This quarterly Earnings News Release (ENR) should be read in conjunction with the Bank's unaudited second quarter 2026 Report to Shareholders for the three and six months ended April 30, 2026, prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), which is available on our website at http://www.td.com/investor/. This ENR is dated May 27, 2026. Unless otherwise indicated, all amounts are expressed in Canadian dollars, and have been primarily derived from the Bank's Annual or Interim Consolidated Financial Statements prepared in accordance with IFRS. Certain comparative amounts have been revised to conform with the presentation adopted in the current period. Additional information relating to the Bank is available on the Bank's website at http://www.td.com, as well as on SEDAR+ at http://www.sedarplus.ca and on the U.S. Securities and Exchange Commission's (SEC) website at http://www.sec.gov (EDGAR filers section).
Reported results conform with generally accepted accounting principles (GAAP), in accordance with IFRS. Adjusted results are non-GAAP financial measures. For additional information about the Bank's use of non-GAAP financial measures, refer to "Non-GAAP and Other Financial Measures" in the "How We Performed", or "How Our Businesses Performed" sections of this document.
SECOND QUARTER FINANCIAL HIGHLIGHTS, compared with the second quarter last year:
Reported diluted earnings per share were $2.43, compared with $6.27.
Adjusted diluted earnings per share were $2.38, compared with $1.97.
Reported net income was $4,251 million, compared with $11,129 million.
Adjusted net income was $4,168 million, compared with $3,626 million.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS, six months ended April 30, 2026, compared with the corresponding period last year:
Reported diluted earnings per share were $4.77, compared with $7.81.
Adjusted diluted earnings per share were $4.82, compared with $3.99.
Reported net income was $8,294 million, compared with $13,922 million.
Adjusted net income was $8,384 million, compared with $7,249 million.
SECOND QUARTER ADJUSTMENTS (ITEMS OF NOTE)The second quarter reported earnings figures included the following items of note:
Amortization of acquired intangibles of $33 million ($25 million after tax or 1 cent per share), compared with $43 million ($35 million after tax or 2 cents per share) in the second quarter last year.
Impact from the terminated First Horizon Corporation (FHN) acquisition-related capital hedging strategy of $43 million ($33 million after tax or 2 cents per share), compared with $47 million ($35 million after tax or 2 cents per share) in the second quarter last year.
Income tax adjustment on gain on sale of The Charles Schwab Corporation (Schwab) shares of ($288) million (($288) million after tax or (17) cents per share).
Change in partnership share in the U.S. strategic cards portfolio of $197 million ($147 million after tax or 9 cents per share).
TORONTO, May 28, 2026 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the second quarter ended April 30, 2026. Reported earnings and earnings per share were $4.3 billion and $2.43, compared with $11.1 billion and $6.27, respectively, in the second quarter last year. Adjusted earnings and earnings per share were $4.2 billion and $2.38, up 15% and 21%, respectively, year-over-year.
"This was another strong quarter for TD. We drove record Q2 earnings in Canadian Personal and Commercial Banking, all-time high earnings in Wealth Management and Insurance and Wholesale Banking, and we accelerated momentum in U.S. Banking. We demonstrated disciplined execution as we grew return on equity and delivered our fourth consecutive quarter of positive operating leverage, on an adjusted basis. We also continue to make consistent progress on our AML remediation and enhancements, which remain our top priority," said Raymond Chun, Group President and CEO, TD Bank Group. "Our bank has momentum, and we are making important investments in talent, innovation, AI and client experience, as we fundamentally restructure our cost base to drive performance and continue winning."
Canadian Personal and Commercial Banking delivered record Q2 revenue and earningsCanadian Personal and Commercial Banking net income was $1,925 million, up 15% year-over-year, primarily reflecting higher revenue and lower provisions for credit losses (PCL). Revenue grew 5% year-over-year driven by loan and deposit volume growth and higher margins.
Canadian Personal Banking drove continued momentum in deepening client relationships, achieving record penetration rates for consumer and small business credit cards. The business also generated $9 billion in closed referrals to Wealth, with double-digit growth year-over-year, driven by strong frontline engagement and execution. Canadian Business Banking maintained its momentum this quarter as continued progress on distribution expansion contributed to strong loan growth and earnings. TD Auto Finance was once again awarded #1 for Dealer Satisfaction among both Non-Prime and Prime Credit Non-Captive Automotive Financing Lenders in the JD Power 2026 Canada Dealer Financing Satisfaction Study1.
U.S. Banking sustained business momentumU.S. Banking reported net income was $813 million (US$595 million), an increase of $771 million (US$560 million) year-over-year. On an adjusted basis, net income was $960 million (US$702 million), up 8% (12% in U.S. dollars) year-over-year. The segment delivered a return on equity of 8.2% on a reported basis and 9.6% on an adjusted basis, up 770 basis points and 130 basis points year-over-year respectively, as the business continued to manage capital with discipline.
U.S. Banking performance was supported by growth across core lending portfolios2, including double-digit growth year-over-year in middle market commercial lending and TD's proprietary credit card balances. In Wealth, record mass affluent sales drove double-digit asset growth year-over-year.
Wealth Management and Insurance delivered record earnings and assetsWealth Management and Insurance net income was $837 million, up 18% year-over-year, driven by record assets, higher insurance earned premiums, and deposit volume growth.
Wealth Management launched the fully redesigned TD Easy Trade™ app, delivering a streamlined, mobile-first experience that supports the next generation of self-directed investors, offering market-leading capabilities. TD Insurance launched a client-facing generative AI powered Virtual Assistant, becoming the first Canadian home and auto insurer to deploy this capability and making it simpler for clients to connect with TD Insurance.
Wholesale Banking delivered record earningsWholesale Banking net income was $612 million, up 46% year-over-year on a reported basis and 38% year-over-year on an adjusted basis, reflecting higher revenues and lower PCL, partially offset by higher non-interest expenses. Revenue for the quarter was $2,393 million, up 12% year-over-year, driven by strong execution across Global Markets and Corporate and Investment Banking including strength in Equities, Capital Markets, and Lending businesses.
Wholesale Banking performance reflects the depth and diversification of the platform combined with high levels of client activity and constructive market conditions. Return on equity for the quarter was 14.5%, a significant improvement year-over-year, driven by strong revenue growth, moderating expense growth, and disciplined capital management.
CapitalTD's Common Equity Tier 1 Capital ratio was 14.3%.
Conclusion"Our ongoing share buy-back and the dividend increase announced today reflect our confidence in TD's growth and earnings power," added Chun. "As we deepen relationships, run our bank simpler and faster, and execute with discipline, we are creating value for shareholders, supporting our clients, and opening new opportunities for growth. I want to thank our colleagues for delivering once again this quarter for TD and the more than 28 million clients we serve."
The foregoing contains forward-looking statements. Please refer to the "Caution Regarding Forward-Looking Statements" on page 3.
1
TD Auto Finance received the highest score in the retail non-captive non-prime segment and the retail non-captive prime segment in the JD Power 2024-2026 Canada Dealer Financing Satisfaction Studies, which measure Canadian auto dealers' satisfaction with their auto finance providers. Visit jdpower.com/awards for more details.
2
Core loan growth is defined as growth in average loan volumes excluding the impact of the loan portfolios identified for sale or run-off under the U.S. balance sheet restructuring program.
Caution Regarding Forward-Looking Statements
From time to time, the Bank (as defined in this document) makes written and/or oral forward-looking statements, including in this document, in other filings with Canadian regulators or the United States (U.S.) Securities and Exchange Commission (SEC), and in other communications. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media, and others. All such statements are made pursuant to the "safe harbour" provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements made in this document, the Management's Discussion and Analysis (2025 MD&A) in the Bank's 2025 Annual Report under the heading "Economic Summary and Outlook", under the headings "Key Priorities for 2026" and "Operating Environment and Outlook" for the Canadian Personal and Commercial Banking, U.S. Banking, Wealth Management and Insurance, and Wholesale Banking segments, and under the heading "2025 Accomplishments and Focus for 2026" for the Corporate segment, and in other statements regarding the Bank's objectives and priorities for 2026 and beyond and strategies to achieve them, the regulatory environment in which the Bank operates, and the Bank's anticipated financial performance. Forward-looking statements are typically identified by words such as "will", "would", "should", "believe", "expect", "anticipate", "intend", "estimate", "forecast", "outlook", "plan", "goal", "target", "possible", "potential", "predict", "project", "may", and "could" and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. By their very nature, these forward-looking statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, general and specific. Especially in light of the uncertainty related to the physical, financial, economic, political, and regulatory environments, such risks and uncertainties, many of which are beyond the Bank's control and the effects of which can be difficult to predict, may cause actual results to differ materially from the expectations expressed in the forward-looking statements.
Risk factors that could cause, individually or in the aggregate, such differences include: strategic, credit, market (including equity, commodity, foreign exchange, interest rate, and credit spreads), operational (including technology, cyber security, process, systems, data, third-party, fraud, infrastructure, insider and conduct), model, insurance, liquidity, capital adequacy, compliance and legal, financial crime, reputational, environmental and social, and other risks. Examples of such risk factors include general business and economic conditions in the regions in which the Bank operates; geopolitical risk (including policy, trade and tax-related risks and the potential impact of any new or elevated tariffs or any retaliatory tariffs); inflation, interest rates and recession uncertainty; regulatory oversight and compliance risk; risks associated with the Bank's ability to satisfy the terms of the global resolution of the investigations into the Bank's U.S. Bank Secrecy Act (BSA)/anti-money laundering (AML) program; the impact of the global resolution of the investigations into the Bank's U.S. BSA/AML program on the Bank's businesses, operations, financial condition, and reputation; the ability of the Bank to execute on long-term strategies, shorter-term key strategic priorities, including the successful completion of acquisitions and dispositions and integration of acquisitions, the ability of the Bank to achieve its financial or strategic objectives with respect to its investments, business retention plans, and other strategic plans; the business relationship with The Charles Schwab Corporation through the insured deposit account agreement exposes the Bank to certain risks; technology and cyber security risk (including cyber-attacks, data security breaches or technology failures) on the Bank's technologies, systems and networks, those of the Bank's customers (including their own devices), and third parties providing services to the Bank; data risk; model risk; fraud activity; insider risk; conduct risk; the failure of third parties to comply with their obligations to the Bank or its affiliates, including relating to the care and control of information, and other risks arising from the Bank's use of third-parties; the impact of new and changes to, or application of, current laws, rules and regulations, including consumer protection laws and regulations, tax laws, capital guidelines and liquidity regulatory guidance; increased competition from incumbents and new entrants (including Fintechs and big technology competitors); shifts in consumer attitudes and disruptive technology; environmental and social risk (including climate-related risk); exposure related to litigation and regulatory matters; ability of the Bank to attract, develop, and retain key talent; changes in foreign exchange rates, interest rates, credit spreads and equity prices; downgrade, suspension or withdrawal of ratings assigned by any rating agency, the value and market price of the Bank's common shares and other securities may be impacted by market conditions and other factors; the interconnectivity of financial institutions including existing and potential international debt crises; increased funding costs and market volatility due to market illiquidity and competition for funding; critical accounting estimates and changes to accounting standards, policies, and methods used by the Bank; and the occurrence of natural and unnatural catastrophic events and claims resulting from such events.
The Bank cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank's results. For more detailed information, please refer to the "Risk Factors and Management" section of the 2025 MD&A, as may be updated in subsequently filed quarterly reports to shareholders and news releases (as applicable) related to any events or transactions discussed under the headings "Significant Events", "Significant and Subsequent Events" or "Update on U.S. Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) Program Remediation and Enterprise AML Program Improvement Activities" in the relevant MD&A, which applicable releases may be found on www.td.com. All such factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, should be considered carefully when making decisions with respect to the Bank. The Bank cautions readers not to place undue reliance on the Bank's forward-looking statements. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2025 MD&A under the headings "Economic Summary and Outlook" and "Significant Events", under the headings "Key Priorities for 2026" and "Operating Environment and Outlook" for the Canadian Personal and Commercial Banking, U.S. Banking, Wealth Management and Insurance, and Wholesale Banking segments, and under the heading "2025 Accomplishments and Focus for 2026" for the Corporate segment, each as may be updated in subsequently filed quarterly reports to shareholders and news releases (as applicable). Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Bank's shareholders and analysts in understanding the Bank's financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation.
This document was reviewed by the Bank's Audit Committee and was approved by the Bank's Board of Directors, on the Audit Committee's recommendation, prior to its release.
TABLE 1: FINANCIAL HIGHLIGHTS
(millions of Canadian dollars, except as noted)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2026
2026
2025
2026
2025
Results of operations
Total revenue, reported
$
15,797
$
16,585
$
22,937
$
32,382
$
36,986
Total revenue, adjusted1
16,037
16,629
15,138
32,666
30,168
Provision for (recovery of) credit losses
1,001
1,039
1,341
2,040
2,553
Insurance service expenses (ISE)
1,398
1,622
1,417
3,020
2,924
Non-interest expenses, reported
8,372
8,753
8,139
17,125
16,209
Non-interest expenses, adjusted1
8,339
8,563
7,908
16,902
15,891
Net income, reported
4,251
4,043
11,129
8,294
13,922
Net income, adjusted1
4,168
4,216
3,626
8,384
7,249
Financial position (billions of Canadian dollars)
Total loans net of allowance for loan losses
$
964.3
$
958.5
$
936.4
$
964.3
$
936.4
Total assets
2,085.1
2,099.3
2,064.3
2,085.1
2,064.3
Total deposits
1,243.4
1,245.1
1,267.7
1,243.4
1,267.7
Total equity
124.3
125.6
126.1
124.3
126.1
Total risk-weighted assets2
641.1
635.2
624.6
641.4
624.6
Financial ratios
Return on common equity (ROE), reported3
14.7
%
13.6
%
39.1
%
14.1
%
24.8
%
Return on common equity, adjusted1
14.4
14.2
12.3
14.3
12.7
Return on tangible common equity (ROTCE)1,3
17.7
16.3
48.0
17.0
31.3
Return on tangible common equity, adjusted1
17.2
16.9
15.0
17.1
15.9
Efficiency ratio, reported3
53.0
52.8
35.5
52.9
43.8
Efficiency ratio, adjusted, net of ISE1,3,4
57.0
57.1
57.6
57.0
58.3
Provision for (recovery of) credit losses as a % of net
average loans
0.43
0.43
0.58
0.43
0.54
Common share information, reported (Canadian dollars)
Per share earnings
Basic
$
2.44
$
2.35
$
6.28
$
4.78
$
7.81
Diluted
2.43
2.34
6.27
4.77
7.81
Dividends per share
1.08
1.08
1.05
2.16
2.10
Book value per share3
68.22
68.20
66.75
68.22
66.75
Closing share price (TSX)5
146.33
127.26
88.09
146.33
88.09
Shares outstanding (millions)
Average basic
1,660.7
1,680.3
1,740.5
1,670.6
1,745.3
Average diluted
1,665.5
1,684.7
1,741.7
1,675.4
1,746.3
End of period
1,652.1
1,671.2
1,722.5
1,652.1
1,722.5
Market capitalization (billions of Canadian dollars)
$
241.7
$
212.7
$
151.7
$
241.7
$
151.7
Dividend yield3
3.2
%
3.5
%
5.0
%
3.4
%
5.2
%
Dividend payout ratio3
44.1
45.9
16.6
45.0
26.8
Price-earnings ratio3
17.3
10.3
9.1
17.3
9.1
Total shareholder return (1 year)3
72.2
60.0
13.6
72.2
13.6
Common share information, adjusted (Canadian dollars)1
Per share earnings
Basic
$
2.39
$
2.45
$
1.97
$
4.84
$
3.99
Diluted
2.38
2.44
1.97
4.82
3.99
Dividend payout ratio
45.0
%
44.0
%
53.0
%
44.5
%
52.4
%
Price-earnings ratio
15.9
14.5
11.4
15.9
11.4
Capital ratios2
Common Equity Tier 1 (CET1) Capital ratio
14.3
%
14.5
%
14.9
%
14.3
%
14.9
%
Tier 1 Capital ratio
16.0
16.3
16.6
16.0
16.6
Total Capital ratio
17.8
18.1
18.5
17.8
18.5
Leverage ratio
4.5
4.5
4.7
4.5
4.7
Total Loss Absorbing Capacity (TLAC) ratio
31.1
31.1
31.0
31.1
31.0
TLAC Leverage ratio
8.8
8.6
8.7
8.8
8.7
1
The Toronto-Dominion Bank ("TD" or the "Bank") prepares its Interim Consolidated Financial Statements in accordance with IFRS, the current GAAP, and refers to results prepared in accordance with IFRS as the "reported" results. The Bank also utilizes non-GAAP financial measures such as "adjusted" results and non-GAAP ratios to assess each of its businesses and to measure overall Bank performance. To arrive at adjusted results, the Bank adjusts reported results for "items of note". Refer to "How We Performed" or "How Our Businesses Performed" sections of this document for further explanation, a list of the items of note, and a reconciliation of adjusted to reported results. Non-GAAP financial measures and ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers.
2
These measures have been included in this document in accordance with the Office of the Superintendent of Financial Institutions Canada's (OSFI's) Capital Adequacy Requirements (CAR), Leverage Requirements (LR), and Total Loss Absorbing Capacity (TLAC) guidelines. Refer to the "Capital Position" section in the Bank's second quarter 2026 Management's Discussion and Analysis (MD&A) for further details.
3
For additional information about these metrics, refer to the Glossary in the Bank's second quarter 2026 MD&A, which is incorporated by reference.
4
Efficiency ratio, adjusted, net of ISE is calculated by dividing adjusted non‑interest expenses by adjusted total revenue, net of ISE. Adjusted total revenue, net of ISE, Q2 2026: $14,639 million, Q1 2026: $15,007 million, Q2 2025: $13,721 million, 2026 YTD: $29,646 million, 2025 YTD: $27,244 million.
5
Toronto Stock Exchange closing market price.
UPDATE ON THE REMEDIATION OF THE U.S. BANK SECRECY ACT/ANTI-MONEY LAUNDERING PROGRAM AND ENTERPRISE AML PROGRAM
As previously disclosed, on October 10, 2024, the Bank announced that, following active cooperation and engagement with authorities and regulators, it reached a resolution (the "Global Resolution") of previously disclosed investigations related to its U.S. BSA/AML program. The Bank and certain of its U.S. subsidiaries consented to orders with the Office of the Comptroller of the Currency ("OCC"), the Federal Reserve Board ("FRB"), and the Financial Crimes Enforcement Network ("FinCEN") and entered into plea agreements with the Department of Justice ("DOJ"), Criminal Division, Money Laundering and Asset Recovery Section and the United States Attorney's Office for the District of New Jersey. The full terms of the consent orders and plea agreements are available on the Bank's issuer profile on SEDAR+ at www.sedarplus.com.
The Bank is focused on meeting the terms of the consent orders and plea agreements, including meeting the requirements to remediate the Bank's U.S. BSA/AML program. In addition, the Bank is also undertaking remediation of the Bank's enterprise-wide AML/Anti-Terrorist Financing and Sanctions Programs ("Enterprise AML Program").
For additional information on the risks associated with the remediation of the Bank's U.S. BSA/AML program and the Bank's Enterprise AML Program, see the "Risk Factors That May Affect Future Results, Remediation of the Bank's U.S. BSA/AML Program and Enterprise AML Program" section of the 2025 MD&A.
Update on the Remediation of the U.S. AML ProgramThe Bank remains focused on remediating its U.S. BSA/AML program to meet the requirements of the Global Resolution. The Bank continues to work on its management remediation actions (the term "management remediation actions" is not a regulatory definition and is considered by the Bank to consist of the root cause assessments, data preparation, design, documentation, frameworks, policies, standards, training, processes, systems, testing and implementation of controls, as well as the hiring of resources) with significant work and important milestones remaining in calendar 2026 and calendar 2027 including the Suspicious Activity Report lookback per the OCC consent order which management expects to complete in calendar 2027. For fiscal 2026, the Bank continues to expect U.S. BSA/AML remediation and related governance and control investments to be largely in line with the previous guidance of approximately US$500 million pre-tax3. All management remediation actions will be subject to demonstrated sustainability and validation by the Bank's internal audit function (with such activities currently planned for calendar 2026 and calendar 2027), as well as the review by the appointed monitor, and, ultimately, the review and approval of the Bank's U.S. banking regulators and the DOJ. Following such independent reviews, testing, and validation, there could be additional management remediation actions that would take place after calendar 2027 in which case the overall remediation timeline may be extended. In addition, as the Bank undertakes the lookback reviews, the Bank may be required to further expand the scope of the review, either in terms of the subjects being addressed and/or the time period reviewed. The following graph illustrates the Bank's expected remediation plan and progress on a calendar year basis, based on its work to date.
The Bank's remediation timeline is based on the Bank's current plans, as well as assumptions related to the duration of remediation activities, including the completion of lookback reviews. The Bank's ability to meet its planned remediation milestones assumes that the Bank will be able to successfully execute against its U.S. BSA/AML remediation program plan, which is subject to inherent risks and uncertainties including the Bank's ability to attract and retain key employees, the ability of third parties to deliver on their contractual obligations, the successful development and implementation of required technology solutions, and data availability to complete the required lookback reviews. Furthermore, the execution of the U.S. BSA/AML remediation plan, including these planned milestones, will not be entirely within the Bank's control because of various factors such as (i) the requirement to obtain regulatory approval or non-objection before proceeding with various steps, and (ii) the requirement for the various deliverables to be acceptable to the regulators and/or the monitor. As of the date hereof, the Bank believes that it and its applicable U.S. subsidiaries have taken such actions as are required of them to date under the terms of the consent orders and plea agreements and is not aware of them being in breach of the same. For information about the Bank's AML governance framework, see the "Managing Risk" section of the Bank's 2025 Annual Report.
3
The total amount expected to be spent on remediation and governance and control investments is subject to inherent uncertainties and may vary based on (i) the scope of work in the U.S. BSA/AML remediation plan which could change as a result of additional findings that are identified as work progresses, (ii) actual third party monitor and lookback review costs which could vary from initial estimates and are not entirely within the control of the Bank, as well as (iii) the Bank's ability to successfully execute against the U.S. BSA/AML remediation program in accordance with the U.S. Banking segment's fiscal 2026 and medium term plan.
While substantial work remains, the Bank is making progress on remediating and strengthening its U.S. BSA/AML program as previously disclosed including continued improvements through:
continued maturation of transaction monitoring and investigation processes;
enhancements to the new Know Your Customer (KYC) platform which now includes an improved customer risk rating model and is expected to provide more accurate, timely and consistent risk assessments across U.S. Banking's client population;
additional enhancements to the Financial Crime Risk Management (FCRM) training program with improved controls, providing insights into training effectiveness, completion metrics, and workforce readiness;
improvements to front-line onboarding systems for Money Service Businesses, providing U.S. Banking employees with the ability to sustainably identify, detect and manage Money Service Businesses going forward; and
completion by the third-party vendor of the first population of lookback reviews.
Going forward, the Bank's focus will be on continuing to remediate and strengthen its U.S. BSA/AML program, including:
further deployments of the new KYC platform;
further deployments of machine learning and specialized AI;
continued data enhancements with the deployment of dedicated FCRM data environments which will create a single source of truth in support of advanced detection capabilities;
continued enhancements to its financial crime risk assessment methodologies and processes;
continued training and development of colleagues; and
continued execution of lookback reviews as required under the OCC and FinCEN consent orders.
Strengthening of the Bank's Enterprise AML ProgramThe Bank continues to undertake remediation of the Enterprise AML Program, including a range of management remediation and enhancement actions (the term "management remediation and enhancement actions" is not a regulatory definition and is considered by the Bank to consist of root cause assessments, data preparation, design, documentation, frameworks, policies, standards, training, processes, systems, testing, and execution of controls, as well as the hiring of resources). While the Bank has made progress on this remediation work, it is a multi-year endeavour and the remediation work remains ongoing. The timing of completion of the remediation work will not be entirely within the Bank's control, and is subject to regulatory feedback, internal review, challenge and validation. As previously disclosed, following the end of the first quarter of fiscal 2025, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) commenced a review of certain remediation steps that the Bank has taken to date to address the FINTRAC violations. This review is ongoing, and subject to the outcome, may result in additional regulatory actions.
The remediation and enhancement of the Enterprise AML Program is exposed to similar risks as noted in respect of the remediation of the Bank's U.S. BSA/AML Program (see also "Remediation of the U.S. BSA/AML Program" above). In particular, as the Bank continues its remediation and improvement activities of the Enterprise AML Program, it expects an increase in identification of reportable transactions and/or events, which will add to the operational backlog in the Bank's FCRM investigations processing that the Bank currently faces, but is working towards remediating, across the Bank. In addition, on an ongoing basis, the Bank will continue to review and assess whether issues identified in one jurisdiction have an impact in other jurisdictions. Furthermore, the Bank's regulators or law enforcement agencies may identify other issues with the Bank's Enterprise AML Program, which may result in additional regulatory actions. These issues identified through the Bank's own review or by the Bank's regulators or law enforcement agencies may broaden the scope of the remediation and improvements required for the Enterprise AML Program.
While substantial work remains, the Bank is making progress on remediating and strengthening the Enterprise AML Program as previously disclosed, including:
advanced transaction monitoring capabilities, including enhanced scenario coverage;
strengthened governance and first-line engagement in managing financial crime risks via dedicated governance forums; and
updated FCRM training standards to strengthen and align requirements globally.
Going forward, the Bank's focus will be on continuing to remediate and strengthen its Enterprise AML Program, including:
continued progress on clearing operational backlogs;
ongoing advancements in transaction monitoring capabilities; and
continued investment in supporting advanced analytics, machine learning, and AI opportunities within FCRM.
HOW WE PERFORMED
ECONOMIC SUMMARY AND OUTLOOKThe global economic outlook continues to slow in calendar 2026. The conflict in the Middle East and resulting surge in oil prices has already lifted inflation and is expected to continue to put downward pressure on global growth. The conflict has also increased volatility in financial and commodity markets due to uncertainty over the duration of restricted oil flows through the Strait of Hormuz and elevated oil prices. While some economies, including parts of Europe, may see a modest pickup in economic activity from higher government spending later in the year, the near-term fallout from the oil supply crunch will remain a dominant theme weighing on growth in much of Asia and Europe.
Incoming data suggest that the U.S. economy has remained resilient despite a fluid policy backdrop. Activity through the first calendar quarter of 2026 was supported by continued AI-related capital spending (shifting from construction toward equipment and software) and a rebound in government activity after last year's shutdown. Consumer spending was a soft spot, in part reflecting bad weather and, more recently, higher gasoline prices. Looking ahead, TD Economics expects tax cuts, continued investments in AI, and a business-friendly regulatory environment to help sustain the expansion. However, the pace of growth will remain sensitive to labour market conditions, energy-price volatility and the evolution of trade policy.
Hiring in the U.S. was volatile through the first quarter of calendar 2026, but looking past the month-to-month volatility, the trend indicates job growth has picked up from an anemic pace at the end of last year alongside a stabilization in the unemployment rate. Inflation pressures have also picked up, reflecting both the pass-through from tariffs and higher energy prices. We expect core inflation to drift higher in the coming months reflecting the knock-on effects of higher energy costs. As a result, the Federal Reserve is likely to leave the federal funds rate unchanged at a range of 3.5%-3.75% this year. Should the supply shocks fade and inflation trends improve, TD Economics forecasts that the Federal Reserve would lower the policy rate towards estimates of a "neutral" level at 3.25%-3.50% in 2027. The timing and pace of interest rate moves will depend on whether job growth weakens further and whether inflationary pressures prove more persistent than expected.
Canada's economy has continued to expand at a modest pace. The impact of U.S. tariffs is evident both directly, via weaker exports in affected sectors, and indirectly, through elevated uncertainty that has tempered hiring and delayed some investment decisions. Overall, Canada's labour market has shown a lack of dynamism. So far this year, total employment has declined by a modest 28,000 per month on average. Slower population growth has reduced labour force growth, which has kept the unemployment rate in a still-elevated range of 6.5%-7%. Looking ahead in 2026, a modest improvement in the economy is expected alongside a gradual improvement in housing activity, public infrastructure and defense outlays, and some firming in business investment. However, the risks to the outlook remain highly sensitive to geopolitical events and U.S. trade policy.
The Canadian central bank has maintained a steady policy stance in 2026, keeping the overnight rate at 2.25% after substantial easing since mid-2024. TD Economics expects no change in the policy interest rate through the remainder of 2026. Due to the economy having excess supply and a weakened economic growth profile, this is expected to outweigh any near-term rise in inflation within the conditions evaluated by the Bank of Canada. Once the conflict subsides, a generally weaker U.S. dollar and a smaller gap between U.S. and Canadian short-term interest rates are expected to lift the Canadian dollar. TD Economics expects the Canadian dollar to appreciate to the 74-75 U.S. cent range by late-2026, although the outcome of U.S. trade policy will be a key determinant for timing and direction.
HOW THE BANK REPORTSThe Bank prepares its Interim Consolidated Financial Statements in accordance with IFRS, the current GAAP, and refers to results prepared in accordance with IFRS as "reported" results.
Non-GAAP and Other Financial MeasuresIn addition to reported results, the Bank also presents certain financial measures, including non-GAAP financial measures that are historical, non-GAAP ratios, supplementary financial measures and capital management measures, to assess its results. Non-GAAP financial measures, such as "adjusted" results, are utilized to assess the Bank's businesses and to measure the Bank's overall performance. To arrive at adjusted results, the Bank adjusts for "items of note" from reported results. Items of note are items which management does not believe are indicative of underlying business performance and are disclosed in Table 3. Non-GAAP ratios include a non-GAAP financial measure as one or more of its components. Examples of non-GAAP ratios include adjusted net interest margin, adjusted basic and diluted earnings per share (EPS), adjusted dividend payout ratio, adjusted efficiency ratio, net of ISE, and adjusted effective income tax rate. The Bank believes that non-GAAP financial measures and non-GAAP ratios provide the reader with a better understanding of how management views the Bank's performance. Non-GAAP financial measures and non-GAAP ratios used in this document are not defined terms under IFRS and, therefore, may not be comparable to similar terms used by other issuers. Supplementary financial measures depict the Bank's financial performance and position, and capital management measures depict the Bank's capital position, and both are explained in this document where they first appear.
Investment in The Charles Schwab Corporation ("Schwab") and Insured Deposit Account (IDA) AgreementOn February 12, 2025, the Bank sold its entire remaining equity investment in Schwab through a registered offering and share repurchase by Schwab. The Bank discontinued recording its share of earnings available to common shareholders from its investment in Schwab following the sale.
Prior to the sale, the Bank accounted for its investment in Schwab using the equity method. The U.S. Banking segment reflected the Bank's share of net income from its investment in Schwab. The Corporate segment net income (loss) included amounts for amortization of acquired intangibles, the acquisition and integration charges related to the Schwab transaction, and the Bank's share of restructuring and other charges incurred by Schwab. The Bank's share of Schwab's earnings available to common shareholders was reported with a one-month lag. For further details, refer to Note 12 of the Bank's 2025 Annual Consolidated Financial Statements.
Subsequent to the sale of the Bank's entire remaining equity investment in Schwab, the Bank continues to have a business relationship with Schwab through the insured deposit account agreement ("Schwab IDA Agreement").
On May 4, 2023, the Bank and Schwab entered into an amended Schwab IDA Agreement, with an initial expiration of July 1, 2034. Pursuant to the Schwab IDA Agreement, the Bank makes sweep deposit accounts available to clients of Schwab. Schwab designates a portion of the deposits with the Bank as fixed-rate obligation amounts. Remaining deposits are designated as floating-rate obligations. The IDA deposit floor is set at US$60 billion.
Refer to Note 26 of the Bank's 2025 Annual Consolidated Financial Statements for further details on the Schwab IDA Agreement.
The following table provides the operating results on a reported basis for the Bank.
TABLE 2: OPERATING RESULTS, Reported
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2026
2026
2025
2026
2025
Net interest income
$
8,861
$
8,789
$
8,125
$
17,650
$
15,991
Non-interest income
6,936
7,796
14,812
14,732
20,995
Total revenue
15,797
16,585
22,937
32,382
36,986
Provision for (recovery of) credit losses
1,001
1,039
1,341
2,040
2,553
Insurance service expenses
1,398
1,622
1,417
3,020
2,924
Non-interest expenses
8,372
8,753
8,139
17,125
16,209
Income before income taxes and share of net income from
investment in Schwab
5,026
5,171
12,040
10,197
15,300
Provision for (recovery of) income taxes
775
1,128
985
1,903
1,683
Share of net income from investment in Schwab
–
–
74
–
305
Net income, reported
4,251
4,043
11,129
8,294
13,922
Preferred dividends and distributions on other equity instruments
202
101
200
303
286
Net income available to common shareholders
$
4,049
$
3,942
$
10,929
$
7,991
$
13,636
The following table provides a reconciliation between the Bank's adjusted and reported results. For further details refer to the "How We Performed" or "How Our Businesses Performed" sections of this document.
TABLE 3: NON-GAAP FINANCIAL MEASURES, Reconciliation of Adjusted to Reported Net Income
(millions of Canadian dollars)
For the three months ended
For the six months ended
April 30
January 31
April 30
April 30
April 30
2026
2026
2025
2026
2025
Operating results, adjusted
