In response to a faltering economic outlook, TD Bank Group announced plans to cut staff by three percent and increase its reserve for bad loans. The bank’s fourth quarter results are reflective of these economic pressures, with restructuring charges amounting to $363 million and additional costs anticipated for the next year. The goal of these measures is to optimize efficiencies and create resources for future growth, said chief financial officer Kelvin Tran.
Moreover, these measures are forecast to save the bank $400 million pre-tax by 2024 and then $600 million annually after that. The scale of these cuts mirrors those made by other banks, with both Scotiabank and RBC also announcing similar initiatives. Additionally, the bank intends to handle the staff reductions through attrition and seek out ways to reallocate affected employees.
Against the backdrop of reduced economic conditions, TD Bank also noted that progress on its medium-term earning goals and return on equity may be challenging to achieve. This sentiment was shared by Mr. Tran, who expressed concern about the complexity of the environment the bank is operating in during the upcoming year. The bank’s full-year target has been complicated by higher-than-expected provisions for bad loans, reflecting fears of an impending recession and the strain on borrowers. Despite these obstacles, TD Bank remains confident in its ability to weather the storm.
In light of its performance, TD will pay a quarterly dividend of $1.02 per share, up from 96 cents, reflecting its confidence in the business. This increase comes as TD’s Canadian and U.S. retail business reported a decrease in earnings, while wealth management and insurance operations also experienced a drop year-over-year.