Toronto-Dominion Bank at RBC Capital Markets Global Financial Institutions Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Darko Mihelic - RBC Capital Markets - Analyst : So I think we're just going to dive right into questions right off the bat, and obviously, the big question of the day is going to be tariffs. So we'll spend a little bit of time talking about tariffs and potential impacts. And I guess the first thing is maybe you can discuss your expectations and what you're thinking today and how you think you're going to manage through this period of what could be a lot of volatility.

Question: Darko Mihelic - RBC Capital Markets - Analyst : So let's go, I want to hear this one.

Question: Darko Mihelic - RBC Capital Markets - Analyst : It's a pretty good laundry list. But I think on balance, do you come out positive or negative?

Question: Darko Mihelic - RBC Capital Markets - Analyst : That makes sense for sure. So maybe just sticking with the credit quality theme. And for those of you in the audience, the banks reported last week, right? So we saw the results just last week. So in many ways, I'm still actually digesting some of the stuff that I saw. One of the things that I didn't see was a large build of reserves. So maybe you can discuss that. And for context, there was a scare on tariffs and then it kind of went away and then it came. So you must have been running scenarios and have some idea. So maybe you can talk to why there was no large build and what would it take to build a large reserve.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so the concept of significant uncertainty, in my mind, would suggest that maybe you have to put a higher waiting or higher probability on the pessimistic case. Is that something that you've done? And can you maybe discuss the possibility that these tariffs come off and on and off and on and we have strange outcomes here? Is it possible that even if they come off tomorrow and today that we still end up in a place where there's so much uncertainty that you have to put a higher weighting on the pessimistic scenario. Is that possible?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And then there's, of course, the expert credit judgment overlay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so maybe just stepping away from the reserving model and that sort of black box and thinking about, well, here we are. We've got a pretty difficult set of tariffs in place for Canada. A lot of economics teams are suggesting it could be very harmful to the economy. So maybe you can give us an idea, I mean, what parts of your business are rather sensitive to what we just are enduring right now? And give us an idea of your sort of exposure to places where we think there will be issues like aluminum, auto, manufacturing, forestry. I mean, is there anything you can provide today to give us a sense of how sensitive you are to this?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so is it something that TD is contemplating that there could be layoffs coming relatively quickly on the back of this? Or what is your base case sort of view right now as we sit here today?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. Fair enough. And by the way, I will take questions from the audience. So don't be shy. If you have -- anybody has a question, please raise your hand and we can lob it up here at Kelvin. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Darko Mihelic - RBC Capital Markets - Analyst : It's something I thought about, too. I mean, could we see, for example a reemergence of deferrals, things like that? Do you think that's -- deferrals like mortgage payment deferrals, for example, to help the consumer out, I don't know, take it a further, try doing something like that with a commercial broker account.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. So maybe moving on to -- away from credit and talking a bit about your US business. I'm sure everyone is well aware that there is an asset cap that's been imposed on TD and its US business. And you've now brought your assets down well below the asset cap, and you've been undergoing some balance sheet repositioning that's been helping you out as well. So I think maybe if you can just discuss the progress that you've made with the balance sheet repositioning, what you've done in the balance sheet. And maybe you can speak to sort of next steps with respect to the repositioning and any other next steps with respect to the US business while operating under this asset cap.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And maybe just to follow up on some of the things that you were just chatting on. First, with respect to the bond portfolio repositioning, what about the losses on the sales? Have they been within the range? And how comfortable are you with the remainder?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so clearly now with the sale of the Schwab stake, you have plenty of capital. Now maybe you can give us -- you can size this for us, just for those of you in the room, they have just under $400 billion balance sheet, repositioning $50 billion. How much more can you reposition? How much more bonds are in that? What's the possibility? What's the upper end of the bound?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so there's a few other things that we can do here at TD that you have at your disposal because you've got lots of capital. Now first of all, maybe you can touch on the buyback and just give everybody a reminder in how active are you on the buyback. I think it just started, right?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And you were able to generate capital in the quarter organically.

Question: Darko Mihelic - RBC Capital Markets - Analyst : So conceptually, even though you have a very large buyback and you intend to use it, you still have the capacity to actually build capital unless. So I think you guys left the door open to more buybacks after this one is complete.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And then the other thing that we heard about potentially is the potential for restructuring. But as I sit there, I think it's going to be -- when I think of the structuring, I think of maybe bank-wide or were you guys thinking more -- I just want to clarify, were you thinking more US-oriented sort of restructuring? Or is it really TD Bank-wide?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so maybe just touch on the, since we're still speaking mostly about the US business, the AML remediation. Can you just give us a bit of an update on where you are in that program? And when I think of the AML remediation, I'd love to hear your -- there's a lot of work being done this year and then you kind of move into a different phase. And what I'm curious about and what most investors are curious about is, is there any phase in the AML remediation process where it's perhaps more likely that you have expense overruns or the chance that you actually exceed your budgeted expense for the AML remediation? So maybe you can give us an idea.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And is there any kind of stage at which we should be a little more thoughtful about costs?

Question: Darko Mihelic - RBC Capital Markets - Analyst : I appreciate it's very early in the process. So there's a lot of time and this could be, as you said.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. And then maybe turning around and speaking about not the US business, so the other businesses. So given the capital situation now at TD, you have a very robust capital position. The question that I get frequently from investors is, will TD really try to deploy that capital aggressively in other parts of the business, whether it's Canada, whether it's TD Cowen, you name it? But the environment isn't really one that's conducive to a lot of organic growth. It doesn't feel like it anyway. I mean, it feels like many of your customers would be right now paralyzed. So what would you say to that? First comment is, is TD aiming to deploy that capital aggressively in certain businesses? And how would you -- first, how do you respond to that? And then second, I'll probably have some follow-ups, but --

Question: Darko Mihelic - RBC Capital Markets - Analyst : So I don't think of it as going out on the risk curve. That's not what I typically envision you potentially doing. What I envision is potentially staying within your risk appetite but pushing up the cost of acquisition of a customer a little bit. Like why not, right? If everybody -- if you've got the capital and if you're TD and you're really strong with your customer relationships, push the cost of acquisition up a little bit. Is that not something that --?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. Any last chance from the audience? Because I'm going to wind down here with a couple of more questions. So if anybody has anything, raise your hand now or -- no? Okay. And so maybe just on that, with our last couple of minutes here. I did want to touch on loan growth and what you're seeing. What is the early read here from your customers on -- I mean, have you got a bit of a temperature of the customer in the middle of all this uncertainty? And do you think there's a chance here that loan growth disappoints 2025?

Question: Darko Mihelic - RBC Capital Markets - Analyst : But you haven't had much feedback yet? Is it fair to say? It's still too early? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. And so what would be your key takeaways here for everybody? Recognizing that it's a very volatile time. You just reported earnings last week, so the numbers are there. What would be your key sort of message to shareholders today?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, great. Well, with that, we're in our last minute here. So we'll wrap it up there. And thank you very much, Kelvin, for your time. It's been great.