TD Bank Group Reports Third Quarter 2025 Results

Earnings News Release • Three and nine months ended July 31, 2025

THIRD QUARTER FINANCIAL HIGHLIGHTS, compared with the third quarter last year:

• Reported diluted earnings (loss) per share were $1.89, compared with $(0.14).
• Adjusted diluted earnings per share were $2.20, compared with $2.05.
• Reported net income (loss) was $3,336 million, compared with $(181) million.
• Adjusted net income was $3,871 million, compared with $3,646 million.

YEAR-TO-DATE FINANCIAL HIGHLIGHTS, nine months ended July 31, 2025, compared with the corresponding period last year:

• Reported diluted earnings per share were $9.72, compared with $2.76.
• Adjusted diluted earnings per share were $6.19, compared with $6.09.
• Reported net income was $17,258 million, compared with $5,207 million.
• Adjusted net income was $11,120 million, compared with $11,072 million.

THIRD QUARTER ADJUSTMENTS (ITEMS OF NOTE)
The third 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 $64 million ($56 million after tax or 3 cents per share) in the third quarter last year.
• Acquisition and integration charges related to the Cowen acquisition of $32 million ($25 million after tax or 1 cent per share), compared with $78 million ($60 million after tax or 3 cents per share) in the third quarter last year.
• Impact from the terminated First Horizon Corporation (FHN) acquisition-related capital hedging strategy of $55 million ($41 million after tax or 2 cents per share), compared with $62 million ($46 million after tax or 3 cents per share) in the third quarter last year.
• U.S. balance sheet restructuring of $262 million ($196 million after tax or 13 cents per share).
• Restructuring charges of $333 million ($248 million after tax or 14 cents per share), compared with $110 million ($81 million after tax or 5 cents per share) under a previous program in the third quarter last year.

TORONTO, Aug. 28, 2025 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the third quarter ended July 31, 2025. Reported earnings were $3.3 billion, compared with a loss of $181 million in the third quarter last year, and adjusted earnings were $3.9 billion, up 6%.

"Our teams delivered another quarter of strong performance, driven by robust client activity and disciplined execution, underscoring the strength of our diversified business model," said Raymond Chun, Group President and Chief Executive Officer, TD Bank Group. "We are well positioned to build on this momentum as we compete, grow and build our bank for the future."

Canadian Personal and Commercial Banking delivered a strong quarter with record revenue, earnings, deposit and loan volumes
Canadian Personal and Commercial Banking net income was a record $1,953 million, an increase of 4% year-over-year, reflecting higher revenue, partially offset by higher non-interest expenses and provisions for credit losses (PCL). Revenue was a record $5,241 million, an increase of 5%, primarily reflecting loan and deposit volume growth.

Canadian Personal Banking achieved record year-to-date digital sales in personal chequing, savings and cards combined. This milestone underscores the compelling convenience of TD's digital offerings. This quarter, Business Banking reported strong loan growth from commercial lending, and record retail originations in TD Auto Finance, along with continued strong customer acquisition in Small Business Banking. In addition, TD announced a strategic relationship with Fiserv, a leading global provider of payments and financial services technology, which will elevate the client experience within the TD Merchant Solutions offering.

U.S. Retail sustained business momentum and made significant progress on balance sheet restructuring
Excluding contributions of $178 million in the third quarter last year from the Bank's investment in The Charles Schwab Corporation, which was sold on February 12, 2025, U.S. Retail reported net income was $760 million (US$554 million), an increase of $3,337 million (US$2,433 million) year-over-year. This primarily reflects the impact of the charges for the global resolution of the investigations into the Bank's U.S. BSA/AML program in the third quarter last year and higher revenue in the current quarter. This was partially offset by the impact of U.S. balance sheet restructuring activities and higher governance and control investments, including costs for U.S. BSA/AML remediation in the current quarter. On an adjusted basis, net income was $956 million (US$695 million), down 18% (18% in U.S. dollars) compared with the third quarter last year, reflecting higher governance and control investments, including costs for U.S. BSA/AML remediation, partially offset by higher revenue.

This quarter, U.S. Retail sustained its momentum with growth in core lending portfolios and in U.S. Wealth assets year-over-year¹. The Bank made significant progress in its balance sheet restructuring, completing its bond repositioning program and achieving its target 10% asset reduction. In addition, TD Bank N.A. (TDBNA) earned an 'Outstanding' rating on the Community Reinvestment Act (CRA) performance evaluations from the Office of the Comptroller of the Currency, maintaining its 'Outstanding' ratings in its CRA performance evaluations for TDBNA and TD Bank USA since 2014.

Wealth Management and Insurance delivered strong underlying business performance
Wealth Management and Insurance net income was $703 million, an increase of 63% year-over-year, driven by record assets and record earnings in Wealth Management, strong insurance premiums growth and lower estimated losses from catastrophe claims. This quarter's revenue growth marks the sixth consecutive quarter of double-digit growth led by higher insurance premiums, fee-based revenue, and transaction revenue.

This quarter, TD Asset Management reinforced its leading position as Canada's #1 institutional asset manager with $2.5 billion of new mandate wins secured globally and domestically. TD Private Wealth Management announced that it will be the first bank-owned wealth manager to combine its Investment Counsel and Investment Advisory businesses into a unified discretionary management offering for high-net-worth clients, pending regulatory approval. TD Insurance advanced its digital transformation, with more than 75% of clients digitally engaged and a mobile app that was recently rated as Canada's Top-Rated Home and Auto Insurance App by Apple and Google². In addition, TD Insurance maintained its leadership position in the General Insurance market, with #1 brand awareness for Home and Auto Insurance³.

Wholesale Banking delivered a strong quarter driven by revenue growth
Wholesale Banking reported net income for the quarter was $398 million, an increase of 26% year-over-year, primarily reflecting higher revenue and lower PCL, partially offset by higher non-interest expenses and income taxes. On an adjusted basis, net income was $423 million, an increase of 12% year-over-year. Revenue for the quarter was $2,063 million, an increase of 15% year-over-year, primarily reflecting broad-based growth across Global Markets and Corporate and Investment Banking.

This quarter TD Securities was awarded Canada's Best Bank for Debt Capital Markets by EuroMoney Awards for Excellence⁴. In addition, the Wholesale Bank launched a generative AI-powered assistant, designed to query and synthesize proprietary research in seconds, enhancing the speed of interactions with clients.

Board Appointments
As previously announced by the Bank in April 2025 in connection with the election of directors, Frank Pearn joined the Board of Directors effective August 27, 2025. In addition, as previously announced in July 2025, John B. MacIntyre will step into the role of Chair of the Board of Directors on September 1, 2025.

Capital
TD's Common Equity Tier 1 Capital ratio was 14.8%.

Conclusion
"We are confident in the strength of our business model and the discipline of our teams to navigate shifting economic conditions while delivering for our clients and shareholders," added Chun. "I want to thank our colleagues for their dedication and unwavering commitment to our clients."

The foregoing contains forward-looking statements. Please refer to the "Caution Regarding Forward-Looking Statements" on page 3.

SIGNIFICANT EVENTS

a) Sale of Schwab Shares

On February 12, 2025, the Bank sold its entire remaining equity investment in The Charles Schwab Corporation ("Schwab") through a registered offering and share repurchase by Schwab. Immediately prior to the sale, TD held 184.7 million shares of Schwab's common stock, representing 10.1% economic ownership. The sale of the shares resulted in proceeds of approximately $21.0 billion (US$14.6 billion) and the Bank recognized a net gain on sale of approximately $8.6 billion (US$5.8 billion) in the second quarter of fiscal 2025. This gain is net of the release of related cumulative foreign currency translation from accumulated other comprehensive income (AOCI), the release of AOCI on designated net investment hedging items, direct transaction costs, and taxes. The Bank also recognized $184 million of underwriting fees in its Wholesale segment as a result of TD Securities acting as a lead bookrunner on the transaction in the second quarter of fiscal 2025.

The transaction increased Common Equity Tier 1 (CET1) capital by approximately 238 basis points (bps) in the second quarter of fiscal 2025. The Bank discontinued recording its share of earnings available to common shareholders from its investment in Schwab following the sale. The Bank continues to have a business relationship with Schwab through the IDA Agreement.

b) Restructuring Charges
The Bank initiated a new restructuring program in the second quarter of 2025 to reduce its cost base and achieve greater efficiency. In connection with this program, the Bank expects to incur total restructuring charges of $600 million to $700 million pre-tax over several quarters and incurred $333 million and $496 million pre-tax of restructuring charges during the three and nine months ended July 31, 2025, respectively, which primarily related to employee severance and other personnel-related costs, asset impairment and other rationalization, including certain business wind-downs, and real estate optimization. The Bank expects the restructuring program to generate savings of approximately $100 million pre-tax in fiscal 2025 and fully realized annual savings of $550 million to $650 million pre-tax, including savings from an approximate 2% workforce reduction⁵.

UPDATE ON U.S. BANK SECRECY ACT (BSA)/ANTI-MONEY LAUNDERING (AML) PROGRAM REMEDIATION AND ENTERPRISE AML PROGRAM IMPROVEMENT ACTIVITIES

As previously disclosed in the Bank's 2024 MD&A, on October 10, 2024, the Bank announced that, following active cooperation and engagement with authorities and regulators, it reached a resolution of previously disclosed investigations related to its U.S. BSA/AML compliance programs (the "Global Resolution"). 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, 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 Bank is focused on meeting the terms of the consent orders and plea agreements, including meeting its requirements to remediate the Bank's U.S. BSA/AML programs. In addition, the Bank is also undertaking several improvements to the Bank's enterprise-wide AML/Anti-Terrorist Financing and Sanctions Programs ("Enterprise AML Program").

For additional information on the Global Resolution, the Bank's U.S. BSA/AML program remediation activities, the Bank's Enterprise AML Program improvement activities, and the risks associated with the foregoing, see the "Significant Events – Global Resolution of the Investigations into the Bankְ's U.S. BSA/AML Program" and "Risk Factors That May Affect Future Results – Global Resolution of the Investigations into the Bank's U.S. BSA/AML Program" sections of the Bank's 2024 MD&A.

Remediation of the U.S. BSA/AML Program
The Bank remains focused on remediating its U.S. BSA/AML program to meet the requirements of the Global Resolution. As noted in the Bank's first and second quarter 2025 MD&A, the Bank continues to expect to have the majority of 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) completed in calendar 2025 with significant work and important milestones planned for calendar 2026 and calendar 2027. Sustainability and testing activities are planned for calendar 2026 and calendar 2027 following management implementations, and the Bank is targeting to have the Suspicious Activity Report lookback completed in calendar 2027 per the OCC consent order. For fiscal 2025, the Bank continues to expect U.S. BSA/AML remediation and related governance and control investments of approximately US$500 million pre-tax and expects similar investments in fiscal 2026⁶. As noted in the Bank's 2024 MD&A, all management remediation actions will be subject to demonstrated sustainability, validation by the Bank's internal audit function, 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:

As noted in the Bank's 2024 MD&A, including in the "Risk Factors That May Affect Future Results – Global Resolution of the Investigations into the Bank's U.S. BSA/AML Program" section thereof, the Bank's remediation timeline is based on the Bank's current plans, as well as assumptions related to the duration of planning activities, including the completion of external benchmarking and 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.

While substantial work remains, in addition to the work that has been completed and previously outlined in the Bank's 2024 MD&A and first and second quarter 2025 MD&A, the Bank continued to make progress on remediating and strengthening its U.S. BSA/AML program during the third quarter of fiscal 2025, including:

1) the deployment of the first phase of machine learning analysis on transaction monitoring which will help improve the effectiveness and efficiency of our investigative teams;
2) strengthened controls and assessments relating to new business initiatives, including the establishment of a new Financial Crimes Risk Management subcommittee focused on reviewing and assessing new business products, services and geographies; and
3) the launch of focused training for the first and second lines of defense relating to suspicious customer activity for certain commercial products and services.

For the upcoming fiscal quarters, the Bank's focus will be on continuing to implement incremental enhancements to its transaction monitoring, customer screening, and reporting controls, including:

1) completing the design and deployment of dedicated data environments which will create unified data assets for future monitoring; and
2) the deployment of additional machine learning analysis capabilities related to transaction monitoring and customer screening, including addressing high-risk typologies with customized models.

In addition, the Bank will continue to progress its work in relation to the lookback reviews and complete the implementation of additional reporting and controls for cash management activities.

As noted in the Bank's 2024 MD&A, to help ensure that the Bank can continue to support its customers' financial needs in the U.S. while not exceeding the limitation on the combined total assets of the U.S. Bank, the Bank is focused on executing multiple U.S. balance sheet restructuring actions in fiscal 2025. Refer to the "Update on U.S. Balance Sheet Restructuring" section of the U.S. Retail segment section for additional information on these actions. For additional information about expenses associated with the Bank's U.S. BSA/AML program remediation activities, refer to the U.S. Retail segment section.

Assessment and Strengthening of the Bank's Enterprise AML Program
The Bank is continuing to make improvements to the Enterprise AML Program and continues to target completion of the majority of its Enterprise AML Program 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) by the end of calendar 2025. As noted in the Bank's first and second quarter 2025 MD&A, once completed, those remediation and enhancement actions will then be subject to internal review, challenge and validation of the activities. Following the end of the first fiscal quarter, 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.

As noted in the "Risk Factors That May Affect Future Results – Global Resolution of the Investigations into the Bank's U.S. BSA/AML Program" section of the Bank's 2024 MD&A, 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 Financial Crime Risk Management (FCRM) investigations processing that the Bank currently faces, but is working towards remediating, across the Enterprise. 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 has made progress on the improvements to the Enterprise AML Program over the third quarter of fiscal 2025, including:

1) appointed permanent head of FCRM Canada and redesigned organizational structure to enable stronger collaboration, clear ownership, and a more agile response to evolving risk and regulatory expectations;
2) completed comprehensive transaction monitoring coverage assessment to identify areas requiring enhancements and deployment of the first wave of the new centralized case management tool for use at the Enterprise level;
3) improved Know Your Customer controls to strengthen tracking and regulatory compliance;
4) enhanced investigative processes through improved workflow and data management; and
5) delivered an enhanced monitoring and testing standard to improve coverage and depth of controls testing.

For the upcoming fiscal quarters, the Bank's focus will be on the following improvements to the Enterprise AML Program:

1) continued enhancement and Enterprise-wide adoption of the new centralized case management tool that is already in production in the U.S., with the goal of strengthening oversight and investigations of identified FCRM risks;
2) the ongoing rollout of an enhanced risk assessment methodology and tools to strengthen identification and measurement of FCRM risks across clients, products, and transactions, supported by improved data capabilities; and
3) continued investment in supporting advanced analytics, machine learning, and AI opportunities within FCRM, globally aligning Enterprise efforts with those of the U.S.

HOW WE PERFORMED

ECONOMIC SUMMARY AND OUTLOOK
The global economy remains on track to slow in calendar 2025 with decelerating cyclical momentum reinforced by trade barriers. Higher U.S. tariffs appear likely to persist under the current administration. Inflation expectations have increased as the U.S. tariffs are expected to raise prices and complicate global supply chains. This puts global central banks in the challenging position of gauging whether any resulting inflationary pressures are a one-time shock or will prove persistent. TD Economics expects future interest rate reductions as evidence of slowing in global economies accumulates.

The U.S. economy has slowed in the first half of calendar 2025. The quarter-over-quarter performance in overall economic growth has been volatile, driven by swings in imports as businesses rushed to ship ahead of tariffs. Smoothing through the volatility, consumer spending has slowed notably across both goods and services. Investment in residential construction has weakened, held back by elevated borrowing costs. Government spending has also slowed, driven by cutbacks at the federal level. Business investment has managed to buck the trend, largely the result of increased technology-related spending. TD Economics forecasts that the U.S. economy will grow at below a 2% pace over calendar 2025 before a combination of tax cuts, lower interest rates and a more business-friendly regulatory environment lift growth back to 2% in calendar 2026.

Momentum in hiring within the U.S. job market has decelerated, in line with the broader economy. The unemployment rate has held steady at around 4.2% over the past year as labour force growth has slowed in line with hiring. Inflation has picked up so far in calendar 2025, leading the Federal Reserve to keep interest rates unchanged as it assesses the impact of the increase in tariffs on the inflation outlook. TD Economics expects that given broader weakness in the economy, the U.S. central bank will resume monetary easing, with the federal funds rate expected to be lowered to 3.50-3.75% by the end of calendar 2025 – a level still on the restrictive side.

Canada's economic growth is on track to remain modest in calendar 2025 as the impact of U.S. import tariffs offsets the boost from lower borrowing costs. The effect of elevated uncertainty around tariff policy has weakened business and consumer confidence about the future, which is expected to dampen growth in the near term. TD Economics expects Canada's economy to contract in the second quarter of calendar 2025 due to a drop in exports, before gaining some modest traction by year end. This soft backdrop is expected to lift the unemployment rate from 6.9% in July to 7.2% by (calendar) year end. TD Economics also expects population growth to slow sharply over the next few years as immigration policy changes restrict inflows.

The Canadian central bank lowered its overnight rate to 2.75% in March 2025, before pausing to assess the impact of U.S. tariffs on the economic outlook. TD Economics expects the Bank of Canada to continue trimming interest rates, reaching 2.25% by the end of calendar 2025. Concerns about the U.S. economic outlook and larger U.S. government deficits have weakened the U.S. dollar, lifting the Canadian dollar. TD Economics expects the Canadian dollar will trade in a range around 73 U.S. cents over the next couple of quarters, although that is likely to be influenced by the path of U.S. trade policy.

HOW THE BANK REPORTS
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 "reported" results.

Non-GAAP and Other Financial Measures
In 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.

U.S. Strategic Cards
The Bank's U.S. strategic cards portfolio is comprised of agreements with certain U.S. retailers pursuant to which TD is the U.S. issuer of private label and co-branded consumer credit cards to their U.S. customers. Under the terms of the individual agreements, the Bank and the retailers share in the profits generated by the relevant portfolios after credit losses. Under IFRS, TD is required to present the gross amount of revenue and PCL related to these portfolios in the Bank's Interim Consolidated Statement of Income. At the segment level, the retailer program partners' share of revenues and credit losses is presented in the Corporate segment, with an offsetting amount (representing the partners' net share) recorded in Non-interest expenses, resulting in no impact to Corporate's reported net income (loss). The net income included in the U.S. Retail segment includes only the portion of revenue and credit losses attributable to TD under the agreements.

Investment in The Charles Schwab Corporation and IDA Agreement
On February 12, 2025, the Bank sold its entire remaining equity investment in Schwab through a registered offering and share repurchase by Schwab. For further details, refer to the "Significant Events" section of this document. 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. Retail 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 2024 Annual Consolidated Financial Statements.

On November 25, 2019, the Bank and Schwab signed an insured deposit account agreement (the "2019 Schwab IDA Agreement"), with an initial expiration date of July 1, 2031. Under the 2019 Schwab IDA Agreement, starting July 1, 2021, Schwab had the option to reduce the deposits by up to US$10 billion per year (subject to certain limitations and adjustments), with a floor of US$50 billion. In addition, Schwab requested some further operational flexibility to allow for the sweep deposit balances to fluctuate over time, under certain conditions and subject to certain limitations.

On May 4, 2023, the Bank and Schwab entered into an amended insured deposit account agreement (the "2023 Schwab IDA Agreement" or the "Schwab IDA Agreement"), which replaced the 2019 Schwab IDA Agreement. Pursuant to the 2023 Schwab IDA Agreement, the Bank continues to make sweep deposit accounts available to clients of Schwab. Schwab designates a portion of the deposits with the Bank as fixed-rate obligation amounts (FROA). Remaining deposits are designated as floating-rate obligations. In comparison to the 2019 Schwab IDA Agreement, the 2023 Schwab IDA Agreement extends the initial expiration date by three years to July 1, 2034 and provides for lower deposit balances in its first six years, followed by higher balances in the later years. Specifically, until September 2025, the aggregate FROA will serve as the floor. Thereafter, the floor will be set at US$60 billion. In addition, Schwab had the option to buy down up to $6.8 billion (US$5 billion) of FROA by paying the Bank certain fees in accordance with the 2023 Schwab IDA Agreement, subject to certain limits.

During the first quarter of fiscal 2024, Schwab exercised its option to buy down the remaining $0.7 billion (US$0.5 billion) of the US$5 billion FROA buydown allowance and paid $32 million (US$23 million) in termination fees to the Bank in accordance with the 2023 Schwab IDA Agreement. By the end of the first quarter of fiscal 2024, Schwab had completed its buydown of the full US$5 billion FROA buydown allowance and had paid a total of $337 million (US$250 million) in termination fees to the Bank. The fees were intended to compensate the Bank for losses incurred from discontinuing certain hedging relationships and for lost revenues. The net impact was recorded in net interest income.

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 IDA Agreement. Refer to Note 27 of the Bank's 2024 Annual Consolidated Financial Statements for further details on the Schwab IDA Agreement.

Strategic Review Update
As previously disclosed in the second quarter 2025 MD&A, the Bank is conducting a strategic review. The strategic review is organized across four pillars that are intended to help evolve the Bank strategically, operationally and financially:

1) Adjust business mix and capital allocation – re-allocate capital and disproportionately invest in targeted segments;
2) Simplify the portfolio and drive ROE focus – simplify, optimize, and reposition portfolios to drive returns;
3) Evolve the Bank and accelerate capabilities – simplify operating model and strengthen capabilities to deliver exceptional client experiences; and
4) Innovate to drive efficiency and operational excellence – redesign operations and processes.

Through the strategic review, the Bank is identifying opportunities to deepen client relationships across and within segments and channels, simplify the organization to better execute with speed for colleagues and clients, and drive disciplined execution from a capital and cost management perspective. In addition, as part of the strategic review, the Bank will continue to evolve its governance, and risk and control functions in line with the Bank's scale, complexity and regulatory requirements. The Bank will provide an update on its strategic review, and on the Bank's medium-term financial targets, at an Investor Day on September 29, 2025. For additional information on current initiatives that are part of the strategic review, refer to "Significant Events – Sale of Schwab Shares", "Significant Events – Restructuring Charges", and "How Our Businesses Performed – U.S. Retail – Update on U.S. Balance Sheet Restructuring Activities" in this document.

The following table provides the operating results on a reported basis for the Bank.

The following table provides a reconciliation between the Bank's adjusted and reported results. For further details refer to the "Significant Events", "How We Performed", or "How Our Businesses Performed" sections.

Return on Common Equity

The consolidated Bank ROE is calculated as reported net income available to common shareholders as a percentage of average common equity. The consolidated Bank adjusted ROE is calculated as adjusted net income available to common shareholders as a percentage of average common equity. Adjusted ROE is a non-GAAP financial ratio and can be utilized in assessing the Bank's use of equity.

ROE for the business segments is calculated as the segment net income as a percentage of average allocated capital. The Bank's methodology for allocating capital to its business segments is largely aligned with the common equity capital requirements under Basel III. Capital allocated to the business segments was 11.5% CET1 Capital effective fiscal 2024.

Return on Tangible Common Equity
Tangible common equity (TCE) is calculated as common shareholders' equity less goodwill, imputed goodwill and intangibles on the investments in Schwab and other acquired intangible assets, net of related deferred tax liabilities. ROTCE is calculated as reported net income available to common shareholders after adjusting for the after‑tax amortization of acquired intangibles, which are treated as an item of note, as a percentage of average TCE. Adjusted ROTCE is calculated using reported net income available to common shareholders, adjusted for all items of note, as a percentage of average TCE. TCE, ROTCE, and adjusted ROTCE can be utilized in assessing the Bank's use of equity. TCE is a non-GAAP financial measure, and ROTCE and adjusted ROTCE are non-GAAP ratios.

HOW OUR BUSINESSES PERFORMED

For management reporting purposes, the Bank's business operations and activities are organized around the following four key business segments: Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking. The Bank's other activities are grouped into the Corporate segment.

Results of each business segment reflect revenue, expenses, assets, and liabilities generated by the businesses in that segment. Where applicable, the Bank measures and evaluates the performance of each segment based on adjusted results and ROE, and for those segments, the Bank indicates that the measure is adjusted. For further details, refer to the "How We Performed" section of this document, the "Business Focus" section in the Bank's 2024 MD&A, and Note 28 of the Bank's Annual Consolidated Financial Statements for the year ended October 31, 2024. Effective the first quarter of fiscal 2025, certain U.S. governance and control investments, including costs for U.S. BSA/AML remediation, previously reported in the Corporate segment are now reported in the U.S. Retail segment. Comparative amounts have been reclassified to conform with the presentation adopted in the current period.

PCL related to performing (Stage 1 and Stage 2) and impaired (Stage 3) financial assets, loan commitments, and financial guarantees is recorded within the respective segment.

Net interest income within Wholesale Banking is calculated on a taxable equivalent basis (TEB), which means that the value of non-taxable or tax-exempt income, including certain dividends, is adjusted to its equivalent pre-tax value. Using TEB allows the Bank to measure income from all securities and loans consistently and makes for a more meaningful comparison of net interest income with similar institutions. The TEB increase to net interest income and provision for income taxes reflected in Wholesale Banking results is reversed in the Corporate segment. The TEB adjustment for the quarter was $16 million, compared with $13 million in the prior quarter and $27 million in the third quarter last year.

On February 12, 2025, the Bank sold its entire remaining equity investment in Schwab. Prior to the sale, the Bank accounted for its investment in Schwab using the equity method and the share of net income from investment in Schwab was reported in the U.S. Retail segment. 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 were recorded in the Corporate segment. Refer to "Significant Events" for further details. Beginning in the third quarter of fiscal 2025, the U.S. Retail segment no longer includes contributions from Schwab and consequently discussions of the U.S. Retail segment's performance exclude Schwab.

Quarterly comparison – Q3 2025 vs. Q3 2024

Canadian Personal and Commercial Banking net income for the quarter was $1,953 million, an increase of $81 million, or 4%, compared with the third quarter last year, primarily reflecting higher revenue, partially offset by higher PCL and non-interest expenses. The annualized ROE for the quarter was 32.5%, compared with 34.1%, in the third quarter last year.

Revenue for the quarter was $5,241 million, an increase of $238 million, or 5%, compared with the third quarter last year. Net interest income was $4,239 million, an increase of $245 million, or 6%, primarily reflecting volume growth. Average loan volumes increased $22 billion, or 4%, reflecting 3% growth in personal loans and 6% growth in business loans. Average deposit volumes increased $20 billion, or 4%, reflecting 4% growth in personal deposits and 6% growth in business deposits. Net interest margin was 2.83%, an increase of 2 bps, primarily due to higher margins on loans, partially offset by changes to balance sheet mix reflecting the transition of Bankers' Acceptances (BAs) to Canadian Overnight Repo Rate Average (CORRA)-based loans. Non-interest income was $1,002 million, a decrease of $7 million, or 1%, compared with the third quarter last year, primarily reflecting lower fees due to the transition of BAs to CORRA-based loans in the prior year, the impact of which is offset in net interest income.

PCL for the quarter was $463 million, an increase of $28 million compared with the third quarter last year. PCL – impaired was $376 million, an increase of $38 million, or 11%, largely reflecting credit migration in the consumer lending portfolios. PCL – performing was $87 million, a decrease of $10 million compared with the third quarter last year. The performing provisions this quarter largely reflect further overlays for credit impacts from policy and trade uncertainty, and an update to the macroeconomic forecast. Total PCL as an annualized percentage of credit volume was 0.31%, an increase of 1 basis point compared with the third quarter last year.

Non-interest expenses for the quarter were $2,066 million, an increase of $99 million, or 5%, compared with the third quarter last year, primarily reflecting higher technology spend and other operating expenses.

The efficiency ratio for the quarter was 39.4%, compared with 39.3% in the third quarter last year.

Quarterly comparison – Q3 2025 vs. Q2 2025

Canadian Personal and Commercial Banking net income for the quarter was $1,953 million, an increase of $285 million, or 17%, compared with the prior quarter, primarily reflecting higher revenue and lower PCL, partially offset by higher non-interest expenses. The annualized ROE for the quarter was 32.5%, compared with 28.9% in the prior quarter.

Revenue increased $250 million, or 5%, compared with the prior quarter. Net interest income increased $216 million, or 5%, primarily reflecting more days in the third quarter and volume growth. Average loan volumes increased $8 billion, or 1%, reflecting 1% growth in personal loans and 1% growth in business loans. Average deposit volumes increased $4 billion, or 1%, reflecting 1% growth in personal deposits and 1% growth in business deposits. Net interest margin was 2.83%, an increase of 1 basis point, primarily driven by higher margins on loans and deposits. As we look forward to the fourth quarter, while many factors can impact margins, we continue to expect net interest margin to be relatively stable⁷. Non-interest income increased $34 million, or 4% compared with the prior quarter, reflecting higher fee revenue.

PCL for the quarter was $463 million, a decrease of $159 million compared with the prior quarter. PCL – impaired was $376 million, a decrease of $52 million, or 12%, recorded across the commercial and consumer lending portfolios. PCL – performing was $87 million, a decrease of $107 million. The performing provisions this quarter largely reflect further overlays for credit impacts from policy and trade uncertainty, and an update to the macroeconomic forecast. Total PCL as an annualized percentage of credit volume was 0.31%, a decrease of 13 bps compared with the prior quarter.

Non-interest expenses increased $14 million, or 1% compared with the prior quarter, primarily reflecting more days in the third quarter.

The efficiency ratio was 39.4%, compared with 41.1% in the prior quarter.

Year-to-date comparison – Q3 2025 vs. Q3 2024

Canadian Personal and Commercial Banking net income for the nine months ended July 31, 2025, was $5,452 million, an increase of $56 million, or 1%, compared with the same period last year, reflecting higher revenue, partially offset by higher PCL and non-interest expenses. The annualized ROE for the period was 31.0%, compared with 33.9%, in the same period last year.

Revenue for the period was $15,381 million, an increase of $655 million, or 4%, compared with the same period last year. Net interest income was $12,397 million, an increase of $758 million, or 7%, primarily reflecting volume growth. Average loan volumes increased $22 billion, or 4%, reflecting 3% growth in personal loans and 6% growth in business loans. Average deposit volumes increased $23 billion, or 5%, reflecting 4% growth in personal deposits and 7% growth in business deposits. Net interest margin was 2.82%, a decrease of 1 basis point, primarily due to changes to balance sheet mix reflecting the transition of BAs to CORRA-based loans. Non-interest income was $2,984 million, a decrease of $103 million, or 3%, reflecting lower fees due to the transition of BAs to CORRA-based loans in the prior year, the impact of which is offset in net interest income, partially offset by higher fee revenue.

PCL was $1,606 million, an increase of $281 million compared with the same period last year. PCL – impaired was $1,263 million, an increase of $164 million, or 15%, largely reflecting credit migration in the consumer lending portfolios. PCL – performing was $343 million, an increase of $117 million compared with the same period last year. The current year performing provisions largely reflect credit impacts from policy and trade uncertainty, including overlays and updates to the macroeconomic forecasts, and volume growth. Total PCL as an annualized percentage of credit volume was 0.37%, an increase of 6 bps compared with the same period last year.

Non-interest expenses were $6,204 million, an increase of $296 million, or 5%, compared with the same period last year, reflecting higher technology and other operating expenses.

The efficiency ratio was 40.3%, compared with 40.1%, for the same period last year.

U.S. Retail

Update on U.S. Balance Sheet Restructuring Activities

The Bank continued to focus on executing the balance sheet restructuring activities disclosed in the 2024 MD&A to help ensure the Bank can continue to support customers' financial needs in the U.S. while not exceeding the limitation on the combined total assets of TD Bank, N.A. and TD Bank USA, N.A. (the "U.S. Bank").

This quarter, the Bank completed the repositioning of its U.S. investment portfolio by selling lower yielding investment securities and reinvesting the proceeds into a similar composition of assets but yielding higher rates. During the third quarter of fiscal 2025, the Bank sold approximately US$5.9 billion of bonds which resulted in a loss of US$244 million pre-tax. In the aggregate, since the announcement of the U.S. balance sheet restructuring activities on October 10, 2024, the Bank has sold approximately US$25 billion of bonds from its U.S. investment portfolio for an aggregate loss of US$1.3 billion pre-tax. The Bank expects the net interest income benefit from these sales to be approximately US$500 million pre-tax in fiscal 2025⁸.

The Bank now expects to reduce the U.S. Bank's assets by modestly more than 10% from the asset level as of September 30, 2024 by using excess cash to paydown borrowings and by selling or winding down certain non-scalable or non-core U.S. loan portfolios that do not align with the U.S. Retail segment's focused strategy or have lower returns on investment. This reduction in assets combined with natural balance sheet run-off, is expected to be largely complete by the end of fiscal 2025 and reduce net interest income in the U.S. Retail segment by approximately US$150 million pre-tax in fiscal 2025⁹.

During the quarter, the Bank used proceeds from the sale of the loans, investment maturities, and cash on hand, to pay down US$10 billion of short-term borrowings. Loans were reduced by US$4 billion, reflecting run-off and sales in the non-core U.S. loan portfolios. Accordingly, as of July 31, 2025, the combined total assets of the U.S. Bank were US$386 billion. TD Bank, N.A. reached an agreement with The Toronto-Dominion Bank and certain of its affiliates to sell approximately US$5 billion of commercial loans at market terms. Upon closing, these loans are reflected in the Wholesale Banking segment.

As of June 30, 2025, the combined total assets of the U.S. Bank, as measured in accordance with the OCC Consent Order which utilizes the average of spot balances of March 31, 2025, and June 30, 2025, was US$396 billion.

In the aggregate, total losses associated with the Bank's U.S. balance sheet restructuring activities from October 10, 2024, through July 31, 2025, are US$1,854 million pre-tax and US$1,391 million after-tax. In total, the Bank's collective balance sheet restructuring actions are expected to result in a loss up to US$1.5 billion after-tax, and impact capital as executed^8,9.

As previously disclosed, in addition to the asset reductions identified on October 10, 2024, the Bank made the strategic decision in the second quarter to gradually wind-down the approximately US$3 billion point of sale financing business which services third-party retailers, as part of the Bank's efforts to reduce non-scalable and niche portfolios that do not fit the Bank's focused strategy. In addition, as part of the Bank's strategic review, the U.S. Retail segment has identified additional loans that do not align with the U.S. Retail segment's focused strategy or have lower returns on investment and will be reduced over the course of fiscal 2026 and beyond.