- Key insight: TD’s efforts to shrink its U.S. balance sheet are nearing the end, as the bank expects to beef up its lending in certain areas throughout the year.
- Supporting data: While total stateside loans were down some 11% from the previous year, lending rose by more than 2% in the sectors where TD is targeting growth.
- Forward look: Still, the tailwind that the U.S. unit got from certain balance-sheet repositioning efforts isn’t expected to be as strong going forward as it was in the first quarter.
TD Bank Group says it’s on track to resume growing its U.S. loan portfolio later in 2026, about two years after regulators capped the size of its American operations.
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The Toronto-based company has been running off certain U.S. portfolios, while also building up stateside business in what it calls “core” lending areas, such as middle market, consumer and credit cards.
During the quarter that ended on Jan. 31, U.S. revenue rose from the same period a year earlier, TD reported Thursday. Better credit quality and a balance-sheet restructuring were factors in the improvement.
“You put the revenue momentum that we’re enjoying now, the pricing discipline we put in place, the expense focus that we have, and will continue to materialize over the rest of the year — I feel quite confident with regards to the outlook for the rest of the year,” said Leo Salom, who leads TD’s American operations, during the company’s earnings call on Thursday.
TD’s stock was up some 1.7% on Thursday afternoon, as the bank stuck to the expense
In the U.S., the company’s revenue of $2.9 billion was up 8% on an adjusted basis from the prior year. Reported net income excluding the impact of the company’s stake in Charles Schwab rose to $747 million, up from just $105 million in the first quarter of 2025. The massive difference was largely due to a change in how certain tax benefits are accounted for, along with stronger credit quality.
John Aiken, an analyst at Jefferies, said in a note that TD’s first quarter, which ended Jan. 31, was a “positive” look, with the bank “moving forward on its goals.”
TD has been seeking to turn around its U.S. operations after
Since Chun’s appointment, the bank has been on a mission not only to
The company has reduced its U.S. branch count by 7.5% since Jan. 31, 2025, and has sold or run off portfolios in its “non-core” businesses, including point-of-sale finance, correspondent lending, commercial auto deal lending and export and import lending.
Average loans in non-core U.S. businesses fell from $33 billion in the first quarter of 2025 to $11 billion in the same period this year.
Salom said Thursday that the loan-repositioning work, along with repricing actions across deposit and loan books, were tailwinds to TD’s U.S. business during the first quarter. The effects of those tailwinds may not be as strong going forward, he added.
He also said that “economic momentum” in the U.S. was leading to solid loan growth in the areas where TD wants to expand. While total average loans in the States were down about 9% from the previous year, core average loans were up about 2.5%, the company said in its earnings presentation.
Middle-market loans grew 4%, with a 15% increase in pipelines for that business, Salom said. TD’s specialty higher-education loan book also increased by about 5%, he said.
The bank has been investing in certain parts of its cards business since 2022, and Salom said that U.S. proprietary credit card balances were up 15% year-over-year.
“Where we’re seeing a little bit of sluggishness in the U.S. market broadly is that the small business and lower-end community banking level,” Salom said. “I think that those businesses are just more susceptible to the trade uncertainty, the supply-chain disruptions, and the current state of interest rates. So I think there we’re still seeing some muted growth.”
Still, TD is targeting a return to U.S. net loan growth in the third quarter, Salom said.
Earlier this month, the bank took another step in sharpening its focus on credit cards by converting its Nordstrom card portfolio from the department store chain’s servicing platform onto its own. The move, which TD had teased for months, will give the bank a higher share of revenue, along with higher expected losses.
The bank reiterated Thursday that it plans to spend $1 billion across 2025 and 2026 on
In December, Salom said that the company had completed the majority of the actions that it had to take, but it still needed to audit and earn the approval of regulators and law enforcement for its enhanced controls.
On top of its U.S. compliance fixes, the bank will continue to work on revamping its anti-money-laundering controls across the enterprise.
During the first quarter, TD also completed one major restructuring effort that it began last year, which was part of its mission to reduce expenses.
Across the enterprise, the bank has logged 886 million in Canadian dollars of total pre-tax charges from the restructuring program, which included layoffs, real-estate optimization and business wind-downs. TD expects the changes to drive C$500 million of pre-tax savings in 2026, plus fully-realized pre-tax annual cost savings of C$775 million.
Chun said Thursday that he expects the bank’s gains from artificial intelligence to beat its projections from September. Last fall, TD said it expected AI tools to cut C$500 million in expenses and drive C$500 million in revenue across the company by 2029.
But those AI tools are becoming more advanced and more useful than the bank had predicted six months ago, Chun said Thursday.
“I do think we’re going to get more from the value, from an AI perspective, beyond the billion dollars,” Chun said. “We’re seeing better momentum than what we had thought.”
