TD Bank Pushes Up Dividend After Underlying Earnings, Revenue Beat Expectations — Update

By Robb M. Stewart

Toronto-Dominion Bank joined other big Canadian lenders in boosting its dividend, signalling optimism despite continued economic uncertainty after TD and its rivals each notched better-than-expected results in the latest quarter.

TD, Canada's second-largest bank by market value, said Thursday it will increase its dividend 2.9% for the coming quarter despite earnings in the final quarter of fiscal 2025 being held back by restructuring and other charges as it looks to slash costs and continues with efforts to rebuild its anti-money laundering controls. Excluding unusual costs, its earnings jumped thanks to a rise in capital-markets activity and volume growth in Canadian banking.

The Toronto-based bank, like the rest of Canada's "Big Six" lenders, maintained a strong capital position that sits well above minimum regulatory requirements and said it was aiming for adjusted growth in earnings per share in fiscal 2026 of between 6% and 8% despite lingering concerns among households and businesses over the shift in U.S. trade policy and tariffs that have disrupted global trade.

The decision to raise the dividend reflected confidence in the bank's growth and earnings power, said Raymond Chun, who stepped into the role of president and chief executive early this year in the wake of the TD's historic settlement with U.S. authorities over failings in its anti-money laundering controls that saw it hit with hefty penalties and a cap on asset growth in the U.S.

"I do think that there are opportunities and tailwinds as we head into fiscal 2026, both on the EPS side and from a ROE [return on equity] perspective," Chun said.

TD's fourth-quarter net income fell to 3.28 billion Canadian dollars ($2.35 billion), or C$1.82 a share, from C$3.64 billion, or C$1.97, a year earlier. The result was held back by one-time items including C$140 million in restructuring charges as the bank cuts staff and slashes its cost base, and C$485 million for restructuring its balance sheet in the U.S. to meet regulatory limits and put it in a position to again grow loans in the U.S.

On an adjusted basis, TD said its net income rose to C$3.91 billion in the three months to Oct. 31 from C$3.21 billion on a similar basis last year. Adjusted per-share earnings came in at C$2.18, beating the C$2.01 mean estimate of analysts polled by FactSet.

Overall revenue was little changed at C$15.49 billion, though well above the C$13.92 billion expected.

Across its business, revenue from the bank's Canadian personal and commercial banking was up roughly 5% on last year at a record C$5.31 billion thanks to loan and deposit-volume growth. U.S. retail revenue rose 7.5% to C$3.45 billion, but revenue for its wealth-management and insurance division dropped 3.9% to C$3.79 billion thanks to reinsurance recoveries for catastrophe claims. Wholesale-banking revenue climbed 24% to C$2.2 billion.

TD's return on equity, a closely watched gauge of profitability and of how efficiently those profits are generated, widened to 12.8% on an adjusted basis from 11.7% last year. It is targeting a return of about 13% in the coming year, and 16% over the medium-term through fiscal 2029.

That echoes Canada's other big banks, which forecast improving ROE in the coming years even as they hold on to elevated capital buffers against possible risk. Royal Bank of Canada, Canada's largest bank, a day earlier lifted its medium-term ROE target to 17% or more from a previous 16%-plus goal when it announced plans to raise its quarterly dividend 6.5%.

TD's common-equity Tier 1 capital ratio stood at 14.7% as of the end of October, well above the minimum 11.5% of risk-weighted assets that Canada's banking regulator requires.

TD declared a dividend of C$1.08 a share for the new quarter, an increase of C$0.03.

Bank of Montreal and Canadian Imperial Bank of Commerce rounded out earnings season for the big banks Thursday. Bank of Montreal said it will raise its dividend for next quarter by 2.5%, while CIBC aims to boost its payout 10%

Bank of Montreal's fourth-quarter net income dipped C$9 million from last year to just under C$2.3 billion, or C$2.97 a share. Excluding items including a goodwill write-down for the closure of some U.S. branches, its adjusted earnings jumped 73% to C$3.28, beating the C$3.04 consensus forecast of analysts. Its adjusted ROE widened to 11.8% from 7.4%.

CIBC logged quarterly net income of C$2.18 billion, or C$2.20 a share, for the three months against C$1.88 billion, or C$1.90, a year earlier. On an adjusted basis, per-share earnings increased to C$2.21, beating the C$2.08 expected. Its ROE edged up to 14.1% on a reported and adjusted basis, as it targets an adjusted return of 15%-plus medium term alongside 7% to 10% adjusted EPS growth.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

December 04, 2025 12:01 ET (17:01 GMT)