AML remediation costs in the US drag down first-quarter profit despite strong Canadian results
Toronto-Dominion Bank (TD) posted a slight decline in first-quarter profit as its US operations continue to grapple with the financial and reputational fallout from anti-money laundering (AML) compliance failures.
The bank reported net income of $2.79 billion for the quarter ending January 31, 2025, a marginal drop from $2.82 billion in the same period last year. Adjusted earnings stood at $3.6 billion, largely unchanged from the previous year.
Despite the challenges, TD remains optimistic about its overall performance. "TD started the year with strong momentum and record revenue across many of our businesses," said Raymond Chun, president and CEO of TD Bank Group. "While expenses remain somewhat elevated, we delivered solid earnings, which positions us well as we begin the new fiscal year."
The bank’s first-quarter financial report showed that its Canadian personal and commercial banking was a bright spot in the bank’s results, generating $1.83 billion in net income, a 3% increase from the same quarter last year. Revenue climbed 5% to a record $5.15 billion, driven by continued loan and deposit volume growth.
Wealth management and insurance saw a strong quarter, with net income rising 23% to $680 million on the back of record revenue, higher insurance premiums, and growing assets.
TD’s wholesale banking segment also delivered strong results, with net income increasing 46% to $299 million. Revenue hit a record $2 billion, up 12% year-over-year, driven by higher trading-related revenue and underwriting fees.
TD’s US retail business, however, saw a significant earnings hit. Net income for the division plummeted 61% to $342 million (US$247 million), largely due to the impact of AML-related compliance costs, balance sheet restructuring, and higher provisions for credit losses.
On an adjusted basis, the US retail segment reported $1.04 billion (US$736 million) in net income, a 12% drop from the previous year. The bank’s investment in Charles Schwab provided some stability, generating $199 million (US$142 million) in earnings.
Read more: TD to plow money into Canada unit following Schwab sale
The US anti-money laundering compliance issues remains a “top priority,” according to Chun.
"We continue to make consistent progress to strengthen the bank,” he said.
The bank has already begun restructuring its US balance sheet and recently sold its stake in Charles Schwab as part of its broader strategic review.
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