TD layoffs 3,000 positions.

Toronto-Dominion Bank fell short of analysts’ earnings expectations as it allocated more funds than anticipated for potential loan losses and disclosed a restructuring charge linked to a planned three percent reduction in its workforce. The bank, Canada’s second-largest, reported on November 30 that it incurred $266 million in after-tax restructuring charges in the fiscal fourth quarter, attributed to staff cuts and adjustments to its real estate portfolio, including a reduction of 111,000 square meters of office space in its U.S. operations.

In addition to the restructuring, Toronto-Dominion cautioned that meeting its medium-term earnings targets for fiscal 2024 would be “challenging.” The job cuts, expected through attrition and targeted reductions, mirror similar initiatives by other Canadian banks like Royal Bank of Canada, Bank of Montreal, and Bank of Nova Scotia. Toronto-Dominion’s staff reduction is projected to surpass 3,000 positions. On a pre-tax basis, the bank anticipates the restructuring to yield $400 million in savings for the current fiscal year and $600 million annually.

Kelvin Tran, Toronto-Dominion’s Chief Financial Officer, explained, “We’ve undertaken a restructuring program to streamline and deliver efficiency, to create capacity to invest in the future.” While some job cuts have already occurred, others are slated for 2024, with Tran declining to specify the areas affected.

Key Financial Figures in Toronto-Dominion’s Fourth Quarter?

The bank’s shares slipped 1.8 percent to $81.84 in Toronto trading, reflecting a 6.6 percent decline for the year, compared to a 5.9 percent drop for the S&P/TSX commercial banks index. Meanwhile, Royal Bank and Canadian Imperial Bank of Commerce, reporting results on the same day, exceeded analysts’ estimates.

Toronto-Dominion’s provisions for credit losses in the quarter amounted to $878 million, surpassing analysts’ expectations of $844.5 million. On an adjusted basis, the bank earned $1.83 per share, falling short of the $1.90 average estimate in a Bloomberg survey.

Navigating a “complex macroeconomic environment” and anticipating further normalization in loan-loss provisions, Toronto-Dominion expressed doubt about meeting its medium-term adjusted earnings-per-share growth target and return-on-equity target for fiscal 2024.

Adjusted non-interest expenses for the fourth quarter totaled $7.24 billion, exceeding the $6.89 billion anticipated by analysts. Keefe, Bruyette & Woods analysts noted a mixed quarter for TD but saw the bank’s significant restructuring program as a positive, likely to boost future consensus estimates.

What Ongoing Challenges is Toronto-Dominion Facing Regarding a U.S. Department of Justice Investigation?

Toronto-Dominion is still contending with a U.S. Department of Justice investigation into its compliance with anti-money laundering rules. While the bank believes it won’t have a major impact on financial results, there is a possibility that the resolution of legal or regulatory actions could materially affect consolidated results.

Tran declined to provide further details on the investigation. Analysts estimate potential penalties ranging from $500 million to $1 billion. While Toronto-Dominion can afford such a fine, the repercussions may include higher compliance costs and reputational damage, according to National Bank of Canada financial analysts.

Severance Entitlement for TD’s Employees

In Canada, non-unionized employees and executives at TD have the right to receive full severance pay in the event of job loss due to downsizing or corporate restructuring. The amount of severance pay is subject to variation and can potentially extend up to 24 months’ worth of pay, depending on various factors. Particularly in the case of extensive layoffs, severance pay may surpass the usual limits.

At Whitten & Lublin, we recognize the challenges associated with job loss or termination, and our seasoned employment lawyers are available to assist in navigating legal options. Our goal is to ensure individuals receive the compensation they are entitled to. We encourage anyone affected by recent layoffs in Canada to reach out for a consultation, either online or by phone at (416) 640 -2667, to discuss their situation today.