© Reuters.
TD Bank Group is undertaking significant job cuts and bracing for economic headwinds. The bank announced a workforce reduction by approximately 3%, which translates to around 3,100 jobs. This move comes alongside an increase in loan loss provisions, signaling caution in the face of potential economic downturns.
The bank is grappling with a restructuring charge of about $363 million this quarter and anticipates similar expenses in the early part of next year. These steps are part of a broader strategy aimed at enhancing operational efficiency and expanding investment capabilities for future growth, a path also taken by its peers, Scotiabank and RBC.
Kelvin Tran, TD Bank Group’s CFO, stated that these cutbacks are essential for the bank’s larger strategy to improve efficiency and invest in growth opportunities. The current layoffs are part of this initiative, with more staffing reductions expected throughout the next year. TD is exploring alternative employment opportunities within the company for affected employees and is accounting for severance packages as well as reductions in real estate holdings and asset devaluations in its restructuring costs.
For the quarter ending October 31st, TD Bank’s profits have significantly decreased to $2.89 billion, or $1.49 per diluted share, which is just over half of the profits from the same period last year. The bank has also seen loan loss provisions surge by an additional quarter more than last year, totaling $878 million, largely due to concerns over the economic outlook and higher interest rates impacting mortgage renewals.
The bank’s earnings were further impacted by acquisition-related expenses totaling nearly $200 million from its takeover of Cowen Inc. This resulted in adjusted profits of $1.83 per diluted share, which fell short of the expected $2 per share.
Earnings across various segments of TD Bank also faced challenges: Canadian personal and commercial banking saw a slight decline to $1.68 billion, U.S. retail banking experienced a more pronounced drop to $1.28 billion, wealth management and insurance witnessed modest decreases to $501 million, and wholesale banking reported a stark downturn to $17 million.
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