YoY (momentum in markets-driven businesses, margin expansion, and volume growth in Canadian Personal & Commercial Banking). - ROE hit 16%, up 280 bps YoY; management highlighted positive operating leverage for the 5th straight quarter. - CET1 at 14.3% (down 3 bps sequentially); Q3 included share buybacks (≈ 14.5M shares, reducing CET1 by 37 bps) and model updates adding 10 bps. - Forecast/target: management reaffirmed expectation to reach ~13% CET1 by 2H FY2027 (not immediate because TD must run down CET1 more slowly than peers due to strong capital generation).

Credit quality improving; FY2026 PCL outlook raised toward the low end - Impaired PCLs fell $108M QoQ to $865M; gross impaired loan formations decreased 20 bps QoQ; gross impaired loans down $138M (3 bps). - Provision for credit losses improved to 37 bps (down 6 bps QoQ). - FY2026 outlook: TD now expects total PCLs near the LOWER end of its prior 40–50 bps range. - Surprising/positive detail: Ajai said delinquency is stable/slightly higher in RESL, while formations and GILs are down, and impaired PCLs are largely down across non-retail—attributed to economic resilience + borrower adaptation + TD underwriting discipline. - Risk/negative: credit performance can still vary with macro; TD also keeps policy/trade risk reserves (~$500M).

U.S. Banking momentum + NIM guidance supported by selective funding/repricing - U.S. Banking earnings up 11% YoY; ROTCE expanded by 210+ bps to 15.6%. - Loan momentum: U.S. loans were positive sequentially; key balances up YoY (e.g., bank cards +20%, mid-market lending +15%, home equity +6%). - Net interest margin (NIM): Q3 record NIM of 3.47%, up 6 bps QoQ; mgmt expects modestly higher NIM in Q4 and discussed ongoing (though slightly more modest) NIM expansion into 2027. - Expense dynamic: U.S. expenses up 6% YoY partly due to strategic cards conversion costs and growth investments.