Three of Canada's largest financial institutions delivered stronger-than-anticipated quarterly results, demonstrating resilience amid ongoing economic headwinds. Toronto-Dominion Bank, Bank of Montreal, and the Canadian Imperial Bank of Commerce all reported fourth-quarter earnings that comfortably exceeded analysts' expectations.
Earnings Powerhouse: Capital Markets and Wealth Management
The robust profits for the quarter ending October 31 were largely fueled by specific high-performing business segments. Capital markets operations, which assist corporations with fundraising and trading activities, provided a significant boost. Similarly, wealth management divisions, catering to clients with substantial assets, contributed strongly to the bottom line.
This performance offers a critical snapshot of the national economic landscape. "While economic uncertainty has impacted business and consumer confidence, Canada's economy and employment remain largely resilient," stated TD's Chief Executive, Raymond Chun, during an analyst call.
Credit Loss Provisions: A Manageable Increase
A key indicator watched closely by market observers is the banks' provisions for credit losses (PCLs)—the funds set aside to cover potentially souring loans. While most of the major lenders increased their PCLs in the fourth quarter, the rises were not as severe as some had feared.
For instance, TD's total provisions for credit losses reached $982 million. This figure was slightly above the $971 million reported in the third quarter but notably lower than the $1.1 billion reserved in the same period last year.
TD's Restructuring and Financial Highlights
Delving into the specifics, TD Bank reported a fourth-quarter net income of $3.28 billion, resulting in earnings per share of $1.82. This compares to a net income of $3.63 billion a year prior.
More telling was the bank's adjusted net income, which strips out one-time items, coming in at $3.9 billion compared to $3.2 billion last year. This yielded adjusted earnings per share of $2.18, decisively beating the analyst consensus estimate of approximately $2.01 per share.
The quarter also included a $190 million restructuring charge as part of an ongoing efficiency program initiated earlier in the year. For the full 2025 fiscal year, TD incurred $686 million in pre-tax restructuring costs, primarily related to:
- Employee severance and personnel-related costs
- Asset impairment and business rationalization
- Real estate optimization
The bank anticipates an additional $125 million in pre-tax charges next quarter to conclude the program, bringing the total to roughly $825 million. TD stated the initiative has already generated about $100 million in pre-tax savings in 2025 and is expected to deliver annual savings of approximately $750 million upon full realization, linked to an estimated three percent reduction in its workforce.
The collective earnings reports from all six of Canada's major banks this week provide crucial insights into the health of the financial sector and the broader economy, signaling cautious stability despite the uncertain climate.
