TD Bank is laying off 3,000 full-time employees in a bid to reduce expenses and boost profits.
The layoffs represent about 3% of the workforce at the Toronto bank and will affect all of the bank's business lines, TD Chief Financial Officer Kelvin Vi Luan Tran said on Thursday. The cuts include attrition and are part of a broader expense-reduction plan that includes parting with real estate assets and certain impaired assets.
Even with the reductions, expenses at Canada's second-largest bank are expected to remain elevated through 2024, executives said. Investments the bank plans to make to strengthen its risk and control systems and boost growth will push expense increases into the mid-single digits next year, the bank said.
"We've recognized that the bank's cost base is higher than it should be," TD Chief Executive Officer Bharat Masrani said on a call with analysts Thursday afternoon.
Expenses during the bank's fiscal fourth quarter — which ended Oct. 31 — jumped 13% from the year-earlier period, driven by higher staffing costs, charges stemming from the bank's
TD is the latest Canadian bank to announce staff reductions amid rising expenses and an uncertain economic outlook. CIBC this week said it had cut close to 5% of its workforce, or 2,400 employees, over the last year. Scotiabank last month said it would cut 3% of its head count globally, or about 2,700 workers. In August, BMO Financial Group said it would cut 248 roles in California alone, where it began operating this year thanks to
The Canadian bank reported a 70% decline in profits at its U.S. commercial banking and wealth management unit in the most recent quarter and boosted reserves amid distress in the commercial real estate market.
TD said its restructuring plan cost the bank $363 million Canadian ($267.2 million USD) before taxes in the fourth quarter, with a similar charge expected in the first half of next year. TD said it expects the plan to deliver about $400 million in savings in 2024, plus $600 million in subsequent years.
The news of the layoffs and larger restructuring plan comes after a disappointing fourth quarter for TD, which had $1.96 trillion Canadian in assets as of Oct. 31. Higher reserves for loan losses and shrinking margins in the bank's wholesale banking segment pulled down profit in the quarter, TD said.
Net income fell to $3.5 billion Canadian, down almost 14% from the fourth quarter of 2022. Total revenue increased 7% to $13.2 billion. TD's allowance for credit losses stood at $8.2 billion in the fourth quarter after the bank added $415 million of reserves.
"The bank's allowance coverage remains elevated to account for ongoing uncertainty related to the economic trajectory and credit performance," said Ajai Bambawale, chief risk officer at TD.
Profit in TD's wholesale banking unit, responsible for capital markets and investment banking, fell sharply in the fourth quarter. Costly investments the bank made in the quarter to grow its U.S. banking segment and its investment bank, TD Cowen, pushed profits down 35% to $178 million, the bank said.
TD also announced plans to increase its quarterly dividend by six cents to $1.02 per share, beginning in January of 2024.
"We remain confident in the earning power of our franchise," Masrani said.
Shares of TD Bank were down about 0.3% in Friday trading. The bank's stock price has declined more than 6% this year, a far better performance than shares at other large banks.
