Toronto-Dominion Bank Stock

With us, we have TD Bank. And presenting from TD Bank is Leo Salom, Head of U.S. Banking. Welcome, Leo.

Brian, good to be here with you.

Great. Thanks for coming. All right. Let's start. So on the recent earnings call, you announced you're going to focus on opening 100 new branches by end of calendar 2028, subject to regulatory approval. Maybe you can provide a few more details on the growth strategy?

So very excited to be able to make that announcement. We -- this is really a return to sort of a proven track record that we've had previously. We did open up about 250 stores over the last decade. Obviously, given the last 2 or 3 years with the remediation, we took a pause. This is returning to that expansion strategy.

I think maybe a couple of things that I would cite. We have a pretty substantial existing footprint across the U.S. today, 1,100 stores. This is really a focus to densify, strengthen our footprint in those particular markets and really with 2 critical objectives. One, in the major markets in New England, the New York area and New Jersey sort of Philadelphia, where we already have a top 3 deposit position, we really want to ensure that we're properly positioned for the emerging demographic trends that are taking place.

So it's -- think of that as a true repositioning and an extension in terms of the existing footprint that we have. The other part of the expansion is the Southeast expansion, where we really wanted to take on a greater footprint in markets like Florida, the Carolinas more broadly. We'd like to try to embed or increase our presence in those particular markets. Taken in aggregate, it will be a substantial move in a relatively short period of time. We said we'd open up the 100 stores by the end of 2028. And so we'll get started on that in short order here. But it's an exciting step forward, and it brings us back to a bit of an expansionary posture.

Great. And then how does the branch expansion strategy interact with the consent orders and asset limitation currently in place for TD's U.S. Bank? Can you comment on what you mean by subject to regulatory approval?

Sure. Brian, and I know I've mentioned this in the past. I wouldn't want anyone to interpret the fact that we're opening up stores as the fact that our remediation plan is complete or that we satisfied all elements of the consent order. The consent order always provided for the ability for the bank to be able to open up stores or branches.

And this is essentially us having a degree of confidence in discussions with our regulators that we will be able to open up those 100 stores by the end of 2028. I should say that with regards to the AML program itself, we feel quite comfortable with the work that we've done in that space, a tremendous amount of progress, Brian, in a relatively short period of time. And I think that where we are on that remediation, where we are from a maturity standpoint gives us the confidence that we can embark on this expansion plan at this point in time.

You shared that TD continues to make meaningful progress on its AML remediation. Can you provide an update on this progress? Any updates on the time line?

Sure. So I know I've had conversations with many of you with regards to the work that we've done from an AML standpoint. I'd say, first of all, we are very pleased with the progress that we've made on our overall AML remediation plan. And I've signaled that on various analyst calls. But if I just take a moment to describe what we've done, we've completely rebuilt the management team around the BSA/AML program.

Today, we have 40 very seasoned titled officers supporting various aspects of our AML program. We have strengthened and renewed a lot of our policies and procedures and upgraded them accordingly. We've implemented new customer risk rating program. We've implemented a new transaction monitoring core platform. We've revamped our investigations capabilities, changed our training programs, really strengthened the relationship with the sort of engagement model with law enforcement.

Put all those things together, a lot has been done in a relatively short period of time. There's still more work to do with regards to the AML program. But I think we're entering into a very important phase with regards to the program, and that is the phase associated with validation and sustainability. That's really the work ahead of us now is really to ensure that it gets validated. And for some of you that you might have heard me say this in the past, when we say validation, it means that every management action that we've implemented will be challenged by the business community, by the business itself, will be subject to internal audit validation, will be reviewed by the monitor. And ultimately, it has to be accepted as effective by the regulator. And that's the process we're in right now. I think we've made a lot of progress on the actual management actions themselves. We're now in that important validation stage to be able to secure regulatory relief.

Great. And then on expenses, TD increased its guidance for the U.S. BSA/AML remediation expenses from USD 500 million for fiscal 2026 to USD 550 million for '26. What is driving that increase? And what is your outlook for the U.S. BSA/AML expenses for '27? Should we expect some moderation in costs?

Yes. So Brian, we did say on the call that we were going to come in for the full year at $550 million. So a $50 million increase vis-a-vis what we had said before. And what we did say is that the majority of that expense increase was associated with the look-back exercise that we're running. To a lesser extent, it was also related to the fact that we've accelerated a series of management actions that were previously scheduled for later on in 2026 outside of our fiscal period and 2027, and we brought those in to be able to get out in front of some of the critical deliverables that we had.

I'd say, as I think about 2027, we do believe we'll be able to moderate overall governance and control costs associated with the AML remediation effort. I'd say that moderation is probably to take place more in the second half of the year versus in the first half of the year, but it will allow us to be able to start to realize some degree of benefits. Some of you might recall in the Investor Day, we did communicate that we do expect that more than half of the total remediation expense will be able to be reduced permanently, while there'll be a portion of that, that will remain as part of our one cost as part of the AML program. But I think that's -- I think being able to experience some degree of moderation will certainly help us in next year's overall expense profile.

Okay. Great. On expenses more broadly, TD has maintained its guidance for mid-single-digit growth for fiscal '26. What are some examples of how you're driving structural cost savings in U.S. Banking? What is your outlook for overall expenses for fiscal '27?

Yes. So the work we're doing on expenses is critically important. I know many of you have heard me talk about the fact that we're really looking at our structural cost envelope in the U.S. business. In the Investor Day discussion, we did put out a target to reduce our structural cost by $750 million. And I can say based on the progress that we've made this year, having achieved almost $200 million of cost savings this year already, that I think we should be able to achieve that within the MTO period.

Some of the things that are driving some of those savings is partly the score optimization work that we did earlier this year. We also discontinued a number of businesses as part of our balance sheet restructuring effort. We have been leaning into certain organizational health initiatives to be able to bring down our overall staffing levels in select areas in the bank. We're leaning in awfully hard on this moderation of G&C costs as we're getting through some of the remediation, we are able to begin to start realizing some degree of benefit. And probably the one that's early days, but it's showing some promise is the work that we're doing from an AI perspective to actually see some additional expense.

You put all those things together, and I think the way I'd ask all of you to think about it is we've already been able to moderate the absolute level of expenses in the U.S. banking business. So our overall expenses on an absolute basis have been about $1.8 billion, just above $1.8 billion for the last 4 quarters. What we would like to be able to do is create the capacity for ourselves to be able to reinvest back at scale in some of the critical things that we're trying to achieve, including our branch expansion plan, including the increase of frontline bankers and financial advisers, leaning into some of the infrastructural investments we're trying to make in data and technology.

But I think the point that I'd want to underscore is we're trying to create the capacity to be able to enjoy the value of J-curve type investments without the J-curve to be able to allow us to be able to self-fund an accelerated degree of growth within the envelope that we currently operate today. And I think we're making good progress, more to come over the next 24 months.

Great. I think that kind of leads directly into my next question. Is AI driving expense savings? And can you provide examples of AI initiatives transforming how you operate the business in the U.S.?

Sure. So in a word, absolutely. I do think -- I am truly excited about what we're seeing from an AI perspective. And I'll just talk about some of the things we're already doing and maybe some of those things that are probably to come in terms of some of the opportunities. I'd say the single most impactful AI program that we're running right now is our software development program. We've now enabled 1,800 of our developers with GitHub Copilot.

I'd say while adoption curves will vary across that universe of developers, we're seeing anywhere between a 30% to 40% improvement in technology capacity available to those individuals, which right now, we're -- we are going to look at potential cost synergies there, but we're also experiencing what is a significant increase in just our ability to bring solutions to market faster. And so we're using it as a capacity increase as opposed to a hard dollar reduction at this moment in time. But obviously, we'll revisit that as we move forward.

I'd say another area that we've applied AI at scale is within the AML effort itself. We are investing -- we've already deployed 3 AI models. So things like scanning negative news for any adverse developments on any clients in the portfolio or using AI to be able to look at our transaction alerts and be able to decipher rare patterns in it and be able to surface that much more effectively.

We're now working on a solution to be able to construct an investigator's desktop to be able to allow them to be able to look at hundreds of different items and immediately score it and be able to provide them with greater insights on how to manage that particular investigation. So all of these things will make not only the AI program -- I'm sorry, our AML program much more effective, but it should, over time, develop -- generate some really significant efficiencies.

I'd say one area that I'm particularly excited about is the work we're seeing in the call center space, in the voice and chat AI space. We are working with a vendor as we speak to be able to enable a voice AI agent solution that we're targeting to address about 50% of the calls into our call centers. In fact, we were at a Board meeting yesterday, and we got a chance to actually be able to demo the new piece. And it is -- it's incredible what's possible today in just the last 3 to 4 months, the quality of the sort of speech dynamic and the latency -- the reduction in the latency that exists is now making what seemed almost unlikely a year ago, very likely now.

And so what we will do, obviously, that will create some synergies in terms of frontline staffing, but we hope we'll be able to reinvest some of that in being able to enrich the overall experience in the call center over time. I use those as just examples, but I would -- Ray Chun, our Group CEO, talks about reimagining banking. I really do think that Agentic AI and some of the things that we're looking at, at the moment will allow us to be able to change the way we work internally, how work gets done inside the organization. And I think it will unlock a significant amount of expense synergies over time.

Great. Let's turn to the balance sheet. Q3 was an important inflection point for TD's U.S. Banking segment with positive sequential loan growth. What do you see as key drivers of loan growth for your business going forward?

So to your point, Brian, last quarter, we were able to post total loan growth. That means that we fully absorbed all of the restructuring loan runoff within the quarter. It's the first time we've done that since we announced the overall restructuring program. Our core loan growth, we have about $165 billion in total loans, our core loan growth was 3% evenly distributed. Both retail and commercial both posted about a 3% growth rate. But what I think is most important is in the areas that we have signaled during Investor Day that we were going to grow, so take our bank card business, our bank card business was up 20% on a year-on-year basis. New accounts for our cards business was up 30% and spend was up 12%. So some really strong fundamental growth in a category that we've said was going to be one of the critical categories to win as we think about the Investor Day overall targets.

I'd say that it wasn't the only category in our HELOC business, our home equity line business, that portfolio was up 6% on a year-on-year basis and pipeline volumes were up 25%. So we're seeing some good fundamental growth there as well. And I'd say the last area that I would cite is our mid-market business, which is an area that we have been deliberately focusing on, and working very closely with TD Cowen, which is the investment bank that we purchased in TD Securities to reinforce our capital markets business. That overall portfolio, the mid-market business was up 15% on a year-on-year basis. And I think we're just beginning to see the power of that partnership with TD Securities. So you put all those things together, I'm feeling cautiously optimistic about our ability to not only sustain but accelerate the growth that we're seeing across our various lending books.

Great. On the deposit side, with the competitive deposit market, TD is well positioned because of the strong core deposit base. What do you see as drivers of the deposit growth going forward?

So in many ways, the one thing I would leave with all of you is that the deposit portfolio at TD is sort of the crown jewel. I mean it is the flagship product. We have historically been a very effective deposit gatherer in the U.S. Just to bring that to life a bit, in the 3 largest markets that we operate in, so the New England marketplace, including Boston, our presence in New York City and our presence in the Greater Philadelphia marketplace, we have a top 3 market share position.

In fact, 76% of all of our deposits are in markets where we're either first, second or third in terms of market share. So that gives us an incredibly strong overall position. And if you look at the type of deposits we have, we are a traditional core checking transactional primary bank institution. So that gives us a great stable platform to be able to fund our portfolio. When you combine that with the fact that our loan-to-deposit ratio is 58% overall, just sub 80 if you exclude the Schwab deposits. That gives us a unique position vis-a-vis our regional peers and some of our larger bank peers to be able to not only fund our balance sheet, but to do so at a much more attractive cost point than some of our peers that are forced into marginal pricing structures.

So I think that's a unique advantage for us. It is an area, to your point, that we are leaning in. It's a critical part of our Investor Day objectives. In retail, we are leaning in quite significantly. The branch expansion will be helpful. I'd say the expansion of our front office staff will also be critically important. We're retooling our digital account opening capabilities and implementing next-generation precision pricing capabilities to tier much more intelligently and sort of price our book effectively as we move forward.

So in retail, I'm confident that we'll be able to continue to grow that that core book of business. And likewise, in the commercial side of the house, last year, we announced a global transaction banking effort across TD Securities and ourselves to be able to focus on those cash management and treasury management capabilities that are going to position us to be a leader in the U.S. marketplace and to better service both our commercial and corporate banking clients. Really pleased with the progress we're making on that front. And I would expect that to translate into greater product innovation and ultimately greater growth in terms of overall commercial deposits. You put those things together, I gave a guidance at the Investor Day of a mid-single-digit growth rate in terms of deposits. And I think we feel quite comfortable with that as a future guidance.

And how do these loan and deposit dynamics plus tractor repricing impact U.S. banking's NIM outlook. You've guided to modest NIM expansion for Q4. What is driving that? And what is your NIM outlook for fiscal '27?

So we're coming off a particularly strong quarter from a NIM perspective. NIM came in at 347 basis points. That was up 6 basis points on a year-on-year basis, up 28 basis points -- I'm sorry, 6 basis points sequentially, 28 basis points on a year-on-year basis. So a good strong overall performance. A number of factors played into that. But if we think about the fourth quarter, the guidance that we gave is that we still believe that there's an opportunity for modest NIM expansion.

I think a little bit more muted than what we experienced in the most recent quarters, but still a modest expansion nonetheless. As we think about 2027, we still remain constructive about our ability to be able to grow NIM. As I said before, I think that growth will be more modest in nature, maybe more muted than what we experienced in the full year 2026 profile, but notwithstanding the impacts of higher interest rates overall, the growing margins in both our loan book, growth in higher-yielding loans and higher investment yields all come together and give us some tailwind.

But the one area where we probably won't experience as much of a tailwind from a NIM perspective, Brian, is tractor on-off rates. I think the first half of the year, just because of what's coming off and what's coming on, that may not be quite as much of a tailwind as we enjoyed earlier in 2026. But as we see through the year, given where rates are, I do think that tractor on tractor off rates in the back end of this year of '27 and into '28 will be a tailwind as well. So generally speaking, constructive about the future.

Okay. Great. And then just comment Fed might be -- people think the Fed might be raising rates tomorrow and likely some rate hikes early next year. Any thoughts on how that would impact your NIM outlook?

No. I think in the short term, I don't think it will impact it significantly. I think there might be some degree of favorability in the short term. I think -- personally, I think a rate hike at this point will send a very strong positive message that the Fed is, in fact, conscious about the inflationary pressures that are still present and that are going to be able to rein in some of that sort of inflationary growth.

I would argue the bond market is expecting it. So I think it's priced in -- right now, the market is priced 86% probability that it will -- that they will increase. But I think it's important, something other than a rate hike at this point could create some instability in terms of overall market reaction. I think the fundamental question that we just need to consider, I think, generally speaking, the backdrop for banking has been very constructive. We look at earnings, we look at a general momentum in many -- in the industry overall. I think the biggest area of concern at this point is do rates get to a level that they begin to affect the consumer and begin to fundamentally constrain true commercial and corporate growth activity. I don't think we're there. In fact, I think the consumer has been resilient, and we're seeing corporations continue to make decisions in terms of their financial futures. But I do think that making sure that rates are contained is going to be critically important to the health of banking industry over the next few years.

Okay. Great. And then maybe on the credit side, TD has demonstrated strong credit performance over the past few quarters. What are you seeing in U.S. banking? And how would you characterize business client sentiment in U.S. consumer health?

Yes. So really strong quarter. Total PCLs came in at $227 million, and that was down sequentially about 9%, flattish on a year-on-year basis. But if you look at the leading indicators, so delinquency, retail delinquency was stable to down across all product categories. And with regards to some of the other critical indicators like gross formations as well as gross impaired loans, in both cases, we saw sequential declines, 13% in terms of new formations and about 6% decline in gross impaired loans.

So I do think we are experiencing despite some of the macro uncertainty, some really strong credit underlying performance numbers. And I think that's to be expected. I think TD's portfolio is a strong portfolio. On the retail side, we have very little subprime and near-prime exposure. We're largely a super prime, prime core retail portfolio. And on the commercial side, we have deliberately been derisking areas of greater potential risk, for instance, reducing our office CRE exposure over the past 3.5 years.

So I think you put those 2 things together, I think we feel like we've got a very strong credit portfolio, and we've got more than sufficient allowances against that book. So I think PCLs should be a bright spot for us, certainly over the next few quarters.

There's been a lot of developments over the past year in the digital asset space with the GENIUS Act and the Clarity Act. How are you thinking about TD's role in a tokenized U.S. ecosystem?

Yes. So I think we want to be a leader in client-centric digital asset platforms and solutions. If I take a step back, we did -- I think the GENIUS Act was a really important step forward. It created a legislative framework for stablecoin. And more importantly, it triggered almost an awareness moment across the entire industry, and particularly the banking industry that tokenized deposits and stablecoin was going to become a reality much quicker than first thought.

And that's resulted in a mobilization across the entire industry. At TD, back at the beginning of this year, we created the digital asset task force under Jeff Solomon's leadership. Jeff was the former President and CEO of Cowen, the investment bank that we acquired. Under the leadership, we did look at a number of digital asset solutions that we wanted to bring forward. We have embarked on a tokenized deposit solution that will link our commercial banking clients and the corporate bank's clients to be able to provide ledger-to-ledger transactions internally.

And we've been supporting the clearinghouse's effort to create a tokenized deposit clearing process, in fact, which was announced, I guess, 1.5 months or 2 months ago. And TD will play a very important role in terms of enabling that as well.

So I do think certainly on a tokenized deposit perspective, we believe that there is a tremendous amount of utility for our clients in that space, and we will be early adopters in that space. I'd say with regards to stablecoin, we did form -- we did sign on to a major consortium of global banks to be able to enable stablecoin technology. And the view there was for cross-border transactions. We don't know if stablecoin will become the primary means of digital asset exchange, but we felt that it was important to play a role in that as that technology develops going forward.

So all things being equal, I do think that plus a number of other initiatives that we're working on, we do want to play an important -- a leadership role in how digital assets get brought to market. I would say you mentioned Clarity Act. And Brian, I'd like to make a bit of a distinction there. TD will always support innovation that is client-centric. But we do have some concerns about the Clarity Act in its current form. I think the largest concern is whether the BSA, AML and KYC rules that underpin, by which crypto will be governed will be sufficient to protect the financial system as a whole, and having just gone through a challenging remediation process ourselves, getting that right. From my standpoint, that's instrumental. And we're going to be continuing to work with other industry players to make sure the final form of the Clarity Act has very strong protective language with respect to that.

Likewise, I think we have to be thoughtful about this yield discussion, the risk of disintermediating banks and then subsequently potentially inhibiting loan formation in the U.S. is something that we need to look at very carefully. I know that this is the subject of a great deal of discussion, and we're certainly lending our voice to that discussion as we move forward. But to your first point, we absolutely want to play a role in the broader digital asset evolution discussion.

Excellent. U.S. bank M&A has been a hot topic on both sides of the border. At the top of the house, TD has said is focused on organic growth or would potentially consider inorganic opportunities that provide fee income diversification. What does that mean for your business? And are there inorganic opportunities for U.S. banking?

So Brian, I never like to rule things out, but the reality is we are absolutely focused on our organic growth strategy at this point. You've heard us talk about growing our branch network. We talked about adding 450 advisers next year. We're leaning into some of the work that we're doing in terms of our digital offerings. I think right now, for us, where we are in our journey? Completing the remediation is priority #1, accelerating the momentum in the franchise, which we've started to see that actually materialize in 2026, maintaining that and building on that momentum is critically important.

And then ultimately, we put out some pretty bold aspirations with regards to our Investor Day targets. Executing against those aspirations is really what we're focused on. And from our standpoint, I think we see that through an organic strategy at this point in time. We'll never rule out evaluating intelligent inorganic opportunities. But for our immediate focus, it's going to be driving that organic growth.

Great. Let's end on ROE. For your business, you were targeting 9.5% ROE for fiscal '26, and you've already hit that target. Medium-term target is 13%. Is that still the right target? And what levers are you pulling to achieve it?

So Brian, are you trying to get me to change my guidance at the Barclays conference. So I think we're in good shape on the ROE -- just take a couple of numbers to sort of anchor the group. We did post in the third quarter 10.2% in terms of ROE. That was up 130 basis points on a year-on-year basis, up 270 basis points over the last 2 years, and ROTCE eclipsed 15%. Now as we communicated at Investor Day, our targets are 13% and 18%, respectively, for ROE and ROTCE. I think where we stand right now, I think there is a path not only to achieve that, but potentially exceed that number.

I think a number of factors are playing into that. We talked about the momentum we're seeing from an earnings perspective. But we're also spending quite a bit of time on just capital optimization. We're really looking at our RWA models, looking at how capital is consumed, evaluating underperforming sectors within the bank and making sure we're holding those businesses accountable and driving the necessary changes, whether that be unit cost changes or fundamental acceleration, volume acceleration to be able to achieve some of our targets. I'm pleased with the progress we've made to date, but we are absolutely committed to get to that 13% target. And I think stay tuned for some more updates with regards to that overall target.

Excellent. Well, we have a few minutes left, I guess, if anyone wants to answer -- ask any questions from the audience? Sounds quiet late in the day.

Questions?

I got one in the back. You got a mic.

Yes.

You hear me?

Yes. You happen to operate in a footprint that I would consider to be a very competitive environment for deposits and deposit rate setting. Can you talk about what your competitive advantages are relative to other institutions? And is it the stickiness of the deposits, the granularity? Or what is the nature of your deposit base?

Sure. Maybe just to take a quick step back. Our deposit base right now stands at just under $300 billion in size. What's different about our deposit base is, one, we do have a very large single depositor through the Schwab sweep structure, which represents about $70 billion of that overall target.

At the aggregate level, our loan-to-deposit ratio is 58%. If you take out the Schwab component piece, it would still be a little sub 80% overall. So first of all, we are a very deposit-rich bank and the composition of that deposit base is important. We have a very significant checking account and low-yield savings overall composition as part of the overall footprint.

Why that's important is, one, it gives us a tremendous amount of funding capacity. And secondly, I'm funding that largely with lower cost deposits relative to some of our regional peers that might not have that same flexibility and are funding themselves at the margin. That flexibility for us is quite significant. It's one of the reasons why our NIM expanded 6 basis points sequentially and 28 basis points is that we've been able to rightsize the balance sheet as part of our overall restructuring efforts and still be able to generate some overall margin increase.

To your point, though, the market is very competitive. And we're seeing -- if you look at macro trends, you're seeing the loan growth start to increase across the industry. and deposit formation starting to lag that overall loan demand. So I do think that your premise that things will become more competitive is certainly true at neobanks and other factors that might bring a slightly less conventional approach to deposit gathering. And I fully expect the next 2 or 3 years to be a really competitive environment. It's one of the reasons why we're leaning into our branch expansion strategy. It's one of the reasons why we're leaning into our mass affluent strategy to make sure that we continue to protect what is probably one of our most valuable assets, which is that core strong transactional deposit base in TD.

One more question...

Would you be able to expand on how TD anticipates adapting to Canadian macro risk, specifically with like a weakening Canadian consumer spending and U.S.-Canada trade uncertainties heating up?

So I'll address that from the U.S. perspective. So I think we're certainly concerned about the state of some of the trade discussions between the 2 countries. It goes without saying that the reliance of both countries to the trade and supply chains are critically important. And we are hopeful that we will arrive at a beneficial solution for both countries so that, that USMCA sort of question mark is removed from the overall equation.

And I don't want to prejudice it with my own thoughts, but I do believe that we will find a solution on that point. It is in both countries' best interest, not only in terms of economic trade, but in terms of defense coordination and just the ability to manage a number of really important issues, including immigration, et cetera. So I do believe that there will be some sort of positive outcome on that front. It is important to us. A number of our clients in our book of business are Canadian snowbirds and we serve them cross-border. And obviously, maintaining a strong relationship there is going to be critically important going forward.

I think trade, generally speaking, if I could, is critically important. We are -- there is a tremendous amount of uncertainty still with regards to the state of trade relationships globally, getting to an effective outcome on those and just arriving at greater certainty, I think, will be one of the many factors that will eliminate some of the doubts that might exist in some of our commercial clients with regards to whether this is the right moment to invest. And so I am hopeful that we'll continue to see progress both in the Canadian context, but in terms of trade much more generally. Thank you.

Thanks. That brings us -- we're out of time. Please join me in thanking Leo for his presentation. Thanks, everyone.

Welcome back. Next on stage, I just want to introduce Ray Chun, Chief Executive Officer of TD. Welcome, Ray.

Thanks, Mike. Thanks for having me.

Great to see you again. And maybe we could sort of start with the quarter. Obviously, it was a very well-received quarter, a big step-up in earnings, ROE now at 16%. So things are obviously moving in the right direction. Maybe just some high-level thoughts on what you were most excited about in the quarter.

Yes. No, thanks. Great to be here, everyone. I think you saw in Q3, but it's sort of a continuation of what we said at Investor Day, which is fast approaching 1-year anniversary. When we look at our strategy of deeper relationships, build a simpler, faster bank and then discipline in how we execute on capital, restructuring our costs and governance and control, I could say that strategy we're executing across the board. And so when I look at sort of the commitments that we made at Investor Day and then how are we doing relative to that, on an ROE perspective, I think like you said, we're at 16%. Our target for this year was 13%. So we've sort of gotten to the medium-term outlook that we have. And so I couldn't be more proud of the team on that side.

And I would break that down into a couple of areas. I think restructuring cost has been a really big focus for TD Bank. We said we'd get to $2 billion to $2.5 billion of restructuring costs. And I do emphasize that with everybody that when we say we're restructuring our costs, we are trying to fundamentally reset the run cost of TD Bank, not slash our project spending or marketing spending or put some sort of a hiring freeze in places. Can you take the unit cost of your biggest processes and fundamentally reset that cost down to 20%, 30%, some 50% or 60%, and you're seeing that play through. Our goal was $900 million this year. We hit that restructuring cost in Q3. We actually think that there is significant upside to the $2 million, $2.5 million (sic) [$2 billion, $2.5 billion ] as we go forward.

From a business momentum, and you're seeing it across the board, we are having record earnings across literally every parts of our organization. On the wholesale business, we have doubled the revenue on a quarterly basis since we did the Cowen acquisition and still have significant upside. And the reason I say that, everyone, is that when I took over as CEO, the earnings contribution from the wholesale bank for TD was about 9%. At the end of Q3, we're at about 15% is the earnings contribution from the wholesale bank. There probably isn't a G-SIB in the world that doesn't have probably around 25% of their earnings might coming from the wholesale business. So I do have a lot more upside, I would see, in our wholesale bank relative to potentially other G-SIBs, and we're seeing that play through.

And then across the Canadian footprint, we've been #1 in RESL, credit cards and deposit year-on-year growth for the last 4 quarters. And so good momentum in the Canadian bank. And then as we announced in the United States, the AML remediation program, which absolutely still is our #1 priority as an organization is on schedule. And we're now balancing bringing back the growth elements into the United States, and you saw our announcement around launching 100 new stores or branches -- we call them stores in the U.S., we call them branches here, by the end of 2028.

So I'll pause there and say lots of momentum on the things that we committed to doing at Investor Day and couldn't be more pleased.

Okay. And then maybe just asking about a couple of questions on credit. Obviously, that was something that investors were very pleased about, lower than expected on the quarter, and it sounded like there's a bit more confidence on sort of landing at that lower end of your guided range, at least from the commentary on the call. Any thoughts on the credit outlook? Obviously, there's a lot of uncertainty now and sort of maybe dovetail that into your current reserves of $500 million, I believe, is still the number for the tariff-related risks. How do you sort of see that in terms of where it sits today and where it needs to be?

No. And I think -- and we did give the guidance for the balance of this year is lower end of our 40 to 50 basis points on our PCLs. We're certainly not seeing anything outside of what we would have expected. And so the resiliency in both Canada and the United States, Mike, is playing -- continues to be there. And I would say, and I think Ajai captured it well, right? I mean I think we monitor quite extensively. We run a lot of stress scenarios around this uncertainty. And so we have taken, as all of you know, $500 million of reserve specific for the tariff-related uncertainty. And we've modeled all the different variations of what could happen. And so we'll continue to be prudent on that piece. But we're also starting from a very healthy reserve. We've always been prudent on how we reserve from a PCL perspective. So I think going into 2027, but also as sort of this uncertainty plays through, we are very well positioned from a reserving perspective.

And any pockets of risk that you flag? Obviously, unsecured retail in Canada has been something that's been gravitating to -- slight deterioration, nothing meaningful, but anything on TD that you can comment?

Yes. We watch different cohorts in the organization very closely. And to your point, on the unsecured side, the cohort that I watch very, very closely is clients with credit scores under 650. It's still a very small percentage of our book, but that gives you a bit of an indication. We're definitely seeing some deterioration in that cohort of the less than 650, but within the range that we would have expected, everyone. So again, even in that more sensitive cohort, you're not seeing, I would say, unusual behavior. And this is where I'm saying the resiliency of the Canadian consumer continues to play through at this point.

So from a weakness, I wouldn't point anything out to the group here other than to say, I think the range of 40 to 50 basis points is still the range as we think forward. And I would suspect, in some cases, you've hit the high cycle on some of the credit pieces, as Ajai said, and you may be -- there will be some volatility, I suspect, as we move through. But I think with confidence, the 40 to 50 basis point range that we put out there is still the right range.

Okay. And maybe on your segments, starting with U.S. Retail. Before we get into sort of the nuts and bolts, maybe just a quick update on the remediation. And I think some investors are sort of looking at the potential pivot to opening stores now being a bit of a -- I'm not going to call it an inflection point, but you seem to be in a much better place on that whole remediation process versus where you might have been a year ago or...

Listen, I've said it for the whole 2 years that I've been CEO, it is the #1 priority for our organization until we get to end of job, and it will remain our #1 priority. We couldn't be more pleased with the work that's been done in the United States, the investments that we've made, the talent that we've brought in, not just at the most senior levels, but 2, 3 layers down. And so a lot of the management actions that we've had to do, we will have delivered by the end of this calendar year.

And so then it gets really down to validation and testing, which then provides, I think, some capacity for the management team. And so we've been very careful and thoughtful to make sure that we don't lose the focus on the AML remediation. But as we've gotten through and hit certain milestones, we now have the ability to balance the growth element in the United States. And we've cleared the asset cap room, as all of you know. We have about $53 billion worth of asset cap room in the United States. And if you throw in the non-HQLA you're probably in the $100 billion range, right? And so what we've done is we've gone out and looked at the footprint that we're in and said, where are the biggest growth opportunities in the footprint. So we've identified the 100 branches that we want to open in the United States. But we'll continue to balance making sure that the remediation work stays a priority, but we now have capacity and cycles within the management team to look for and drive some growth. And I think it's finding that right balance that's important, right?

Okay. And what about just more broadly in the U.S., like what about the wealth business? Are you looking to sort of scale that up? And what are your sort of long-term ambitions there? Maybe just remind investors.

Yes. And I would just say from a -- maybe I'll just say more broadly, one of the areas that we have underinvested at TD over the last decade is on frontline distribution. And we called that out at Investor Day. And so I know it's a U.S. question, but maybe I'll just stretch it a bit more broad. If you look at Canada, we're going to be adding 835 business bankers, and that's half small business bankers, half commercial bankers. We're adding 1,200 wealth advisers. We're adding 1,000 specialized sales force into branch banking, 500 for mortgage specialization, 500 for investment specialization. And in the United States, we're adding 500 wealth advisers. Just to put that in perspective, we probably have about 220, 230. So we're moving that north of 700 by 2029, and we're going to add another 200 commercial bankers. And so -- that's probably the area.

And if I look at all of that, I would say to everybody, that's like doing an acquisition, right? That's how much sales force productivity lift I do think the teams are going to see. And in the Canadian bank, we have already added those 500 mortgage specialists into the field and 500 investment specialists. Their productivity to date is 3x the generalists that are in our branches, right? And so definitely moving to a specialization model is proving out.

And this -- all of these hires, this cost addition is all incorporated into the -- you're still looking to that $2 billion to $2.5 billion with maybe a potential upside in terms of that structural reduction over the course of the next couple of years?

That's the exciting part. I think everybody is what we're saying is that if you can take the structural cost of running the bank down, you can invest in a flywheel capability. So we are already making the investments. And so the great thing is if you've seen our expense numbers, our efficiency ratios over the last year is that we are not starving the future to meet our numbers today, right? And I think that's really, really important, right, that we continue to invest in not only the frontline distribution, but in AI capabilities in the data infrastructure that you're going to need, platform modernization. But all that investment is not increasing our project pool.

So I would say to everybody, we've taken our expenses down to where we said that 3% to 4%. We've had positive operating leverage, which we've committed to delivering. And we've been able to invest. We have the highest project spend in the history of TD Bank this year. We have the highest marketing spend in the history of TD Bank because we're relaunching our entire brand. And we've been able to manage all of that while controlling our costs and reducing our cost and our efficiency from 59.5% down to 55%, which was our medium-term objective when we came out of the Investor Day. So this whole discipline on cost restructuring, we're not at end of job. There's still significant more opportunities that will continue to press, but we'll use some of that to invest back and some of it will certainly go and drop to the bottom line.

Okay. Appreciate that. Maybe switching over to Canadian P&C Banking on the retail side to begin with. And I think Sona gave a good amount of color on not sacrificing margins for volume. That's something that's very topical these days. But how do you sort of see that sort of race to primacy or the competitiveness of getting that primacy client? It doesn't seem to be an easy thing to do. And obviously, you have to do in a very targeted way. How does -- what's TD's strategy on that primacy?

That's probably one of the most important questions, I think, for any retail bank is do you have primacy with the clients because that leads to a lot of other goodness. I'll leave you with a few things. Number one, our primacy percentage is 700 basis points higher than the peer average in Canada. So that's number one. Number two, if you look at the deposit mix for TD Bank, and this is a fundamental advantage that we have, that our non-term deposit mix is about 70% of our deposits. The industry average is about 53%. That gives us certainly from a funding perspective and from a deposit perspective, much, much an advantage relative to our competitors, which then plays out in the NIM over time, right? And so I keep those 2 data points in mind.

And in Canada, what you've seen from a RESL perspective is that we've done both. We've been able to be #1 in year-on-year mortgage growth for 4 consecutive quarters and have NIM expansion in our Canadian Personal Bank and in our RESL. And that's because of a few reasons. The on-off on the renewals on mortgages is a tailwind. Our tractors are a tailwind. And I suspect that we will continue, as we said on the Q3 call, you can expect that into Q4, and it will be tailwinds as we head into fiscal 2027. But we are very conscious of making sure that we are putting on profitable, whether it's in profitable business, and I emphasize that, whether it's in RESL or whether it's in deposits. And Sona and their team are showing that you can actually gain acquisition while still managing the margin to be accretive. And I think it's really important that you balance that.

Okay. And maybe talk about the new to relatively new to Canada client that you're targeting. I think you've been clear in the past about how a big part of TD's strategy is having more branch concentration in the GTA because a lot of new Canadians do gravitate to the GTA. And I know you've given some stats over -- in the past about market share on new Canadians. Maybe just an update there. I think it's something that a lot of people are wondering about in terms of how is TD going to continue to win in that part of the market?

And I'm going to come back to that in just one second. Just on the mortgage piece that a fundamental shift that Sona has done under her leadership is the mix that you're seeing in our mortgage portfolio. And so the mix between broker to proprietary to direct, right? And so what you're seeing in TD Bank is we used to have a higher broker mix, which is lower margin, right? And this year, we have record proprietary, that's the MMS mortgage sales force, plus our branch mortgage sales and due to those 500 mortgage specialists that we put in.

So you're seeing for the first time, our proprietary mortgages, even though the RESL market is down in Canada on a year-on-year basis, our proprietary mortgage is actually on a record, right? And so terrific momentum. It's a mix issue. And also the mix between mortgages and HELOCs, we're also rightsizing that mix and you get -- and certainly, we're getting a better balance between HELOC and mortgage. That gives you another pickup in the margin. And so keep that in mind as you think of the RESL portfolio.

When you think about sort of acquisition, new to Canada, which is your question, Mike, I think about acquisition in 3 buckets, specifically in Canada, new to Canada, switchers and students. And you have to actually try to win in all 3, right? And so what you see in Q3 for TD Bank is we had the highest switcher acquisition numbers that we've ever had on record, and we've had the highest student acquisition numbers that we've had. And so we've revamped those 2 programs. While immigration has come down, it's still a significant factor. And we absolutely win from a new to Canada perspective. And -- but those numbers are down a little bit.

I do think in the next few years, those numbers, you'll start to see that sort of tick back upwards as we sort of revisit our policies as a country. But that's what gives me confidence is that you have to win on all 3 of those categories. You got to win on new to Canada, you got to win on the switchers and you have to win on students, and we're seeing terrific momentum on that. And then that translates into credit card sales, mutual fund sales. And if you look at our credit card acquisition, again, #1 in year-on-year growth in credit card acquisition for the last 4 quarters. And so we're continuing to see that momentum play through throughout the entire organization. But it all starts with, can you win the acquisition battle? Can you get primacy of the Canadian consumer? And that's where we actually have a very big competitive advantage.

I want to go back to deposits in Canada and your core deposit franchise. You did allude to a couple of interesting numbers and stats. How does TD continue to maintain that advantage? Because you're clearly in an advantageous spot right now, but things can always change. Like what do you sort of -- what's the secret sauce of keeping TD at the top on that core deposit base?

Well, listen, I do think the -- I mean, we bank 1 in every 3 Canadian. And the last numbers I saw is something in the neighborhood of about 35% to 40% of all new to Canada do select TD as their first account. And so what we've been focused on as part of our strategy is, number one is deepen the relationships of the clients that we have. And it's not just in the retail, it's whether it's our TD Securities clients or our commercial banking clients, significant opportunities to deepen those relationships. And the biggest way to deepen those relationships is actually make it simpler and easier and faster to do business with TD.

And so I can tell you, and I've told some of you before that if you think of the new to Canada customer, we open about 500,000 new to Canada accounts, and we consider new to Canada over a 2-year period. And I would tell all of us in this room that if we move to any country, you do 1 of 2 things. you'd open up a bank account and you go get a credit card, right? And we made it incredibly hard for our clients to get a credit card because we didn't do zero score credit bureaus well. And so that process took so long, it frustrated our colleagues, it frustrated our clients. that only 30% of our new to Canada clients were getting a credit card with TD and then 70% went elsewhere and yet 100% wanted them.

And I could tell you, it's not a risk issue because I've had the risk team review the portfolio of new-to-Canada credit cards relative to the non-new-to-Canada portfolio, it is a marginal difference in delinquencies. So it has nothing to do with the risk perspective. It was all about the process was so complicated. The team has changed that process. And now as you open your checking account, it will soft ping the bureau. And as long as you do not have anything derogatory on your credit bureau, I don't -- and I keep saying, "I don't know how someone ruins their credit bureau in 2 days of being in Canada," right? I hope not, that we will then preapprove you for a credit card on the spot as you open your checking account. That leads to something like 250,000 to 300,000 new credit cards.

But more importantly, I've always said that when clients open their bank account with us, I think in most clients' minds, Mike, they're doing us a favor, right? They're depositing money, they're giving us their funds. And the first time a client really tries to figure out, does my bank trust me? Is my bank helping me is when they apply for a credit card. And for new to Canada, we weren't creating sort of that wow moment on a regular basis. And now it's the complete opposite. That will then earn us the right to have the savings discussion. that will earn us the right to have the mortgage discussion. And so it's really important that you get those 2 pieces right. Can you get them in the door and then the products and services that they need, can you deliver it to them in a simple, easy, frictionless way. And that's exactly what we're working on right now.

Okay. Maybe switching over to Wholesale Banking. Obviously, the business has done a lot better last few quarters. The market has been very constructive in terms of the backdrop there. Your ROE has been significantly improved. And I have to -- it's almost like a boiler question I'm asking because clients are asking, investors are asking, in terms of the sustainability of wholesale, how do you sort of see that? I'm guessing the revenue diversification is going to help sort of stabilize it. Maybe there's less of a downside scenario if markets do turn. How do you sort of see that dynamic in terms of your wholesale business?

Yes. I couldn't be more pleased with the performance of our wholesale business. First and foremost, as all of you know, 3 years ago, when we did the Cowen acquisition, lots of questions on, could you make this acquisition work? It's not easy to take a boutique investment firm and put it together with a G-SIB and could the cultures come together, could you retain the talent from the Cowen perspective? And it could not have gone any better. And I'll tell you from a talent retention perspective, but just the fit from a culture.

And a lot of that is because the reason we bought Cowen is that the capabilities and the talent that Cowen had, Mike, is exactly what we needed, right? There wasn't a sort of pick who's going to stay, who's going to go. We actually needed it all. So from the research capabilities to the prime brokerage capabilities to verticals like health care, biotech, things that we just didn't play in that are the growth parts of the wholesale business. So we've been able to bring in that entire business into the TD infrastructure. Where we found synergies is in our sort of operations back office. So that's number one.

I would tell you, that the mix of where we're doing business has changed. I mean the U.S. is obviously the largest market. And so like historically, we would have had more earnings coming out of the Canadian wholesale bank. But now we've got about 50% of our earnings in the Investment Bank coming from the U.S., 30% from Canada and 20% from the rest of the world, Europe, Asia and what have you. And I see that mix continuing to sort of play into the U.S. piece of it. But I said it in my opening remarks, if you go back 3 years ago when we did the Cowen acquisition, we've now shown every quarter, we've doubled the revenue for this business on a quarterly basis. We did have a record Q3. The markets are constructive. So I do think at some point, some of that comes back a little bit. But we've diversified now our earnings, and it's been really important.

One of the things that we said at Investor Day is that we needed to make sure that at TD, there would be a focus on driving fee income. And that's exactly what you've seen with TD Securities, our Wealth Management business, our TD Insurance business, our credit card business. Those are the businesses that we wanted to supercharge coming out of the Investor Day, and you're seeing that exactly play out with the discipline on our cost restructuring. And if you go back to our Investor Day, I think the ROE that the TD Securities was producing back then, I'm going to get this number, was around 9% in that range. Q3 ROE was 16.7%.

And so Tim and team have done a terrific job and not just driving revenue, but they've made tough choices on expenses. They've made tough choices on restructuring their business. They've gone down to each individual client level in both our wholesale business and in the commercial bank. When we say we're going to get serious around ROE, we know the ROE at every client level and then what's the projection over the next 2 years. And we're trying to build deeper relationships, more fulsome relationships with every one of those clients. And so where we deploy our balance sheet, we want to make sure it's a true partnership and a relationship.

Okay. So it sounds like the U.S. opportunity is still there in terms of growing organically, potentially tuck-in deals, I'm guessing as well. What about your longer-term ambitions? Like do you ideally want to have more of the bank's earnings coming from wholesale? It's a question that I get often just given how good the business has really been in the last couple of years, and it seems to be in a much more steady state sort of diversified business than it was in years past. Would you ideally want to move the needle on that?

Absolutely. I do think where we want to be is probably somewhere in that 20% to 25% of the bank's earnings coming from the wholesale business. It's at 15% today. And that's not changing our risk appetite. That's not changing our risk curve. It's actually playing right within those, as I say, in the golf terminology, right down the middle of the fairway folks, right, is what we want to play. But we have the client base.

What we haven't had historically is the capabilities that we've needed like Prime services, transaction banking. We're making a significant investment at TD Bank on transaction banking, and you'll see that to play through. Prime Services in the United States. We've had it in Canada, but not in the U.S., and you're seeing that play through. So I think it's fair to say you should expect to see the wholesale bank contribute what any G-SIB bank would have in that 20% to 25%. And in these constructive markets, I would tell you, most G-SIBs are probably 30% to 35% of their earnings are coming from the wholesale bank. My goal is somewhere in the 20%, 25%. And so I think from an upside perspective, still significant opportunity for us.

Okay. Capital deployment, definitely very topical in terms of TD because you do have the highest CET1 ratio, the most excess capital. And I know the ambition is to get to that roughly 13% CET1 by the end of next year. I think most investors think that it's probably tough to get there because you're sitting at 14.3%. There's so much abundant capital. But what are your sort of high-level thoughts on how you sort of move the needle because it's just...

Well, and I think I said it on the Q3 call that TD is different than any of the other banks in a positive way. And first and foremost, we do start from an incredible position of strength that we're at CET1 of 14.3% and producing an ROE of 16%. I don't know that a lot of people would have thought that would have been possible, right? So I've said very clearly that our #1 priority for deploying capital at TD Bank is organic, and that is the focus and will continue to be our focus. Then comes the buybacks, and we have the ability to do significant buybacks.

And then ultimately, which is not a priority for us, but if ultimately, there is a sort of a tuck-in opportunity on any of the fee-based businesses is really where we would potentially take a look, but that is not a priority for us. And so I would say we're in the privileged position that we can actually do it all, right, that we can invest significantly to drive our organic growth. that we have the capital to do sizable buybacks. And then ultimately, we have enough dry powder that if a tuck-in opportunity was to present itself that we could deploy there. So terrific. Part of that is the advantage that we have is, as you know, that we generate organic capital at an incredible pace, right? And so in these uncertain times that we're in right now, I certainly like the position that we have. But our goal is to get to by the end of 2027, CET1 somewhere around 13%.

Right. And would you ever consider a special dividend to do that?

We've always talked about it, but we like the flexibility that NCIBs allow, right? And so I do think that, that probably would not be something that we would pursue a special dividend. The NCIB route is the route that I think gives us the flexibility. And also, I think there are some advantages also for -- from a tax perspective for shareholders and all of that. So there's other multiple reasons why I think NCIB is the better path.

Okay. Maybe just one final quick question just on AI. You've given us a lot of color on the call and throughout -- since the Investor Day in terms of what you're trying to do. Is there -- do you see an opportunity that maybe things go better on AI and there's even more upside. And I'm sure you'll tell us when the time is right. But is AI morphing into something a lot bigger?

Yes, 100% it is, Mike. And I think when we did Investor Day and we put that target of $1 billion out there, what I underestimated and my entire team is -- and some of this, again, we're like inning 1 and 2 of the AI journey is that the benefits of Agent -- what I'm seeing with the gentic AI capabilities is something that I haven't seen with automation. I haven't seen it with digital is that you can finally truly go end-to-end and reimagine entire processes. And so we've picked 5 big enterprise, what we call big rocks. Contact center is one, end-to-end retail credit, fraud, AML, KYC and adviser productivity. Those cut across. And so in those specific areas, as we drill into, we do think there is sizable upside to the $1 billion.

And when I talk about the structural unit cost reduction of running TD Bank, at the core of that is leveraging AI. And I'll give you -- I told you the examples that we did around our pre-adjudication mortgages that we've taken a 15-hour process that on the pre-adjudication for mortgages for every mortgage would have taken 15 human hours. It's now down to on average 3 minutes. and it's 100% end-to-end Agentic, right? That same agent, we are deploying by the end of this quarter for funding and for discharge, right? And so think about mortgage funding, think about mortgage discharge. Mortgage funding on average cost us about $187. It's going down to $47, $46. Discharges are going from $22, $23 down to about $11. Now that Agentic capability, everybody that we do for mortgages is transferable now to small business banking, auto finance, can move down to the United States, has fun into the commercial bank.

So once you build this Agentic capability, you can actually move it, and that's where I think I underestimated and we underestimated the benefits. I'll tell you another benefit. We just launched our first agent around collections. right? And so leveraging agents and AI and better data and around collections, everybody, the key is can you get in contact with the person, the connect rate. When we are using people, the connect rate was about 6%, 7%. Our connect rate using our agents now with the AI behind it and getting to them at the right times is between 20% to 25%. And so it's not just a cost reduction. There's significant productivity benefits.

And so we're early days on this journey, but I am seeing things today that I have not seen with when we were on the automation journey, the mobile journey, the digital journey. This is transformative. And so I'll keep everybody updated. But it is a win for clients. It's a win for our colleagues, and it's a win for shareholders.

Okay. And I think we'll have to just given the time, I have to end it here. But thank you very much, Ray, for your insights, super, super insightful.

Thank you very much, everybody. All right.

Thanks for joining us. Pleasure. Thank you very much.

Good morning, everyone. Welcome to the TD Bank Group Third Quarter 2021 Earnings Conference Call.

I would now like to turn the meeting over to Ms. Brooke Hill, Head of Investor Relations. Please go ahead, Michal.

Thank you, operator. Good morning, and welcome to TD Bank Group's Third Quarter 2026 Results Presentation. We will begin today's presentation with remarks from Raymond Cheung, the bank's CEO; followed by Leo Salom, Group Head, U.S. Banking; after which Kelvin Tran, the bank's CFO, will present our third quarter operating results. Ajay Bombuale, Chief Risk Officer, will then offer comments on credit quality, after which, we will invite questions from analysts on the phone. .

Also present today to answer your questions are Sona Meta, Group Head, Canadian Personal Banking; Barbara Hooper, Group Head, Canadian Business Banking; Paul Clark, Group Head, Wealth Management and Insurance; and Tim Wiggan, Group Head Wholesale Banking. Please turn to the next slide.

Our comments during this call may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties, actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Ray, Leo and Kelvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our Q3 2026 MD&A.

I will now hand the presentation over to Ray.

Thank you, Brook, and good morning, everyone. Thanks for joining us. TD had a very strong quarter with record earnings in our Canadian businesses and Wholesale Banking and growing momentum in U.S. banking. .

Before I turn to our results, I want to acknowledge the developments over the past few days have added significant uncertainty to the Canadian -- to the Canada U.S. trade relationship. Our economies are interconnected, and we are hopeful that 2 countries will ultimately find common ground. We will continue to be there for our clients in Canada, the U.S. and globally to support their growth as we navigate this uncertain environment.

In Canada, trade tensions have not dampened investment opportunities as governments seek to drive new activity. In a report published earlier this week, TD Economics estimates more than $1 trillion in spending and possibly considerable more could be rolled out across Canada over the coming decade in a historic investment super cycle, we are very well positioned to benefit from this activity. As we unlock investment opportunities, we have the means to deploy capital to support our clients and the broader economy. Please turn to the next slide.

In Q3, the bank delivered a strong quarter with record earnings of $4.7 billion and record EPS of $2.77 and Revenue grew 8% year-over-year, driven by momentum in our markets driven businesses, margin expansion and volume growth in Canadian Personal and Commercial Banking. Impaired PCLs declined quarter-over-quarter, reflecting strong credit performance. We now expect total PCLs near the lower end of our prior 40 to 50 basis point range in fiscal 2026. Ajay will share more details in a few minutes.

TD delivered positive operating leverage for the fifth consecutive quarter. The bank is driving structural cost reductions, while at the same time, accelerating investments across AI, innovation and frontline talent. Excluding variable compensation, FX in the U.S. strategic cards portfolio, expenses were up 1% year-over-year. We expect to achieve our 3% to 4% expense growth target for fiscal 2026. ROE was 16%, up 280 basis points year-over-year. The bank is on track to significantly outperform its 6% to 8% EPS growth and 13% ROE target for fiscal 2026.

Power provided that current macroeconomic conditions continue. In Q3, the bank's CET1 ratio was 14.3%, with strong organic capital accretion offset by consistent share buybacks. TD has significant capital flexibility. The lower DSP requirement in range create even more capital flexibility than we had before. We see growing deployment opportunities driven by the super cycle I mentioned earlier. TD is different than peers. We don't just start from a position of strength in capital. We also produce capital at a very strong rate.

As a result, it will take time for the bank to reduce its CET1 ratio. We continue to expect to reach 13% CET1 by the second half of fiscal 2027. We remain committed to returning excess capital to our shareholders. To illustrate the potential magnitude of capital return, assuming continued strong organic capital accretion and RWA growth in line with fiscal 2026 year-to-date. TD could return over $13 billion in capital in fiscal 2027 to reach a 13% CET1 ratio by the end of that year. We are in an enviable position TD has the flexibility to return substantial capital to shareholders while meeting our ROE objectives and retaining significant capacity to invest in organic growth and support clients and businesses in our communities. Please turn to Slide 3.

Canadian Personal and Commercial Banking delivered deposit and loan growth supporting record earnings. In the personal bank, we saw acquisition momentum in day-to-day banking products, including a record Q3 in digital sales, which were up 17% year-over-year. Small Business Banking acquisition was up 13% year-over-year driven by our frontline distribution expansion and refreshed product lineup. In real estate secured lending, we grew loans 4% year-over-year through speed and specialization. We delivered record proprietary originations this quarter while maintaining disciplined pricing.

We delivered strong performance in our business bank with loans in nonterm deposits each up 8% year-over-year and commercial client acquisition up 10% year-to-date, reflecting the benefits of our distribution expansion. This quarter marked an important inflection point for our U.S. banking segment with total loans positive sequentially. The team continued to execute against the organic growth strategies we laid out at Investor Day. U.S. bank card balances, mid-market lending and home equity lending were up 20%, 15% and 6% year-over-year, respectively.

In our U.S. wealth business, we delivered record mass affluent investment assets driven by net asset growth and market appreciation. As we look ahead, branch expansion remains an important component of our growth strategy in the U.S., consistent with the branch repositioning plan shared at Investor Day and subject to regulatory approval, we are focused on opening 100 new stores with 100 new branches by the end of calendar 2028 with work ongoing to identify additional opportunities through 2030 as we continue to invest in organic growth opportunities.

Wealth Management and Insurance delivered record revenue, earnings and assets. We have strong momentum in wealth with market share gains across advice, direct investing and ETFs. New accounts grew 26% year-over-year, highlighted by straight-through digital onboarding over 90% in TD easy trade. Trades per day were up 20% year-over-year. And in ETFs, we are on track to achieve our medium-term target of $54 billion in assets. Our insurance business continues its leadership role in AI and is accelerating deployment across the bank. TD Insurance leads the Canadian industry in the scale deployment of AI-powered vehicle damage estimation for auto claims, simplifying and accelerating repairs for our clients.

Wholesale Banking delivered record revenue and earnings this quarter reflecting the strength of our client franchise and product depth and favorable market conditions. TD Securities continued to strengthen its position as a trusted adviser on critical and complex global transactions. Our performance this quarter reflects the confidence clients have in our people, capabilities and execution across markets, financing and advisory solutions. This continued to drive market share gains calendar year-to-date, TD Securities placed in the top 10 in the U.S. equity and equity league tables.

We also saw continued momentum in building a world-class integrated global transaction bank for our commercial and corporate clients with deposits up 18% year-over-year. Our growing wholesale bank is an important driver of fee income acceleration and revenue diversification for TD. Please turn to Slide 4.

We made significant progress in deepening client relationships on both sides of the border. The Canadian Personal Bank again achieved record penetration rates for both consumer and small business credit cards this quarter, and wealth closed a record $24 billion in referrals year-to-date. In the U.S., we expanded our TD Premier program, which deepens relationships by bringing together our mass affluent clients, banking and wealth needs.

TD Premier is designed to drive organic growth delivering acquisition on both sides of the balance sheet and accelerating the powerful referral engine from our retail branches. We continue to innovate to make TD simpler and faster. We have scaled Gen AI knowledge management solutions across Canada with over 20,000 client-facing colleagues now supported by these capabilities. We're also leveraging AI to enhance the colleague and client experience in TD Auto Finance Canada. We have automated approximately 1/3 of the manual processes in funding and launching digital income verification to deliver credit decisions faster.

Finally, we continue to execute with discipline. Total bank ROE reached 16% this quarter, in line with the medium-term target we shared at Investor Day. This reflects strong momentum and disciplined expense and capital management across our businesses. As TD continues to deliver on the commitments we've shared with you. This quarter's record results were also supported by favorable market conditions in our wealth and wholesale banking businesses. We are executing against the strategies that we shared at Investor Day. In fact, in many cases, we're ahead of schedule with strong growth momentum across our businesses. We've already delivered on the $900 million in structural cost reductions that we targeted for fiscal '26.

We are on track for our $2 billion to $2.5 billion medium-term structural cost reduction target that we shared at Investor Day and in fact, see potential upside as we fundamentally reset the cost base of the bank. TD is a top 10 bank in the U.S. with a stronger foundation and best-in-class talent, we are increasingly positioned to outcompete in our footprint.

In Wholesale Banking, we have almost doubled our quarterly revenue since the TD Cowen acquisition closed, and Capital Markets still represents a smaller percentage of TD's revenue as compared to other GSIB peers. We're just getting started internal what TD Securities can accomplish. And in Canada, across our personal and business banks and in wealth we are making the most significant investments in frontline distribution that TD has made in over a decade. These levers are unique to TD and position us to continue our growth momentum. I see significant upside for the bank in the coming years. Please turn to Slide 5.

TD is accelerating its leadership in AI. The bank is increasingly emphasizing AI opportunities that transform end-to-end experiences drive lower unit costs and are scalable across the enterprise. In the first wave, we are focused on significant opportunities in retail end-to-end credit, the software development life cycle in our contact centers. We are scaling AI in our credit journeys to streamline application submission, automate document review processes and accelerate speed to decision.

In technology, we're using AI to help our engineering teams build and deploy software faster, improving productivity and accelerating innovation and the delivery of new capabilities across the bank. And in our contact centers, we will leverage AI to simplify routine client interactions and provide colleagues with tools and insights that deliver simpler, more seamless client experiences. Importantly, each of these key transformation initiatives is intended to drive financial performance while enhancing the client and colleague experience.

3 quarters into the year, we have essentially hit our fiscal 2026 target of $200 million in value from AI. We expect to extract further value through the remainder of the year across predictive, generative and agentic AI use cases. Please turn to Slide 6.

TD was ranked #1 on Times Canada's best companies of 2026 list. TD is back to winning. To our colleagues across the bank, your efforts have driven this recognition and the bank's strong results this quarter. Thank you for your continuing to deliver for our clients and shareholders every day. And with that, let me hand it over to Leo.

Great. Thank you, Ray, and good morning, everyone. Please turn to Slide 7. As we move through the second half of fiscal 2026, we continue to make meaningful progress on our U.S. AML remediation program and importantly, continue to strengthen the overall effectiveness of our financial crimes risk management capabilities. For example, we're now benefiting from a more mature assessment of the U.S. Bank's inherent financial crimes risk profile as well as more frequent transaction monitoring coverage assessments. .

Together, these enhancements provide greater visibility into emerging and evolving risk, help ensure our monitoring remains aligned to those risks and allows us to more dynamically respond to those risks. We also are continuing to advance anti-trafficking and fraud detection capabilities through our investigative partnerships, further enhancing our ability to detect and respond to evolving financial crime threats.

Finally, we strengthened our financial crimes risk training program through the rollout of specialized training courses for colleagues in higher-risk business lines, helping reinforce the consistent application of our policies, standards and controls across the organization. We also continue to make meaningful progress against the look-back activities required under the consent orders as reviews advanced across multiple populations this quarter.

Overall, we remain confident in our remediation trajectory, and we see opportunities to accelerate elements of the remaining deliverables under our program. From a financial perspective, we expect our overall U.S. AML remediation expenses for the year to be approximately $550 million, and we continue to expect overall fiscal 2026 expense growth for U.S. banking to be in line with our mid-single-digit expense guidance. With that, I'll turn it over to Kelvin.

Thank you, Leo. Please turn to Slide 8. I TD delivered record performance this quarter. We saw strong momentum across businesses with 8% top line growth. Strong execution, coupled with heightened client activity and favorable market conditions led to robust growth in wholesale banking and wealth. Across our P&C businesses, we continue to drive profitable growth and deepen relationships. Impaired PCLs declined quarter-over-quarter, reflecting strong credit performance.

Expenses increased 4% year-over-year with approximately 3% driven by variable compensation, foreign exchange and the impact of the U.S. strategic cards portfolio. This disciplined expense management reflects significant structural cost reduction coupled with continued investments in business growth. Our efficiency ratio, net of ISC, this quarter was 55.2%, in line with the medium-term target that we shared at Investor Day.

Total bank PTPP was up 17% year-over-year after removing the impact of the U.S. strategic cards portfolio, FX and insurance service expenses. We've shared the details on Slide 23. Please turn to Slide 9.

Canadian Personal and Commercial Banking delivered record revenue, PTPP and earnings. We achieved record deposits this quarter, reflecting 1% growth in personal deposits and 5% growth in business deposits. Strong deposit acquisition was driven by distribution expansion and TD simpler and faster client experience. We also achieved record loans this quarter, reflecting 4% growth in personal volumes and 8% growth in business volumes.

We continue to focus on profitable growth in resi with loans up 4% year-over-year. Strong business loan growth reflected continued investment in our frontline bankers and execution against our local advice-focused model. Our clients continue to demonstrate resilience through macroeconomic uncertainty. NIM was up 3 basis points sequentially. As we look forward to Q4, based on the current rate and competitive market dynamics, we expect net interest margin to modestly increase similar to this quarter's results.

Expenses rose 3% year-over-year, reflecting higher employee-related expenses. Across the Canadian personal and business banks we delivered strong ROEs aligned with our medium-term targets as outlined at Investor Day. Please turn to Slide 10.

In U.S. banking, earnings were up 11% year-over-year and ROTCE expanded by over 210 basis points to 15.6%. Excluding sweeps in our government banking business, deposits were flat year-over-year. We are making progress against our Investor Day target of mid-single-digit growth for these deposits over the medium term. We remain confident in our strategy as we pull back on higher cost deposits and lean into the strength of our non-term personal deposits and operating business deposit franchises.

We continue to execute against the strategies laid out at Investor Day. Bank card balances rose 20% year-over-year, reflecting strong client spend. And in addition, in partnership with TD Securities, U.S. banking continued to deepen relationships with middle market clients with commitments up 9% year-over-year. Record net interest margin of 3.47% was up 6 basis points quarter-over-quarter, driven by higher loan margins, including higher revenue from the strategic platform conversion and higher deposit margins.

Over the past 2 years, the U.S. banking segment's cumulative NIM expansion has been best-in-class among money center and regional banking peers. As we look forward to Q4, we expect NIM to modestly increase. Expenses increased 6% year-over-year, reflecting conversion costs associated with the strategic cards portfolio, higher employee-related expenses and spend supporting business growth initiatives partially offset by lower governance and control investments.

We continue to expect approximately USD 2.9 billion in net income for fiscal 2026 for the U.S. banking segment. Please turn to Slide 11.

Wealth Management and Insurance delivered record revenue, earnings and assets this quarter and continue to execute with discipline with an efficiency ratio net of 53%. In Wealth, TD has an unparalleled pipeline from direct investing into advice. In Q3, direct investing referred $1.4 billion to advise, up 34% year-over-year, deepening relationships by serving more of our clients' needs. Insurance achieved strong earnings this quarter and is delivering significant structural cost reductions with over $100 million in savings relating to claims and severity management year-to-date. Please turn to Slide 12.

Wholesale Banking delivered record revenue and earnings this quarter. Our performance reflects the depth and diversification of the platform including strength across equities, commodities, equity underwriting and advisory combined with higher levels of client activity and favorable market conditions. The business delivered return on equity of 16.7%, reflecting this strong momentum, coupled with disciplined expense and capital management. Please turn to Slide 13.

Corporate net loss for the quarter was $82 million, a smaller loss than the same quarter last year, reflecting higher revenue from treasury and balance sheet management activities. Please turn to Slide 14.

The common equity Tier 1 ratio ended the quarter at 14.3%, down 3 basis points sequentially. We delivered strong organic capital accretion again this quarter. The bank repurchased approximately 14.5 million common shares under its share buyback program in Q3, which reduced CET1 by 37 basis points. Model updates across our Canadian result, Canadian business banking and wholesale banking portfolios increased CET1 by 10 basis points this quarter.

As Ray shared, TD has significant capital flexibility. The bank is positioned to return substantial capital to shareholders while meeting our ROE objectives and investing in organic growth and supporting clients and businesses in our communities. And with that, I will turn it over to Ajay.

Thank you, Kelvin, and good morning, everyone. The bank continued to exhibit strong credit performance this quarter. Please turn to Slide 15. Gross impaired loan formations were 20 basis points a decrease of 2 basis points or $149 million quarter-over-quarter. The decrease was largely recorded in the U.S. and Canadian commercial lending portfolios. Please turn to Slide 16.

Gross impaired loans decreased $138 million or 3 basis points quarter-over-quarter to 51 basis points driven by the U.S. and Canadian commercial and wholesale lending portfolios, partially offset by the impact of foreign exchange. Please turn to Slide 17.

Recall that our presentation reports PCL ratios, both gross and net of the partner share of the U.S. strategic card PCLs. We remind you that U.S. card PCLs recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income. The bank's provision for credit losses was 37 basis points with the decrease of 6 basis points quarter-over-quarter, broadly reflected across the wholesale U.S. banking and Canadian personal and Commercial banking segments. Please turn to Slide 18.

Impaired PCLs were $865 million, a decrease of $108 million quarter-over-quarter. The decrease was primarily recorded across the business and government lending portfolios. The bank recorded a performing provision of $52 million this quarter, which was largely reflected in the wholesale and Canadian commercial lending portfolios. Please turn to Slide 19.

The allowance for credit losses increased $105 million quarter-over-quarter due to a $128 million impact of foreign exchange, a performing build reflective of volume growth and some credit migration, partially offset by resolutions driving lower impaired allowance across the business and government lending portfolios.

Now to summarize the quarter. The bank exhibited strong credit performance as evidenced by lower gross impaired loans, gross impaired loan formations and PCLs. Looking forward, while results may vary by quarter and are subject to changes to economic conditions, I now expect total PCLs in 2026 to come in near the lower end of our previously guided range of 40 to 50 basis points. The bank also remains well positioned to navigate the policy and trade environment through our prudent provisioning, including approximately $500 million in reserves set aside for policy and trade risk. Our strong capital position and through the cycle underwriting standards that have served us well through challenging conditions in the past.

With that operator, we are now ready to begin the Q&A session.

[Operator Instructions] Matthew Lee with Canaccord Genuity. Please go ahead. .

You've talked about opening 100 new U.S. stores within 2028, how should we think about the interaction between that growth plan and the ongoing AML remediation. Like does the regulatory process constrain that path of branch expansion and all are they completely separate tracks?

Matt, let me take that one. So we are announcing today that we're planning on opening up 100 stores across our footprint from Maine to Florida and we intend to complete that by the end of calendar 2028. So just by way of context, that's very consistent with what we announced on Investor Day. As you know, we did consolidate about 91 stores over the past 2 years, and this reflects really the reinvestment back to reposition our footprint. You know we have a top 3 deposit share position on the East Coast. And this is really meant to reinforce that and focus on deepening our presence in critical MSAs and up and down the East Coast. .

Obviously, we're -- at the same time, I'll say that we're focused very much on our AML program. It still remains our #1 priority. We have made significant progress on that program. I'd say today, the degree of maturity and effectiveness of that program is much stronger. And as a result, in discussions with our regulators, et cetera, I feel quite comfortable to be able to announce today that we'll be opening up those 100 stores. You'll see we'll try to get some of that accelerated into 2027. I think the bulk of the openings would be in 2028. But this is -- this is an exciting move forward, and it reflects the fact that we've made significant investments, and we're now in a position to be able to invest back into our respective communities.

Okay. But you wouldn't necessarily make any influence between the asset cap that you're under in the U.S. and the financial openings? .

No. No, Matt. Let me be clear. The consent order is still in place and we are working hard to satisfy every aspect of that consent order, and there is no greater priority for me than resolving that. comprehensively and urgently. .

Thank you. Gabriel Dechaine with National Bank.

Good. First question is on the capital plan. Ray, targeting 13% by the end of next year. What's going to change in the plan? The CET1 ratio is down 50 basis points over the past year, and we're talking about a more than 100 basis point haircut in the next 16 months?

Thanks for the question, Gabe. As I said at Investor Day and today, the way I think you should all think about the way we will be managing capital is that we were managing it differently. But our primary use of the capital will be for organic growth. And you're seeing some of that where we've deployed our organic growth in our Wholesale Banking business, and we'll continue to find some of those opportunities as you see some of the investment opportunities I do think that potentially will arise in the sort of super cycle of investment potential in Canada over the next decade. .

From there, again, primary organic growth. And then we sort of say, are there opportunities then where we want to deploy capital and from an acquisition perspective, and it's not our priority right now, and I know I get lots of questions about it. But if there were selective opportunities in fee income areas that we've been clear from Investor Day, whether it's in wealth management, TD securities, insurance or our credit card businesses, we would look at those opportunities. But our primary goal right now is organic growth and then ultimately, if we don't have a need for or have excess capital, Gabe, we've said that we would consistently return capital back to our shareholders.

And I see that playing through in 2027, and you see the amount of capital that we have would have available to return back to our shareholders. So all that to say, I think we're in an incredibly privileged position as an organization that we have the flexibility to do it all. I mean we can do -- invest in organic growth. We can look selectively if opportunity presents, which is not a priority for us right now from an acquisition but also, most importantly, return excess capital back to our shareholders. Maybe I'll take a second and ask Tim to talk about sort of what he's doing in his business and you've seen the the growth of the wholesale business, but certainly from an opportunity as to how do we deploy our capital organically better. I do think wholesale business gave is an area of opportunity for us.

Thanks, Gray. I would maybe just point to the overall growth in RWA in the quarter was 10% but I always like to compare that to revenue growth. So the revenue growth was 2.5x the RWA growth in the quarter. So we continue to grow with our clients, whether it be in FIG or CMT energy across our diversified industry group. The key is doing more with those loans. And I think that's been the major theme that showed up in the quarter as it relates to deepening. And that certainly showed up on the revenue line and on the net income within the quarter. And so I think that gives you 1 example of how we're utilizing our capital to continue to grow with our clients.

Great. And then second question, margin balance sheet growth kind of question for mostly the U.S. and I don't want to gloss over the Canadian business here because it looks well positioned there, given the deposit growth dynamics, which are pretty impressive. But in the U.S., we're starting to see -- and maybe you can give some more granular on the loan growth there that you're seeing in the core book. But if I look at -- if I consider the U.S. as to be a growth driver over the next year from a lending standpoint, I shouldn't be too concerned about margin compression, considering you still have a lot of excess deposits, so you can be more selective in your funding strategy. .

And the reinvestment rate tailwind should still be around for a couple of years because the 7-year swap rates are still well above where they were years ago and even less than 7 years ago. So they're giving the positive NIM commentary for Q4. I would assume that extends beyond that as well.

I gave that -- that's a very good summary. So let me just unpack that a bit. I'd say first, the quarter was a really strong quarter, and it begins to show the earnings power of the U.S. franchise. So I at up 11% on a year-on-year basis and 10% on a quarter-on-quarter basis. And we did achieve sequential total loan loan growth in the quarter. And we're beginning to see in our core loan growth acceleration, you saw the year-on-year growth of 3%, you saw the quarter-on-quarter growth suggesting some acceleration already.

And in the areas that we've said we're going to focus and Ray highlighted some of those. Our bank card business, our HELOC franchise are our core mid-market businesses, all of those saw very, very strong results in the quarter, and we're seeing some degree of acceleration. We're also seeing from a market perspective, greater loan demand, which is encouraging in terms of what we might expect in 2027 as well, particularly in our larger corporate and commercial banking client set.

So I think that from a volume perspective, I feel quite comfortable. And that's before we get to the things that we're doing to deliberately strengthen our distribution and our coverage models. For next year. I talked about the 100 stores, but beyond the 100 branches, we're also leaning in to increase the number of bankers, both in our retail businesses, but as well as in our commercial banking businesses across a number of critical verticals.

You talked about NIM, and I think we are different than other banks in that we have a loan-to-deposit ratio of 76%. So we've been really deliberate about managing our overall NIM selectively repricing higher-priced yielding clients and focusing on our core deposit growth. And that's allowed us to be able to do 2 things, fund the core loan growth but also be able to continue to drive marginal increases in terms of overall NIM.

As we look forward, Kelvin referenced it in his comments, I do think we will see NIM expansion in 2027, albeit slightly more modest than what we've seen in the last 2 quarters as we do begin to try to continue to take share in our respective markets, but long-winded way of saying, I think we've got great growth prospects going into 2027. And likewise, I think we can grow while still being able to maintain and modestly expand our NIM profile.

The next question comes from Doug Young with Desjardin

So I was distracted right to some of your remarks, but I think you said $13, you could return $13 billion of capital for shareholders to get the CET1 ratio down to 13%. And I just want to confirm that when you say return capital to shareholders, that is purely buyback, that's trancont to the dividend. And then that correctly, how do you guys measure or think about buybacks relative to the impact on the book value per share given the valuation [indiscernible]

Sorry, Debbie, where we're just having some problems trying to hear you're cutting in and out.

But I just wanted to confirm the $3 billion rate that you talked about in terms of returning capital to shareholders, is that all -- is that buyback? That's not including dividends. And the question also just how do you make sure that signs of buybacks and the perpetual implications on just book value per share growth. Just trying to understand the mechanics there as well.

Just on the $13 billion, it is on specifically buybacks. And that's what we could do from a buyback first, I just want to clarify that, Doug, right? And so that's -- I just wanted to give you the math on the excess capital that we would have available and the way we look at it right now is, again, just from a capital management perspective, I said in the earlier question that Gabe asked and so I won't repeat the answer. But our primary purpose for that capital would be to first look at organic growth opportunities. Tim talked about a few of those.

We still think there's significant organic growth opportunities to deploy that capital. And then if there was anything afterwards from an excess perspective, our commitment is to return that. And we still do think there's significant upside opportunity. And as you've seen in our results, and we continue to show accelerated momentum, Doug, I just think back to -- it's almost been a year since our Investor Day where we laid out some of our targets and objectives.

And I can tell you today that the team has more confidence today in not only delivering against those medium-term outlooks, but in many of those targets, we do see upside and tailwind. And so come next quarter, not only will we lay out for you Q4 numbers. But if there are any adjustments to our medium-term outlook, that's when we'll communicate some of that. So I hope that helps you.

That -- and then, Jen, just on looking at PCL it's obviously tracking better than you had expected in the guidance for the year. Just specifically on the impaired side, I would say, but you can correct me if I'm wrong. Just as you reflect on the year and how things in track through the year, what has gone better than maybe you had anticipated when you set the guidance?

Yes. Let me walk you through what's going on on the book. And as I said, the results of the bank are strong. They're actually better than our stated rates, and I'll elaborate on why that's the case. If you look at delinquency levels across the bank, I'd call them stable, they're slightly higher on resi and you'll actually see them in the numbers. If you look at formations and gills, they're down, if you look at impaired PCLs, they're down pretty much across all of our non-retail portfolios are slightly up for some of the consumer asset classes.

But if I answer the heart of your question, how come you're seeing all this good performance, I think it's a combination of factors. You've got economic resilience. Economies have adapted better than we originally thought. You've got businesses and consumers that have also been resilient, and they have also adapted to the new environment. And on top of that, if you lay on TD's discipline and our underwriting standards. That combination gives you very good results, and that's what you're seeing this quarter.

Mika valve with Scotiabank.

Maybe just sticking with Ajay. Just wanted to maybe follow up on the credit question. And I'm certainly not trying to thin you on timing, but it seems like potentially, we're at the point where we're close to reaching that sort of peak credit losses in this current cycle. I'm just wondering, like you've had some really good progress the last couple of quarters. And is there anything anomalous in terms of what TD might be doing? Is this something in terms of being more proactive in managing risk. Can you just talk about maybe some of the sort of qualitative stuff that you've done the last little while?

I'd really bring it back to discipline if you remain disciplined through the cycle, it shows up in your results, and we've been very disciplined. And we've also been prudent, and I tried to bring that point out in my prepared remarks, and you just think about tariffs, okay? Right out of the gate, we went and said, where could this tariff story go? How do we build reserves? I know there's a lot of uncertainty but we tried to get it right the first time. And that's what we've done with tariffs. Again, it's evolving, but we think we were prudent upfront.

So it's a combination of factors, I'd say, that leading to our results being strong. And then just on peak, I mean, it's very difficult to call a peak. In many ways, I think we're past the peak. If you go back to 2025, you'll find Q2 '25 was a peak for total PCL at 58 bps. If you look at Q1 25 impaired were 50 basis points. So in some ways, we are past the peak, okay? And I think the numbers have come down. The question really is where do we go from here? And when will there be a new peak and we're working on our forecast for next year, and we'll be coming back to you next quarter.

But the factors my team will consider. One is the strength of the portfolio, which we're calling out, but will also take into consideration the uncertainties, whether it's trade, whether it's the Middle East conflict or other factors. And again, on tariffs, we are already in a pretty good spot. So more to come next quarter, but I do feel we're very well positioned. Our reserves are 96 bps. As I said and emphasize that includes $500 million for tariffs. I hope that's helpful to you.

That's very helpful. And then just a quick 1 for Sona. Just in terms of the mortgage growth in the quarter or I guess it was more flattish this quarter sequentially. Can you maybe just talk about the spread dynamic? Is this just the market getting a bit more competitive and you're looking to protect spreads? Or is there something else sort of driving that flat result?

Yes, happy to take you a little deeper. So overall, I would say we've had a productive quarter in the RES business -- as you've heard me say before, we're really anchored on this notion that our strategy is built around speed and specialization, and we see that working. On the speed side, just briefly, we fully scaled our first resologentic AI capability, and it's absolutely delivering faster decisions. And so what we've been able to do is reinvest and build out our distribution network adding more in branch home boring specialists and building out our mobile mortgage specialist team over the past year.

What's really excellent to see is together, they've achieved record proprietary originations this quarter. What I really love is that we haven't had to compromise on profitability. And so to the heart of your question, in fact, it's been quite the opposite. What we've been able to do is maintain disciplined pricing in spite of what's been a competitive market. And so you see this fueling both our NIM expansion and to the broader segment strategy. What you see is leading sequential NIM expansion, NII and PTPP growth.

So I think we're sticking to our knitting. We're saying we are doing what we said we would, speed, specialization to drive profitable growth. I couldn't be prouder of the team's hard work.

Okay. And then just on the spread industry level, are you seeing spreads compressed when you mention a bit more competition? Has it led to that dynamic to some degree?

What we've been able to do because we have maintained discipline in pricing, we've been able to expand margins. So in spite of what's been the competitive summer market, so I would say we've been able to balance both to deliver margin expansion as well as resale volume growth.

David Konrad with KBW.

I wanted to follow up on the strong quarter in the U.S. banking group. The 1 area that really beat my expectations was the fee income up pretty strongly quarter-on-quarter. And it's been a pretty volatile number is even negative for SEPA 2025. So maybe what drove the strong results this quarter and maybe the outlook for the fee income in the U.S. business?

And Dave, are you talking about the U.S. banking segment? Or are you talking about U.S. fees in the wholesale bank? .

The U.S. Banking segment, the $584 million, yes.

So maybe a couple of things. From a fee-based line perspective, the numbers you're seeing are probably actually a little understated in that with the Nordstrom agreement that we signed, we actually saw a geography shift in some of the revenue recognition from the partnership from the fee line into NII, which trimmed the headline number you're seeing. To your point, we are seeing in our core fee line businesses, both in terms of retail, in terms of service fees and our core operating fees in retail as well as in our transactional banking areas for the commercial side, we are seeing mid-single-digit growth rates in terms of overall fee income on a year-on-year basis.

I'd probably -- if there's 1 area that I would highlight is really standing out for us is the partnership between the U.S. Bank and the wholesale bank? So if you look at our mid-market business, which has had a really strong run, total balances are up 15%, commitments this quarter were up 9%. Our transactional fee revenues in that subsegment were up 28%. And I'd say a portion of that, a very important portion is the synergy that we're creating between ourselves and being able to afford our corporate clients the ability to avail themselves of broader debt equity capital market capability and then M&A advisory capabilities in the wholesale bank. And I think we've just started to see the power of that model. I'm incredibly encouraged about what that's going to mean in 2027 and beyond.

Paul Holden with CIBC.

Another question for Leo. So I don't think the opening of 100 new U.S. stores is necessarily new as you highlighted. But maybe you can give us some comfort around how that's going to impact, I guess, really PTPP or earnings growth over the next 2 years, right? Like it's roughly expanding the branch footprint by 10%. So it's significant. We all know you opened a branch day 1, the results in expenses with no revenue. So just trying to think through that and how that could impact, again, really the PTP growth over the next couple of years?

Let me just give you a sense of some of the areas that we're going to be investing in because I think it speaks to the optimism we have to continue to consolidate ourselves in the U.S. There's 2 or 3 pockets of significant investments we've planned. The first is the stores. Clearly, we see that as an important part of expanding our footprint and ensuring that we are located in the demographically attractive areas within our existing MSAs. It's critically important as markets evolve that we remain relevant, and I think this is an important part of that equation. .

Number two, we've been -- we're very clear on Investor Day that we want to increase our distribution coverage. That means more retail bankers, it's more financial advisers, selectively more mortgage officers. And in the commercial banking space, more vertically specific bankers supporting our specialized go-to-market strategies. In total, if I add that entire complement, we're probably going to add another 450 bankers to our existing ranks. That's a significant increase in terms of our overall footprint.

And then finally, you've heard us talk about at Investor Day around our product strategy, the focus on core banking, on cards, and our commercial banking business. I say that because we're being purposeful in the investments we're making. But likewise, as you heard us talk about at Investor Day, we are intending to self-fund a significant portion of that with our productivity agenda and the moderation in our GMC expenses over the course of 2027. So in many ways, if I just will give you more detailed guidance in the fourth quarter, but I fully intend to be able to deliver an expense profile -- an expense growth profile in 2027, despite the increased investment in growth initiatives that is lower than what we have posted in 2026. So we are being very thoughtful about how to invest, how to accelerate our growth rate, but doing it in a responsible way and managing it within our existing expense envelope.

And Paul, maybe I can jump in for 1 second. And just at the enterprise level, but also would carry through to the business line you're seeing the discipline that we've put on structural cost reduction across our organization. And we had a goal of $900 million in structural cost reduction this year. We're well ahead of that pace. The $2 billion to $2.5 billion that we had planned for over the MTO, we're significantly on track to get there sooner and certainly see upside on the $2 billion to $2.5 billion. And so as you think -- as we said back in Investor Day, 1 of the things that we're trying to do is as we take the structural cost and the unit cost methodology of running this organization, we can actually take out enough cost that will allow us to fuel in a flywheel effect, the right investments and still deliver from a PTPP still deliver from an ROE perspective, so it can fund the future while delivering the discipline that we want on positive operating leverage and all of the financial metrics.

And so you're seeing that actually come to fruition. It's actually happening faster than what we had anticipated when we did Investor Day a year ago, but that structural cost reduction and the discipline we have around that is absolutely critical. It's an area of focus for every single leader at TD Bank, and you're seeing that play through both in expense discipline and hopefully, you see it in our efficiency and operating leverage, and we'll continue that as we move forward in making some of these investments.

Very, very helpful. And again, actually, very impressive you can grow your store count by 10% without higher expense growth. .

There are no more questions in the queue at this time. I would now like to return the call to Mr. Raymond Chen for closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. We appreciate your questions and comments. In Q3, we delivered record earnings powered by robust revenue growth, strong credit performance and structural cost reduction, ROE was 16%, up 280 basis points year-over-year. I'm proud of our performance this quarter, and I'm confident TD will continue to deliver for its stakeholders. I look forward to connecting with you all again at the year-end. Thank you. .

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning, everyone. Welcome to the TD Bank Group Second Quarter 2026 Earnings Conference Call.

I would now like to turn the meeting over to Ms. Brooke Hales, Head of Investor Relations. Please go ahead, Hales.

Thank you, operator. Good morning, and welcome to TD Bank Group's Second Quarter 2026 Results Presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO; followed by Leo Salom, Group Head, U.S. Banking; after which Kelvin Tran, the bank's CFO, will present our second quarter operating results. Ajai Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from analysts on the phone. Also present today to answer your questions are Sona Mehta, Group Head, Canadian Personal Banking; Barbara Hooper, Group Head, Canadian Business Banking; Paul Clark, Group Head, Wealth Management and Insurance; and Tim Wiggan, Group Head of Wholesale Banking.

Please turn to the next slide. Our comments during this call may contain forward-looking statements which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Ray, Leo and Kelvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our Q2 2026 MD&A.

Please turn to the next slide. I will now hand the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. Thanks for joining us. In Q2, the bank delivered a strong quarter, reflecting continued momentum across our businesses and structural cost reduction.

EPS was up 21% year-over-year and ROE was 14.4%, up over 200 basis points year-over-year. TD is executing against the strategies and targets that we shared at Investor Day. In fact, in many cases, we're ahead of schedule. The bank is on track to outperform its 6% to 8% EPS growth and 13% ROE targets for fiscal 2026 provided that the current macroeconomic conditions continue. Strong revenue performance this quarter was driven by momentum in our market-driven businesses, margin expansion and volume growth in Canadian Personal and Commercial Banking. Impaired PCLs declined quarter-over-quarter, reflecting strong credit performance an update to our macroeconomic outlook resulted in a performing reserve build this quarter. We continue to expect total PCLs of 40 to 50 basis points in fiscal 2026.

TD delivered positive operating leverage for the fourth consecutive quarter. Excluding variable compensation, FX in the U.S. strategic cards portfolio, expenses were up 3% year-over-year. We are well on our way to achieve our 3% to 4% expense growth target for fiscal 2026. The bank is driving structural cost reductions enabling the team to deliver the smallest expense growth since 2022, while at the same time, accelerating investments across AI, innovation and frontline talent. Today, we announced a $0.04 dividend increase, bringing our dividend to $1.12 per share, reflecting confidence in TD's future growth and earnings power. The bank's CET1 ratio was 14.3%, with strong organic capital accretion offset by consistent share repurchases. It's been 8 months since TD's Investor Day. We see strong momentum across our businesses and unparalleled opportunities to take market share on both sides of the border. TD remains committed to completing our $7 billion share buyback program.

Please turn to Slide 3. Canadian Personal and Commercial Banking delivered record Q2 revenue, PTPP and earnings. In real estate secured lending, volumes grew 5% year-over-year. This disciplined growth is anchored in our strategy of speed and specialization. The bank has the largest portfolio of active credit cards and added the most cards in the market based on the annual Nielsen report. We again achieved record penetration rates for consumer and small business credit cards, coupled with strong credit quality. In the Business Bank, loans were up 7% year-over-year driven by distribution expansion and broad-based momentum. Our clients continue to demonstrate resilience through macroeconomic uncertainty.

In TD Auto Finance, we were proud to be recognized again this year by J.D. Power with the highest rank in dealer satisfaction. In U.S. banking, AML remediation remains our top priority. You will hear more about our continued progress from Leo. The business is also building towards sustainable growth, with increases in core loans expected to be more than offsetting balance sheet runoff beginning next quarter. We saw that momentum accelerated in Q2 with core business loans up 1.2% sequentially. This quarter, middle market lending balances were up 13% year-over-year in U.S. proprietary credit card balances were up 18% year-over-year, driven by strong acquisition. And in our U.S. wealth business, record mass affluent sales drove double-digit asset growth year-over-year.

As we shared at Investor Day, U.S. banking has significant opportunities to accelerate commercial loan growth, scale our cards franchise and deepen U.S. wealth relationships, delivering substantial upside to the bank's earnings over the medium term. Wealth Management and Insurance delivered record earnings and assets. We continue to drive innovation in TD Direct Investing Canada's #1 digital investing platform. TD is the only Canadian bank to offer partial share ownership. With as little as $1, clients can now invest in some of the biggest companies in the world, bringing down barriers and creating new opportunities for Canadians.

This quarter, we launched a fully redesigned TD Easy Trade. The app offers market-leading capabilities, 100 free trades helping to widen the gap to peers in direct investing. With this launch, the bank is positioned to continue to serve the next generation of investors. We continue to take share in ETFs with assets more than doubling since the end of fiscal 2024. We are well on our way to achieving our medium-term target of $54 billion in ETF assets. And in insurance, we continue to build on our position as Canada's leading digital direct insurer with over 80% of our clients digitally engaged, strong progress towards our Investor Day target of 90% plus.

Wholesale Banking delivered record earnings this quarter, supported by strong client activity across Global Markets and Corporate Investment Banking. Broad-based momentum across our platform enabled the business to earn through the almost $200 million in revenue from the Schwab transaction in Q2 last year. The team continued to execute against the strategies we laid out in Investor Day and placed in the top 10 in the U.S. equity and equity-linked lead tables calendar year-to-date. Clients are entrusting TD security with their largest and most complex transactions as they navigate the evolving macroeconomic environment.

Please turn to Slide 4. We continue to make progress against our strategy to deepen relationships, make TD simpler and faster and execute with discipline. This quarter, the Canadian Personal Bank delivered almost $9 billion in closed referrals to wealth, double-digit growth year-over-year and well on our way to achieving our medium-term target. Within wealth itself, TD has an unparalleled pipeline from direct investing to advice. This quarter alone, direct investing referred $1.5 billion to advice, up 42% year-over-year, positioning TD to capture assets through the significant intergenerational wealth transfer currently underway.

In Canada, we continue to invest in our small business banking franchise and attract clients, with net client acquisition up 15% year-over-year in the first half of 2026. Effective next week, we are moving our small business banking franchise, the Canadian Personal Banking. Almost 90% of small business clients also do their personal banking with TD. This realignment will enable TD to deliver simpler and faster for our small business banking clients, the backbone of the Canadian economy. Across the bank, we have a clear strategy that is driving higher ROE. This quarter, U.S. banking and wholesale banking ROEs were up 130 basis points and 360 basis points year-over-year, respectively. As I said last quarter, TD may achieve its medium-term ROE target faster than we expected at Investor Day.

Please turn to Slide 5. At our Investor Day, we shared targets to take out $2 billion to $2.5 billion in structural costs and generate $1 billion in annualized value from AI over the medium term. We have strong momentum and are tracking ahead of pace on both targets. Across the bank, structural cost reductions are fueling accelerated investments in innovation and AI. TD is and will continue to be a leader in AI. I believe AI will transform our operations, make our colleagues more efficient, our processes faster and our products and services better. We're already seeing it across our businesses.

In RESL, we reduced mortgage pre-adjudication cycle time from approximately 15 hours to 3 minutes using a agentic AI. In insurance, TD continues to innovate. We set a new industry standard for AI adoption in Canada, becoming the first home and auto insurer to launch a client-facing generative AI virtual assistant. And across the bank, we have over 40,000 colleagues using Copilot and over 7,000 engineers using AI for software development was with the most active achieving a 29% increase in throughput. TD is increasingly emphasizing AI opportunities that transform end-to-end experiences, drive lower unit costs and are scalable across the enterprise. We see significant opportunities across credit, contact centers, fraud and frontline productivity among other focus areas. We are tracking well ahead of pace on our target to deliver $200 million in value from AI this year. At the halfway mark, we have already delivered almost $145 million in value across predictive, generative and agentic AI use cases.

Please turn to Slide 6. For the fourth consecutive year, TD was named the most valuable brand in Canada by Brand Finance. TD was also recently ranked #1 on LinkedIn's list of the top 25 best Canadian companies to work for. These incredible accomplishments reflect the dedication and commitment of our colleagues across the bank. Thank you for continuing to deliver for our clients and shareholders every day.

Now before I hand it over to Leo, I'd like to take a moment to honor the memory of Richard M. Thompson. He was one of TD's true architects, dedicating more than 4 decades to our organization, rising to become Chairman and CEO. It was under his leadership, TD launched the first bank-owned self-directed brokerage in Canada, laying the groundwork for today's TD Direct Investing. TD Securities roots can also be traced back to his time leading the bank. They care deeply about TD, its clients, its colleagues and the community. His impact will be felt for generations to come.

With that, I will hand it over to you, Leo.

Great. Thank you, Ray. As we enter the latter half of fiscal 2026, we continue to make good progress on our AML remediation program. This quarter, with respect to the look-back activities required under the OCC and FinCEN consent orders the third-party vendor has now completed its first population of look-back reviews. While there's more work to do in the coming months, I'm encouraged by the progress being made on this very important deliverable.

Turning to our AML platforms and systems. As you've heard me speak about in prior quarters, our AML program is now running on a new transaction monitoring system that has an embedded machine learning and AI enhancements, we've streamlined and improved our investigative practices and last quarter, we deployed our new KYC strategic platform. This foundational work has resulted in measurable residual risk reduction as our processes continue to mature. Notably, this quarter, we embedded an improved customer risk rating model into our KYC platform, which provides us with more accurate, timely and consistent risk assessments across our entire client population. We also continue to focus on improving our operational systems to enable frontline staff to complete critical AML tests with greater efficiency. Specifically this quarter, we updated our onboarding systems for money service businesses, providing our colleagues with the ability to sustainably identify, detect and manage these types of businesses going forward.

Finally, we made an important enhancement to our financial crime risk management training program with the introduction of enhanced controls, which provide detailed insights into training effectiveness, completion metrics and workforce readiness, all of which are important elements of a sustainable training program. From a financial perspective, the composition of our AML remediation spend has begun to shift towards validation and sustainability costs as management implementation expenses have started to moderate on a quarter-over-quarter and year-over-year basis. We expect that trend to continue with overall AML remediation costs moderating in the second half of the year, largely in line with the previous guidance of $500 million in fiscal 2026.

With that, I'll turn it over to Kelvin.

Thank you, Leo. Please turn to Slide 8. TD delivered a strong quarter with momentum across our businesses. Through the TD Cowen acquisition, and as you heard on Investor Day, we are taking deliberate strategic action to diversify the bank's business mix. We saw the benefits of that strategy play out this quarter, with strength in our market-driven businesses, margin expansion and volume growth in Canadian Personal and Commercial Banking delivering robust top line growth.

At 43 basis points, total PCLs were within our guided range and flat quarter-over-quarter. Expenses increased 5% year-over-year with approximately 2% driven by variable compensation, foreign exchange and the impact of the U.S. strategic cards portfolio. We delivered our fourth consecutive quarter of positive operating leverage. We made significant progress on our structural cost reductions, enabling accelerated investments in business growth. Total bank PTPP was up 12% year-over-year after removing the impact of the U.S. strategic cards portfolio, FX and insurance service expenses. We've shared the details on Slide 23.

Please turn to Slide 9. Canadian Personal and Commercial Banking delivered record Q2 revenue, PTPP and earnings. Average deposits rose 3% year-over-year, reflecting 1% growth in personal deposits and 5% growth in business deposits. We had a strong RSP season, including record closed referrals from the Canadian personal bank to our wealth business. Average loan volumes rose 6% year-over-year with 5% growth in personal volumes and 7% growth in business volume. Strong business loan growth reflected continued investment in our frontline bankers and execution against our local advice-focused model. Net interest margin was relatively stable, up 2 basis points sequentially. As we look forward to Q3, based on the current rate and competitive market dynamics, we again expect net interest margin to be relatively stable, similar to this quarter's results. Expenses rose 2% year-over-year and benefited from some timing impacts.

Please turn to Slide 10. In U.S. Banking, Earnings were up 12% year-over-year and ROTCE expanded by over 200 basis points to 14.8%. Excluding sweeps and targeted runoff in our government banking business, deposits were up 1% year-over-year. Deposit costs declined quarter-over-quarter, reflecting our strategic pullback on certain higher cost deposits, and the strength of our non-term deposit -- non-term personal deposits and operating business deposit franchises. Core loans grew 3% year-over-year driven by accelerated momentum across our portfolio. New bank card account acquisition was up 32% year-over-year and TD Auto Finance delivered record Q2 originations. We also saw a 17% year-over-year increase in middle market lending commitments and our home equity lending pipeline remains robust. Net interest margin was 3.41%, up 3 basis points quarter-over-quarter driven by higher loan and deposit margins. As we look forward to Q3, we expect net interest margin to modestly increase.

Expenses increased 10% year-over-year reflecting higher governance and control investments and spend supporting business growth initiatives, including the conversion of Nordstrom credit card clients on to TD's servicing platform. There is no change to our guidance for fiscal 2026 overall expense growth in the mid-single-digit range and approximately USD 2.9 billion in net income for the U.S. Banking segment. As we shared on our Q1 call, in February, we converted Nordstrom card clients on to TD's servicing platform. The conversion was completed smoothly and marked an important strategic milestone that provides scale and as we build out our credit card franchise and opens opportunities to pursue new strategic partnerships and drive down unit costs over time.

Slide 22 provides an illustrative example of the accounting for our strategic cards portfolio. As a result of the Nordstrom change and consistent with similar transactions, the receivable adjustment of USD 144 million was treated as an item of note in Q2. Please turn to Slide 11. Wealth Management and Insurance again delivered record earnings and assets. In [indiscernible] we had new account growth of 15% year-over-year, driven by 16% account growth in TD Direct Investing. Trades per day were up 11% year-over-year as clients continue to engage across our platform. Insurance delivered record earnings, reflecting disciplined claims management and accelerated structural cost reduction. Sequentially, expenses for this segment, excluding variable compensation, were relatively flat. We are driving structural cost savings while investing for the future, including accelerated distribution expansion.

Please turn to Slide 12. Wholesale Banking delivered record earnings driven by strong execution across global markets and corporate and investment banking, including strength in our equities, capital markets and lending businesses. Our performance reflects the depth and diversification of the platform combined with high levels of client activity and constructive market conditions. Expenses increased 6% year-over-year as we continue to invest in talent and technology. Return on equity for the quarter was 14.5%, an improvement of 360 basis points year-over-year, driven by strong revenue growth moderating expense growth and disciplined capital management.

Please turn to Slide 13. Corporate net loss for the quarter was $166 million, relatively flat to the same quarter last year. Please turn to Slide 14. The common equity Tier 1 ratio ended the quarter at 14.3%, down 26 basis points sequentially. We delivered strong organic capital accretion again this quarter. The bank repurchased approximately 19 million common shares under its share buyback program in Q2, which reduced CET1 by 41 basis points. TD's capital position is a competitive advantage. As Ray shared, the bank remains committed to completing a $7 billion share buyback. Upon completion of this program, and together with our previous share buyback, we will have returned $15 billion in capital to our shareholders.

And with that, I will turn it over to Ajai.

Thank you, Kelvin, and good morning, everyone. The bank exhibited continued strong credit performance this quarter. Please turn to Slide 15. Gross impaired loan formations were 22 basis points, a decrease of 5 basis points or $457 million quarter-over-quarter. The decrease was largely recorded in the wholesale and U.S. commercial lending portfolios, partially offset by an increase in Canadian commercial.

Please turn to Slide 16. Gross impaired loans decreased 4 basis points quarter-over-quarter to 54 basis points, reflecting lower impairments in wholesale and U.S. banking segments, partially offset by an increase in Canadian personal and commercial. Please turn to Slide 17. Recall that our presentation reports PCL ratios, both gross and net of the partner share of the U.S. strategic card PCL. We remind you that U.S. card PCL's recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income. The bank's provision for credit losses was 43 basis points, stable quarter-over-quarter as lower provisions in the wholesale and corporate segments were partially offset by an increase in Canadian personal and commercial and U.S. banking.

Please turn to Slide 18. Impaired PCLs were $973 million, decreasing $191 million quarter-over-quarter, reflecting lower provisions in the wholesale, U.S. banking and corporate segments, partially offset by an increase in Canadian commercial. The bank recorded a performing PCL of $28 million, largely related to an update to the macroeconomic outlook, partially offset by migration of performing reserves to impaired in the Wholesale segment. Please turn to Slide 19. The allowance for credit losses decreased $147 million quarter-over-quarter due to lower impaired allowance in wholesale banking driven by resolutions, partially offset by performing build largely related to an update to the macroeconomic outlook.

Now I'd like to spend a few minutes discussing 2 key risk topics. First is private credit and private equity. We've added a slide in our appendix detailing a breakdown of our gross loans to the financial sector. TD's exposure to private credit and equity is small at approximately 1% of total bank gross loans and is primarily concentrated in subscription of capital call facilities. Our exposure is low risk, primarily investment grade and does not pose a material concern for the bank as it continues to perform well with no watch list or impaired loans. Second is the geopolitical environment and the ongoing conflict in the Middle East. We have not realized material impacts on credit performance to date. We have, however, added some performing reserves this quarter to reflect deterioration in our economic outlook and the uncertainty related to the duration and impact of the war.

We will continue to carefully monitor potential impacts of the heightened risk environment on our credit portfolios and take suitable actions if warranted. With that, let me summarize the quarter. The bank exhibited strong credit performance as evidenced by lower gross impaired loans and gross impaired loan formations and stable PCL. Additionally, we continue to be prudently reserved at 97 basis points of allowance coverage, while results may vary by quarter and are subject to changes to economic conditions, we continue to expect fiscal 2026 PCLs to fall within a range of 40 to 50 basis points.

With that operator, we are now ready to begin the Q&A session.

[Operator Instructions] The first question comes from Ebrahim Poonawala with BofA Securities.

So I guess, maybe, Ajai, starting with you on credit quality, [indiscernible] on the PCL guidance. Just give us a sense, when we think about -- you probably have among of all the banks like the best sense of what's happening with the consumer, the sort of dynamic with high unemployment rates going higher. As we look through the next 6 months and beyond, do you think generally credit and at least the early indicators that you see suggest that credit sense for the Canadian consumer book are moving in the right direction? Or do you expect further worsening? And with the endpoint being unclear in terms of when we actually see some of the peaking on delinquency, GILs, et cetera?

Yes. Again, there's quite a few things there, Ebrahim, but let me answer your question comprehensively. Let me start with what I expect. Okay. First, I should remind you that we affirmed the bank's guidance. What I do expect is some pressure on PCLs because of 3 reasons: trade and tariff actions, potential impacts of the Middle East war and the macro environment, particularly in Canada. If you think about trade and tariffs, TD Bank is already well provisioned. We have close to $500 million there, and most of that reserve is unused. With respect to the Middle East war I'd call it a watch item.

Having said that, what we did this quarter is we put more weight on our downside case, and we have already built some incremental Brazil. So we are going to continue to reassess our reserves each quarter, but I feel quite comfortable that at 97 bps we're well positioned on reserves. As I mentioned, we still have that $500 million, and we have a lot of financial flexibility. If I turn to the second part of your question, which is on Canadian consumers, I'd start by saying household debt in Canada is high. But if you look at how the Canadian consumer has done, they've been very resilient. The reason they've been very resilient is a few things. One, rates are down, okay? If you look at where rates peaked, rates are down 275 bps. The second reason I'd offer up is the starting point on wealth is much better than it was pre-pandemic. The third is wage growth and the fourth is ongoing government support.

Having said that, are we seeing some migration in Canadian consumer? The answer is yes. We're seeing it largely in the less than [ 650 ] segment, but it is entirely expected. It's linked to the macro environment. So again, I think you should expect some migration on the Canadian book. We're seeing a little bit of it in resi. We're seeing a bit of it in auto. We're seeing a bit of it in cards. But overall, I think credit is still in good shape. Yes, there are some uncertainties. We'll continue to watch them. we'll reassess them through our process. But at 97 bps, including $500 million for trade and tariffs, I think the bank is very well provisioned. So hopefully, I gave you enough context, Ebrahim.

No, that's good context and very comprehensive. And I guess one for you, Ray. AI is going to transform the bank, like you've talked a lot in terms of the details and how TD is deploying AI. As we look forward, I mean, I think you obviously laid out some ROE targets at the Investor Day, you're running ahead of those. As we look forward, like do you think is it unreasonable to assume that TD despite its business mix, having more U.S. exposure could actually become a much profitable bank than what we are historically used to? And even in terms of as we think about the time line to achieve some of your investor day targets, are you feeling better about them today than you did on the day off?

Thanks, Ebrahim, for the question. So let me tackle that in a few different buckets. Let me start with the Investor Day. And I think it was about 8 months ago, certainly feels a little bit longer than that. But as I've said for the last number of quarters, we continue to have momentum and we are ahead of the vast majority of the metrics and the medium-term outlook that we had set at Investor Day, all the businesses are ahead of their targets. And so we feel very good not only in achieving them, but achieving them sooner.

If I look at our ROE target and ROE being up 200 basis points year-on-year at 14.4%, if I look at just us going from our current CET1 ratio of 14.3% down to 13%, that picks up another 90 basis points of ROE. And then if you look at our expense management or a structural cost reduction from $2 billion to $2.5 billion, that adds another [ 110 ] basis points. And so when you look at that, that's about 200 basis points of ROE pickup, and that's all within our control. And I think that's what really gives us a lot of confidence that we can get to Certainly, our ROE targets ahead of what we had anticipated at Investor Day, assuming macroeconomic conditions remain.

On the structural cost reduction, which has been a critical focus for us, leveraging AI, automation, process redesign, we set a goal of $2 billion to $2.5 billion. What I can tell you, Ebrahim, is we are well ahead of pace. Our goal for this year was to have $900 million of structural cost reduction, and we have already achieved that. And so on that side, we think there's upside. And on the $1 billion AI objective that we set out, $500 million in expense reduction, $500 million in productivity or revenue, we definitely see, as we've gotten more and more into the agentic AI and generate predictive AI. We definitely see more upside to the $1 billion goal that we had set.

So coming back to your question, do we think that we're -- that we can do more than what we had put on the Investor Day? We believe we're ahead of pace. We have momentum right across all of our lines of businesses. And I think that's setting us up well for accelerated growth on a go-forward basis.

The next question comes from Gabriel Dechaine with National Bank Financial.

First, on the -- well, a couple of angles here in the U.S. The expenses, they were up quite a bit. I know you gave some explanation, but let's just revisit that indulge me. And what stands out as the AML cost, $173 million, that's ahead of the $500 million annual kind of figure. Was there a mention of some sort of a third-party agreement that's no longer going to be costing you money or something like that?

Well, Gabe, thanks very much for the question. Let me start by saying that I think the quarter was a solid quarter for the U.S. I came in and that was up 12% on a year-on-year basis. And if you break down the factors, we had positive core loan growth. We had moderate NIM expansion. And as Ajai described, I think PCL performance in the U.S. was quite strong.

So expenses were somewhat elevated at 9.9% on a year-on-year basis. But I would note that it was flat on a quarter-on-quarter basis, and it's the third quarter that we had relatively the same expense. Despite the fact, to your point, we did have higher governance and control expenses in the quarter. And I think composition matters here. We're seeing more -- as I'd indicated in previous quarters, we would expect to start seeing more validation look back and monitor expenses this year and less remediation implementation expenses, and that's exactly what we saw in the quarter. So that was somewhat elevated. The other important milestone in the quarter was that we completed the conversion of Nordstrom. And so we had higher conversion and operating expense that we assumed as part of that transaction.

So if you isolate those 2 categories, our base operating expenses were below 3%. So I feel like we're making some really good progress in terms of moderating the rate of growth I should -- let me just reaffirm that we still believe that we will achieve our mid-single-digit expense growth guidance for the year. In fact, we've got good line of sight to being able to achieve that. And more importantly, I think we're tracking really well to meet and/or exceed our NIAT objective that we laid out in Investor Day. So net-net, I'm feeling good at where we are Obviously, any opportunity that I've got to accelerate the remediation process. It is my #1 priority. We're trying to work through it as quickly as possible because we know how important that is to the overall franchise.

Yes, I get that. I wasn't taking the number. Just trying to get a sense of the -- I guess, additional elements this quarter that might not be around in coming quarters, as that cost mine kind of does drift down sequentially. But I guess more on the strategic side, as you move -- and I appreciate that AML remediation is your #1 priority. But as you move through the process and maybe increased bandwidth for growth initiatives, it sounds like there's some improvement in the core commercial banking loan book. You're open, it sounds to exploring new strategic card partnerships. I want to get a sense for how you're thinking about the growth aspect of the business at this point and what we can look forward to?

Yes, Gabe, thank you very much for the question. I think the quarter did highlight the fact that we are seeing acceleration in a number of different areas. I know Kelvin described a little bit of the loan growth. But I just wanted to call out maybe a couple of stats. One, you've been talking about the fact that total loan growth was going to turn the corner. Well, on a spot basis, total loan growth this quarter versus last quarter was in fact positive. So that's the first quarter that we've seen that since we embarked on the balance sheet restructuring exercise. So that's that was a step in the right direction, and we would expect to build on that momentum in the subsequent quarters.

If I look at core loan growth, core loan growth was 3% for the quarter and it was really well distributed across both our consumer lending portfolios as well as commercial loans. I'll talk about consumer loans just for a moment. We saw a number of our businesses, particularly the bank card business that was -- where we saw overall balances up 18% and 32% growth in account sales. We're seeing real positive momentum there. We've been investing in that business over the past 3 years, and we're beginning to see the fruits of some of those investments. I'd say turning to commercial. I was particularly pleased about the quarter-on-quarter performance in commercial.

Overall, growth was 1.2% for the quarter. So if you annualize that, that would suggest a mid-single-digit growth rate for our commercial businesses. But probably more important than just the absolute number was the composition. We've been seeing really strong performance in sort of the middle market segment for some time. What we saw this quarter was stronger performance in both small business and our commercial regional businesses. So it was a slightly broader base win this quarter, and I think that's quite encouraging. I do think that given the work that we're doing, to your point, the fact that we're increasing the number of bankers on the street supporting our commercial banking business, I do expect us to see some degree of acceleration in that business. There's obviously some macroeconomic factors that you can't control, and there's still risk of trade and supply chain disruptions. But generally speaking, I'm really confident about what I'm seeing in terms of some of the pipelines and some of the leading indicators.

Okay. And Ray, I heard you say it felt like a long time since an Investor Day, I thought time was supposed to fly when you're having fun. All right. That's all folks. Have a good day.

The next question comes from Paul Holden with CIBC Capital Markets.

I want to ask a question on the expense guide. So I think, Kelvin, you're pretty clear in terms of core expense growth was pretty good this quarter. I think 2% if we adjust for some FX and variable comp so better than the mid-single-digit guidance, but then you kind of stuck with the mid-single-digit guidance for the full year. So maybe you can talk about some of the things that were timing related and why that will come back next quarter. And I would have thought, given what Ray has said on being ahead of plan on AI that maybe there was some upside to expenses and efficiencies this year. So maybe you can help us think through all of that.

Paul, maybe I'll just kick off and then Kelvin can jump in. Paul, I just want to clarify, the mid-single-digit guidance is specific to the U.S. the guidance that we have for -- at the enterprise level, and we have confidence in that is 3% to 4%. And so we don't see -- there's nothing that we see as a onetime that's creating the our expense this quarter. And so we see the structural cost reductions that we've been making across all of our business lines continuing. And as we accelerate our value from AI and automation. I think you're going to see, as I've been saying previously, that we try to continue to take the structural cost run rate of the organization down consistently on a unit cost basis. And so you're seeing that play through. and you'll continue to see that play through, Paul. So I just wanted to clarify the mid-single digit is U.S., not enterprise.

Yes. That's right. It's Kelvin here, our guidance for 2026, expense growth, FX and variable compensation and strategic comfort 3% to 4% so this quarter, we're at 3%. Q1 was higher than that. And so just on an average basis, we'll get to that range for the full year. And we're confident that we'll get there.

Okay. My mistake I understand. And then maybe just a quick one for Sona. Increasingly hearing about some increased competition maybe on the loan side and also on the deposit side, sort of pressuring margins a bit. What are you seeing in your business specifically and your confidence around the ability to sort of maintain margins in Canadian retail banking?

Okay. Thanks for that question, Paul. So if we look at the quarter, we were up in CAD PNC 2 bps sequentially, in line with our NIM guidance. And really, that's broken down in a couple of factors. We saw some positive trends on deposit margins, including tractor repricing as well as driving higher loan margins. And so let me talk a little bit at what you're getting to. So in the market, we definitely did see in the second quarter, particularly competitive pricing set in. But Paul, as you've heard me say, we are firmly committed to profitable growth. And for us, that means disciplined pricing. And so as we anchor in this principle, we've nonetheless had 5% year-over-year RESL growth. And that's because we are with our disciplined pricing, we are able to drive positive on off margin, including in this competitive quarter.

And so as we look ahead, we expect to see relatively stable NIM in Q3 similar to this quarter. And I'm even optimistic for some potential NIM upside in Q4. And if I just step back, Paul, I think -- and picking up off what Ray said earlier, I think we're out to capture organic growth upside. We see tremendous momentum across the businesses. Obviously, we're pleased with in RESL, how we're leaning in, competing on speed and specialization rather than price. But across the board, we see momentum. We've had #1 year-over-year growth in RESL in cards and in deposits. So we're particularly pleased with the quarter and proud of our team's work.

The next question comes from Matthew Lee with Canaccord Genuity.

Most of my questions have been answered, but maybe one on cards. You did highlight strong acquisition and record penetration U.S. bank card balance their up and obviously the Nordstrom conversion onto TD's platform. Just how are you thinking about cards in general as the growth engine, especially balancing kind of position, credit normalization and maybe potential new strategic partnership.

Yes. Matt, thanks for the question. I'll start on the U.S. side, and maybe I'll pass it to Sona to add something from a Canadian perspective. I think from a U.S. business, we're somewhat underweight in terms of total cards in our overall book. So it is a segment that it's a product that we're very focused on. And it's one of the reasons why 3 years ago, we embarked on a really comprehensive build. We added significant talent. We retooled our cards operations. We retooled the product lineup. We changed some of our credit underwriting.

In fact, we implemented a number of AI models that allow us to be able to leverage deposit activity to be able to fine-tune some of our targeting. All those things are culminating in the performance that you're seeing today on the bank card side of the house. So I absolutely want to grow our bank card one of the Investor Day targets that we established was to get to a 30% penetration of our deposit book. And quite frankly, Matt, I'd like to exceed that. In fact, we're tracking quite well. We picked up 200 basis points on a year-on-year basis. So clearly, we want to try to maximize the growth of our core bank card business. But I also -- I'm thrilled about the successful conversion of the Nordstrom transaction being partnered with one of the premier retailers in the U.S. marketplace is a privilege. And to the extent that we can deepen our relationship with Target and potentially bolt-on other really high-quality card partnerships. That will be a priority for us in the future as well.

I'd like to have cards receivables be a larger portion of the overall hold. And to your point, we're cognizant about the risk profile. But I can tell you, based on what we're seeing at this point, we're quite comfortable with the credit risk that, that portfolio represents. And I think in many ways, being able to build a bigger cards business as part of our overall U.S. balance sheet will actually improve NIM and will improve our overall diversification in terms of our asset earnings. So net-net, it's a long-winded way of saying it's a big priority for us in the U.S. So...

Yes. Maybe just briefly, Matt, really strong story north of the border as well in our cards business. We've had a strong cards acquisition, up double digits year-over-year, and it's really driving to continued momentum towards our Investor Day targets on depth of relationship, both for personal consumer cards as well as small business banking clients. What I'm particularly pleased with is it's exactly growing in the spots that we would want it to grow. So we've had a really thoughtful execution playbook against how do we really increase the depth of relationship within our existing clients. And so most of our growth year-over-year is actually coming from strong preapproval conversion amongst our existing clients. So are the clients we know the most about and very additive, right, from a quality book perspective.

And then on the flip side, with our new to banking clients. We've seen continued momentum in deepening that relationship at point of sale in our branches. So really healthy mix and really healthy growth, supporting our #1 position in the industry this year.

The next question comes from Doug Young with Desjardins Securities.

I guess for Tim and for Ray here. On wholesale, I mean, I know this is a particularly strong quarter and results are pretty good. But are we -- caught my eye in wholesale of 14.5%. I think you've targeted 13% from the Investor Day. Maybe Tim, you can talk a bit about sustainability. Is there room for further ROE expansion and then what drives this? And Ray, as you look over at that, does that give you more comfort? You've got a lot of excess capital, and I know it's pointed towards organic growth and buybacks and whatnot, but does that give you more comfort deploying capital into capital markets.

So why don't I start and then, Tim, you can jump in after. I would say, first and foremost, very pleased with the continued momentum in TD Securities. And as we said also at Investor Day, what we're trying to do in the organization is balanced or rightsize our NII and fee income. And whether it's our wealth business, our insurance business, which both had record quarters or our wholesale business, getting the fee income mix across TD Bank was a priority for us coming out of Investor Day, and you're seeing exactly that, not just from Tim's business, but from [indiscernible] businesses. And so -- so I'm pleased there.

And before I hand it over to Tim, from a capital perspective, what I would just say is it is an area of the organization that we do believe has outsized opportunity for accelerated growth and Tim and team are demonstrating the power of the platform and the acquisition of TD Cowen and TD Securities combined. And so I would say it's playing along exactly what we thought on a go-forward basis. And then just from a capital perspective, the only thing I would say is I do think we are positioned differently than any other organization amongst our peers that we start with an incredibly strong capital position at 14.3% CET1. But when you overlay our strong organic capital generation that we do here within the organization. It really gives me an advantage that we can deploy capital in different ways.

At the same time, we can do -- continue to do buybacks while we look at not only organic growth opportunities and how do we want to accelerate some of our organic growth opportunities like in TD Security. So it gives me flexibility Doug, to be able to do multiple things that maybe some of our peers can. So on that note, I'll hand it back over to Tim.

Doug, I would just add 2 or 3 things. So it is important to note, despite all the headlines that we are in a constructive market. So from a capital markets perspective, equity capital markets, debt capital markets, credit generally are in a positive place. You've heard me speak before about volatility. I would characterize it as a healthy level, both from the standpoint of being able to monetize volatility on the trading side, while keeping the capital markets open.

And then I would just say, generally, there's an openness to M&A. So as we sit today, it's a constructive environment and quite a healthy backlog. The second point, as Ray mentioned, we've invested heavily in our platform, and we continue to invest. So we're doing more. We're deepening our relationships with our existing clients. And if we look at the first half, that's reflected where we had top line up 18% year-over-year despite the $180 million earned last year from the swap transaction. So very healthy from that perspective. On capital specifically, I would continue to emphasize, we're not capital constrained by any means, but we do need to do more with that resource. So I always like to look at revenue growth relative to RWA growth.

And again, in this quarter, that number was about 3x. The other point I wanted to emphasize is mix. So good balance between corporate and investment banking and global markets. And I think that's reflected as well in the results. but also geography. So directionally, if we look at 2022, which was the last year prior to the Cowen acquisition, we would be doing about [ a quarter ] of our revenue in the U.S. And today, that number is twofold. And of course, it's a market that's about 20x the size of Canada. So we see a tremendous amount of runway. So all of that coming together drove the ROE, 14.5% and the efficiency ratio of 63%. But maybe the last point I wanted to leave you with, there's obviously always cyclicality in our business, but it's about creating durability and repeatability on our platform and positioning ourselves to be able to serve clients and deliver for shareholders through the cycle. And I think that's what you're seeing.

There are no more questions in the queue at this time. I would now like to return the call to Mr. Raymond Chun for closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. We appreciate your questions and comments. In Q2, we continued our business momentum with strong credit performance, positive operating leverage and robust earnings growth. ROE was 14.4%, up 200 basis points year-over-year. I'm proud of the progress through the first half of the year, and I'm confident TD will continue to deliver for its stakeholders.

Now before we close the call, like to go a little bit off script for a moment to congratulate Brooke and her team on winning across 5 categories at the IR Impact Awards last month. What an incredible accomplishment reflecting strong engagement with all of you, our investors and analysts. Thank you for your support and congratulations again to Brooke and the team I look forward to connecting with all of you again next quarter. Thanks, everyone.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning. On behalf of the Toronto-Dominion Bank, I welcome you, shareholders and proxy holders to this annual meeting, whether you are here in person or online on our virtual platform. Thank you for taking the time to attend the meeting and for your continuing interest in and engagement with TD. My name is Tony Di Girolamo, and I am the bank's Corporate Secretary. We thank you for your participation. We care about your views, and we appreciate your trust as shareholders of TD. I acknowledge that the land we are meeting on is the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee and the Wendat peoples.

We are thankful for the opportunity to work and live on this land, which today is home to many First Nations, Metis and Inuit peoples. We recognize that the city of Toronto is covered by Treaty 13 signed with the Mississaugas of the Credit and by the Williams Treaties signed with several Mississauga and Chippewa nations. As you continue your personal and professional journey, I invite you to take the time to learn about the indigenous peoples of the lands where you live and work and to reflect on your relationship with them. John MacIntyre, Board Chair, TD Bank Group. [Foreign Language]

Good morning, everyone. Welcome to the 2026 TD Bank Annual Meeting of Shareholders. I'm John MacIntyre, Chair of the Board of Directors. I will act as Chair of this meeting as stipulated by the bank's bylaws. I'm joined on the podium by Raymond Chun, Group President and Chief Executive Officer; Simon Fish, Senior Executive Vice President and Chief Legal Officer; and Tony Di Girolamo, who you've met, our Corporate Secretary. Tony, with the consent of the meeting, will serve as Secretary of the meeting. In addition, members of the bank's senior executive team and Board of Directors are available to assist with questions if necessary. Pat Lee and Megan Rocha, representatives of TSX Trust Company, the bank's registrar and transfer agent, will act as scrutineers.

I now call the meeting to order. We previously mailed the notice calling the Annual Meeting of Common Shareholders. We've received confirmation of that mailing from Broadridge Investor Communication Solutions and TSX Trust Company. I direct that a copy of the notice mailed to the shareholders and the other meeting materials delivered to shareholders by notice and access be kept by the Secretary and annexed to the minutes of this meeting. I have received satisfactory proof that the notice calling this meeting was duly publicized and sent to all shareholders of the bank. We have received proxies representing more than 54% of the approximately 1.7 billion outstanding common shares.

Accordingly, we have a quorum present, and I hereby declare the meeting duly and properly constituted. Please note that the discussions during the meeting may contain forward-looking statements about the bank's outlook and objectives and strategies to achieve them. Ray will be referring to non-GAAP financial measures, also known as adjusted results in his remarks of today's meeting. Details regarding forward-looking statements and non-GAAP financial measures are on the slide presented in the room and on the webcast and can be found in the bank's financial reporting. For the duration of today's meeting, I will refer to registered shareholders and duly appointed proxy holders as shareholders and proxy holders.

These shareholders and proxy holders are able to view the meeting, vote their shares and submit questions regardless of their method of participation. Instructions for how to do this, including asking questions, were included in this year's proxy circular. This year, we have enabled question and comment capabilities through the webcast platform with the aim of having our experience for our virtual attendees as interactive as possible. As in past years, both English and French will be spoken during this meeting. Simultaneous translation will be provided in person via the headsets provided. Those joining today via the webcast can select to hear the meeting in either English or French. Shareholders and proxy holders will be able to ask questions verbally in the room and both in writing and verbally through the webcast.

As in past years, we will have a question-and-answer session after the formal business of the meeting is completed. During the formal portion of the meeting, we will pause to address questions and comments submitted by shareholders and proxy holders that are specific to the motions presented during the meeting. We will ask that all general questions be reserved for the question-and-answer period after the completion of the formal portion of the meeting. To ensure that every shareholder and proxy holder can participate, whether they are attending in person or joining via the webcast, we will begin by taking questions from those present in the room, followed by questions submitted through the webcast.

Individuals joining the meeting as guests are not able to ask questions. In each case, we also ask that you identify whether your question relates to a motion being considered as part of the formal business of the meeting or whether it is of a more general nature. We ask that any questions that relate to the business or affairs of the bank restrict to those questions rather than addressing matters of a personal nature. For people in the room, we have a representative from TD Client Care here with us today. Can Sarah Barrow stand and be recognized? In the back corner. If your question is of a personal nature, we will defer your question and ask that you speak with Sarah after the meeting or we will have one of our Client Care representatives get in touch with you after the meeting.

We ask that in-person attendees wait to be recognized by me as Chair before speaking. You will be prompted to approach one of the microphones on the floor at the appropriate time. Before speaking, please state your name and confirm that you are a shareholder or proxy holder before asking the question. For those with limited mobility, please raise your hand and a microphone will be brought to you. We like all our shareholders and proxy holders that wish to ask a question to have the opportunity to do so. To that end, we ask that you please keep your comments brief, limiting yourself to 2 minutes and to the subject under discussion so that all shareholders and proxy holders have an opportunity to participate.

We also request that you only ask one question at a time. If a speaker has an additional question, please requeue at the microphone to allow us to speak with as many shareholders as possible during the meeting. Shareholders and proxy holders who are joining us virtually will be able to submit questions via the webcast by clicking on the questions tab on the webcast page. If you're watching the webcast in full screen, you will need to minimize the video to access the questions tab. Shareholders and proxy holders who wish to submit a question or comment through the webcast platform can do so at any time, and we will address them at the appropriate time. Please indicate whether it relates to a specific motion or whether it is to a more general motion.

For example, if you'd like your question read out before shareholders vote on the advisory vote on executive compensation, please indicate that in your submission, and we will read it out then. If it's a more general question or comment, then we will read it during the general Q&A session following the formal meeting. It's recommended that you submit any questions as soon as possible during the meeting so that they can be addressed at the appropriate time. The ability to submit questions online is not available to individuals who joined the webcast as a guest. The secretary will read out the questions received over the webcast in the original language submitted. Shareholders and proxy holders attending the webcast can also ask questions verbally by entering their phone number in the question text box and indicating the topic of their question.

A representative will then call these individuals to connect their audio and place them in queue to be called upon at the appropriate time. Additional details can be found in the webcast portal. To address as many different questions as possible during the meeting, if we have several questions that are similar in nature, we will group those questions so that they can be addressed together. As in past years, the vast majority of shareholders submitted their proxies or voting instructions in advance of the meeting, but shareholders and proxy holders, whether attending virtually or in person, will also have the opportunity to vote during the meeting.

To keep your vote confidential, proxies are counted and tabulated by the scrutineers. Additional information on how to ask questions, how to vote and the other protocols and procedures being used for today's meeting, along with the agenda for today's meeting are available at TD's Annual Meeting website and the Documents tab of the webcast. In-person attendees were also provided a copy of the agenda on their chairs.

Before I invite Ray to address the meeting, I'd like to make a few comments. When I think back to last year's AGM, I'm proud of what our bank has achieved. I am very proud. Our businesses are performing well and have momentum. Our strong balance sheet remains an important differentiator, and our capital position is well above regulatory requirements. Anti-money laundering program remediation remains the #1 priority of the Board and for management. While this is a multiyear process, we made consistent progress in 2025 and continue to make the investments needed to meet our regulatory obligations and strengthen the bank for the future.

As we advance through this important year, we also created significant shareholder value through buybacks, higher dividends and stronger financial performance. We look ahead with renewed confidence and a clear strategy for the future, building on our strengths to create lasting value for shareholders. Ray will discuss this in more detail very shortly. Fellow shareholders, you have entrusted the Board to oversee and ensure its success for the long term. It's a role we take very seriously and a responsibility we exercise with care and focus. As you know, we added 5 new independent directors to our Board in 2025 with deep and varied experience.

Together, we have effectively challenged management, reviewed strategy and overseen critical investments in our risk and control environment. As a part of our role, the Board is also very focused on the long-term needs of the bank. We regularly assess the economic, geopolitical, climate-related and technological changes shaping the environment around us, including AI. We work closely with management to understand both the risks we face today and those emerging on the horizon. This perspective informs our oversight and helps ensure TD remains resilient through change.

Every year, The Globe and Mail ranks corporate governance at Canada's largest publicly traded companies. They evaluate a broad set of criteria, including Board independence and diversity, director tenure, committee composition and CEO succession planning. I was pleased to see TD tied for the #1 ranking in 2025, but we will continue our efforts to further strengthen our Board and governance. Throughout 2025, the Board worked closely with our new CEO in his first year.

In a short time, Ray has taken decisive action to strengthen TD. Your bank's leadership is building an organization that is resilient and forward focused. We're investing in the capabilities and innovation needed to meet the needs of our clients today and for the years to come. They've done a tremendous job, improving performance, energizing our colleagues and shaping a clear strategy. An excellent job.

To speak more about our progress, I'd like to now invite Ray to address the meeting. Ray?

Thank you, John. Good morning, everyone. [Foreign Language] Hello, and welcome to TD's Annual Meeting. I'm so pleased to report that TD had a tremendous year. I'm extremely proud of the progress we've made for our bank, our clients and for you, our shareholders. In just 1 year, we've developed a focused strategy, and we are executing it with discipline, building momentum in every business. We also united TD around the clear and inspiring new purpose to reimagine what banking can be. Our purpose reflects our determination to move faster and lead our business, clients, communities and industry in a rapidly changing world. Our colleagues have embraced our new strategy and purpose and are moving ahead with renewed confidence in the future.

You can feel their energy and excitement right across TD. We're back to winning. You can see this progress reflected in our performance. We've extended our position as Canada's premier banking franchise. We have the #1 most valuable brand for the fourth consecutive year. We're #1 in growth across total personal deposits, Canadian real estate secured lending and Canadian credit card volume. We operate the country's #1 direct insurance business, #1 institutional asset manager and fastest-growing ETF business, a powerful Canadian franchise. In the U.S., we have a tremendous business and continue to gain in strength and performance. We have the eighth largest bank in America with over 10 million clients in one of the largest and most competitive banking markets in the world.

We're building our future in the U.S. from a position of strength. In 2025, we restructured our balance sheet, created capacity to grow with our clients and invested in new leading applications. Our U.S. bank is a key part of our growth strategy and a key part of TD's future. With TD Cowen now fully integrated, we've added powerful new capabilities to TD Securities. This integration is driving strong results. TD Securities delivered record revenues and earnings in 2025, secured larger mandates from clients and accelerated our strategy to build a top 10 North American dealer with global reach. You can see this performance reflected in our 2025 financial results. Revenues grew 9% to $61.8 billion. Earnings grew 5% to over $15 billion.

Earnings per share increased 7% to $8.37 and our CET1 ratio ended the year at 14.7%, among the strongest capital positions in banking. We extended this performance into 2026 with record first quarter earnings of more than $4.2 billion, up 16% and record EPS of $2.44, up 21%. We also returned capital directly to you, our shareholders. We completed an $8 billion share buyback and have started a second buyback of $7 billion to return a total of $15 billion. At the start of the year, we also increased dividends. Going forward, we'll review the dividend level twice a year rather than once. And as earnings grow, so will your returns.

In just 1 year, we placed TD on a different trajectory, opening a new era of growth and performance. At our core and throughout our history, TD has always been about the people we serve, families, hard-working Canadians and Americans, business owners and business leaders, the people who form the backbone of our economies. That's why deeper relationships is the first pillar of the strategy that we outlined at Investor Day in September. Deeper relationships is about earning our clients' trust and the right to serve more of their needs. To achieve this, we are making the largest investment in client-facing talent and capabilities in decades, deploying mortgage and investment specialists, wealth advisers, business bankers and other experts right across the communities where we live and work.

These colleagues are helping families to purchase their first home, homeowners invest for the future, supporting graduates with their student loans, their first credit cards and their first investment account, assisting newcomers as they plant roots in Canada, gain credit, invest and start a new life and advising entrepreneurs and business as they invest for the future. Our focus on deepening relationship led to a record $31 billion in closed referrals from personal banking to wealth. Record credit card growth in Canada and in the U.S. and entirely new mandates for TD Securities across Canada, the U.S. and globally.

Deepening relationships has never been more important to our clients. We are operating at a time of significant uncertainty. Like many of you, our clients are working hard to build their financial future as geopolitical events, economic volatility and new technologies create new challenges. TD will continue to distinguish ourselves with the human experiences that have always defined our bank. Our new brand promise, more human or in French, [Foreign Language], reinforces our commitment to build on this legacy. We're bringing a more human element to banking from the innovation we deploy to the experiences we design. Take TD Direct Investing, Canada's #1 digital investing platform.

We're the only Canadian bank to offer fractional share ownership. With as little as $1, clients can now invest in some of the biggest companies in the world, bringing down barriers and creating new opportunities for Canadians. Our platform is designed to support clients through every stage of their lives from that $1 investment on TD Easy Trade to more sophisticated investing on TD Active Trader and every step along the way. That's more human. We also have programs designed to help clients overcome financial obstacles and solve problems, such as TD Early Pay, which allows U.S. clients to access their paycheck 2 days early.

These 2 days can have a profound impact, reducing the stress of making bill payments on time and getting food on the table. That's more human. More human will always be at the center of the advice we provide, the experience we offer and the seamless way we integrate digital into the client experience. So we're moving with speed to bring more human approaches and exceed our clients' expectations. Speed matters. In a fast-paced world, speed will be a competitive advantage for TD. That's why running a simpler and faster bank is the second pillar of our strategy. Our goal is to elevate the client experience and free up colleagues' time. We're approaching this in 2 ways.

First, structure. We're breaking down silos, reducing layers and clarifying accountability. This is already helping our colleagues make better decisions faster. Second, technology. We're deploying AI and technology at scale throughout TD. We're responsibly harnessing AI to accelerate execution across the client journey from onboarding to advice. We're deploying AI assistant in the phone channel and in our branches to shorten response times. We're accelerating the mortgage approval process, getting document review times down from hours to minutes. We're getting auto loan decisions to clients in seconds right in the dealerships, and we're building more comprehensive investment plans faster for wealth clients.

As you can see, AI will open enormous opportunities for those who embrace its potential. TD will be a leader in AI. We're not new to this game. We acquired Layer 6 in 2018 and have been building our AI talent, expertise and leadership for close to a decade. This experience positions us well to both capture the opportunities and mitigate risk. AI offers powerful advantages, but its progress and oversight must be thoughtful and human-led. As we reimagine the bank and the client experience, disciplined execution, our third strategic pillar is central to how we deliver. To keep winning, we'll continue to grow investments in innovation, new capabilities, AI and the client experience. To fund these critical investments and improve financial performance, we're fundamentally restructuring our cost base.

This will provide TD with long-term strategic advantage. We're redesigning and automating processes, pulling down procurement costs, modernizing infrastructure and relentlessly prioritizing for maximum efficiency. We've made strong progress in a short time, delivering positive operating leverage for the past 3 consecutive quarters. Restructuring our cost base, along with an intentional deployment of capital to elevate ROE is both driving our performance and funding our future. As we scale our business, we continue investing to strengthen our governance and control foundations. Critical to this effort, we're driving consistent progress on our U.S. AML remediation, our #1 priority.

With ongoing investments in talent, technology, processes and training, we're building an AML program to protect the bank, our clients and the financial system we serve. As clients' expectations grow, TD will continue to lead with clarity and conviction, driving deeper relationships, running our bank simpler and faster and operating with disciplined execution. Our strategy is designed to be resilient through change and shifting dynamics, dynamics that impact our clients, our economies in this country. This is an important moment for Canada. There is uncertainty ahead, but one thing is absolutely clear. Tomorrow will not look like today.

We have tremendous advantages and Canadians have good reason to believe in our country, a highly skilled workforce, exceptional universities and colleges, extraordinary natural resources and a stable financial system supported by the strongest banks in the world. These are terrific strengths, and I'm encouraged by the steps being taken by the Canadian and provincial governments. Building a stronger future will take continued action from governments and business leaders, to bring down interprovincial barriers, expand international trade, to develop and commercialize groundbreaking innovation, to design appropriate regulatory and tax frameworks and attract investments to build the projects and infrastructure to unlock the full economic potential. That's the Canada, I believe, that we can build together.

TD will continue to invest in our business to finance projects and programs essential to our future and contribute across our communities. Our strategy supports this future and is powered by our colleagues. Ultimately, TD's long-term success depends on our people and our culture. In fact, I believe building a winning culture is one of the most important responsibilities of a CEO.

Across TD, we're fostering curiosity, courage, accountability to strengthen our culture and drive our strategy. Curiosity to keep learning and to see around corners, courage to challenge the status quo, to lead through change and to be bold, accountability to deliver consistently and with integrity. This is the culture we are building. This is the culture that will power our future. And our colleagues bring this to life each and every day. I want to thank our colleagues for all you do for TD. I am so proud of your tremendous efforts and your continued commitment to TD and our clients. [Foreign Language] Thank you. I am very proud.

I also want to thank our clients for your trust. We'll continue to work hard every day to help you succeed and achieve your goals. Finally, I want to thank our shareholders here in the room and around the world. Thank you for your continued support as we reimagine what banking can be. Thank you.

Thank you, Ray. At this point, I'd like to move to the formal business of the meeting. I'd first like to recognize the fact that the movers for the motions presented by the bank are employees who are also shareholders. Voting will be open so long as the formal portion of the meeting is proceeding. Voting is not available to individuals who join the meeting as guests. If you voted in advance of the meeting and do not wish to change your vote, then you don't need to do anything and should not vote again at the meeting. If you vote at the meeting, you will automatically revoke your prior vote. We'll be conducting the voting on all items of formal business at today's meeting by ballot.

For shareholders and proxy holders who are joining remotely and have accessed the webcast with the appropriate credentials, the voting polls will open soon and will close after the presentation of our formal items of business. Shareholders and proxy holders will see the vote tab appear on the webcast page when the voting polls are open, which is how you can vote through our virtual voting platform. If you're watching the webcast in full screen, you'll need to minimize the video to access the voting tab. If you are with us in the room and you wish to vote during the meeting, you will need the yellow and blue ballots that were offered to you at the registration desk.

We have prepared a blue ballot for the first 5 items of business being the election of directors, the appointment of the auditor, the advisory vote on the bank's approach to executive compensation, the first amendment to the Toronto-Dominion Bank 2000 Stock Option Incentive Plan and the second amendment to the Toronto-Dominion Bank 2000 Stock Incentive Plan. Information about these items of business, including a description of each matter and the related resolutions is set out in the bank's proxy circular, which was made available to shareholders prior to the meeting. A yellow ballot has been prepared for the 9 shareholder proposals to be voted on today.

These proposals, along with the proponent supporting statements and the Board's responses are set out in the proxy circular. Scrutineers have a supply of ballots in both English and French. If you've not received a ballot and would like to vote during the meeting, please raise your hand now. I would ask the scrutineers to distribute a set of ballots to any shareholders or proxy holder in attendance who has not received a ballot or completed a proxy. As previously mentioned, if you've already voted or sent in a proxy, there's no need to complete a ballot. When you sign your ballots, please print your name clearly above your signature. When votes are submitted to our registrar and transfer agent, whether voted at this meeting or submitted by proxy, they are counted and tabulated by their officers.

The scrutineers of this meeting will then verify and report the results. A simple majority of the votes cast during this meeting or by proxy is required to pass each of the matters to be voted on today. In the interest of having an open, fair and orderly meeting, the agenda placed on the chairs of each in-person attendee contains guidelines for shareholder participation. These guidelines are based on customary rules of order as well as common sense and courtesy. This document is also available online on our annual meeting web page and in the Documents tab of the webcast for virtual attendees. On behalf of your fellow shareholders, I thank you in advance for your cooperation.

Copies of TD's 2025 annual report, which contain the bank's 2025 financial statements and the auditor's report were delivered to common shareholders in advance of this meeting and are available at the entrance of the room. You can also view the annual report on our website at td.com or in the Documents tab of the webcast. We will now address any questions or comments that have been submitted by shareholders or proxy holders directly related to the 2025 financial statements. If you have questions or comments that are not directly related to the 2025 financial statements, please hold them until the appropriate time.

Are there any questions or comments from the floor regarding the financial statements?

My name is [indiscernible] shareholders, I would first commend the entire Board for spectacular Q1 results and the second commendation of excellent customer service that I have received from TD Bank as a client. Now my question as a shareholder, what part of those Q1 earnings come from U.S. operations?

Thank you for your question, and thanks for your comments as well. They're appreciated. The disclosure in the financial statements, I think, discloses that number. So I won't throw it out here off the top of my head, but we will circle back to it as well and get back to you on a specific answer for you. But thank you very much for the question.

Okay. That's it, I think, for the room. Tony, are there any questions coming in from the webcast or phone?

Chairman, no questions have come in related to this item.

Okay. Thank you. We will now move to the election of directors. The Board of Directors has fixed the number of directors to be elected at 14, and I confirm all the nominees are eligible for election and have consented to serve as directors if elected. All 14 nominees are currently directors of the bank. Information about each nominee is included in the proxy circular. To facilitate the introduction of the nominees, we prepared a slide presentation that introduces each of them.

[Presentation]

Ayman Antoun, Ana Arsov, Cherie Brant, Raymond Chun, Elio Luongo, John MacIntyre, Keith Martell, Nathalie Palladitcheff, Frank Pearn, Jane Rowe, Nancy Tower, Ajay Virmani, Mary Winston, Paul Wirth.

I will now call on the Secretary to nominate the directors for the coming year.

I nominate each person named in the proxy circular under the heading Director Nominees to be a director of the bank until the close of the next Annual Meeting of common shareholders of the bank.

Thank you, Tony. We will now address any questions or comments that have been submitted by shareholders or proxy holders related directly to the election of directors. Are there any questions or comments from the floor regarding the election of directors? We'll now address any questions from the webcast. Have any questions come in through the webcast related to this matter?

Chairman, no questions have come in related to this matter.

Thank you. Voting is open, and we invite shareholders and proxy holders to submit their vote if they have not already done so. In-person attendees are asked to move to item #1 on the blue ballot, which relates to the election of directors. Please mark it now. Virtual participants are asked to vote in the polling feature on the webcast. As I mentioned earlier, if you've already voted or sent in a proxy, there's no need to do anything unless you'd like to change your vote.

[Voting]

The next item on the agenda is the appointment of the auditor. The Board recommends that Ernst & Young LLP be appointed as auditor of the bank until the close of the next annual meeting. Helen Mitchell and Dom Guiffrida, representatives of Ernst & Young, are available to assist with questions if necessary. I'd now like to call on Sarah Green, Senior Counsel of TD, to make this motion.

Thank you, Chair. I move that the firm of Ernst & Young LLP be appointed auditor of the bank until the close of the next Annual Meeting of Common Shareholders of the bank.

Thank you, Sarah. We will now address any questions or comments that have been submitted by shareholders or proxy holders related to this matter. Are there any questions or comments from the floor regarding the appointment of auditor? Have any questions come in through the webcast related to this matter?

Chairman, no questions have come in related to this matter.

Thank you. We invite shareholders and proxy holders to submit their vote if they've not already done so. Again, for in-person attendees, the appointment of the auditor is item #2 on your ballot, your blue ballot. For virtual participants, you should vote now using the Vote tab on the webcast screen if you've not already done so. Please mark it now. And again, as a reminder, if you've already voted or sent in a proxy, there's no need to do anything unless you'd like to change your vote.

[Voting]

The next item of business is the advisory vote on the bank's approach to executive compensation. The resolution on the approach to executive compensation is set out in the proxy circular under the heading Advisory Vote on approach to executive compensation. I'll ask Maya Raja, Senior Counsel with TD, to move the motion.

I move that the resolution set out in the proxy circular under the heading Advisory Vote on approach to executive compensation be approved.

Thank you, Maya. We will now address any questions or comments that have been submitted by shareholders or proxy holders that directly relate to this matter. Are there any questions or comments from the floor regarding the bank's approach to executive compensation? Are there any questions from the webcast?

Chairman, no questions have come in related to this matter.

Thank you. We invite shareholders and proxy holders to submit their vote if they've not already done so. If you've already voted or sent in a proxy, there's no need to do anything unless you'd like to change your vote. And again, for in-person attendees, this is item #3 on your blue ballot. For virtual participants, you should vote now using the Vote tab on the webcast screen if you've not already done so. Please mark it now.

[Voting]

The next item of business on the agenda is the first amendment to the 2000 Stock Incentive Plan. The resolution on the first amendment to the 2000 Stock Incentive Plan is set out in the proxy circular under the heading First Amendment to the 2000 Stock Incentive Plan. I'd like to call on [indiscernible], Counsel with TD, to move this motion.

I move that the resolution set out in the proxy circular under the heading First Amendment to the 2000 Stock Incentive Plan be approved.

Thank you, Tom. We will now address any questions or comments that have been submitted by shareholders or proxy holders that directly relate to this matter. Are there any questions or comments from the floor regarding the first amendment to the 2000 Stock Incentive Plan? Any address -- any questions from the webcast?

Chairman, no questions have come in related to this matter.

Thank you. We invite proxy holders and shareholders to submit their vote if they've not already done so. For in-person attendees, the first amendment to the 2000 Stock Incentive Plan is Item #4 on your blue ballot. For virtual participants, you should vote now using the Vote tab on the webcast screen if you've not already done so. Please mark it now. Again, as a reminder, if you've already voted or sent in a proxy, there's no need to do anything unless you'd like to change your vote.

[Voting]

The next item of business on the agenda is the second amendment to the 2000 Stock Incentive Plan. The resolution on the second amendment to the 2000 Stock Incentive Plan is set out in the proxy circular under the heading Second Amendment to the 2000 Stock Incentive Plan. And I'd like to call on [indiscernible] to move this motion.

I move that the resolution set out in the proxy circular under the heading Second Amendment to the 2000 Stock Incentive Plan be approved.

Thank you, Tom. We will now address any questions or comments that have been submitted by shareholders or proxy holders that directly relate to this matter. Are there any questions or comments from the floor regarding the second amendment to the 2000 Stock Incentive Plan? Are there any questions from the webcast?

Chairman, no questions have come in related to this matter.

Thank you, Tony. We invite shareholders and proxy holders to submit their votes if they've not already done so. For in-person attendees, the second amendment to the 2000 Stock Incentive Plan is Item #5 on your blue ballot. For virtual participants, you should vote now using the Vote tab on the webcast screen if you've not already done so and please mark it now. As a reminder, again, if you've already voted or sent in a proxy, there is no need to do anything unless you would like to change your vote. I'd like to remind you that when you finish marking and signing the blue ballot, please print your name above your signature.

[Voting]

I'll now ask the attendants to collect the blue ballots so that the scrutineers can begin tabulating the votes on the first 5 items.

There are 9 shareholder proposals for consideration at this meeting. All 9 proposals were submitted by MEDAC of Montreal, Quebec. I would also like to mention that the proxy circular contains details regarding one withdrawn proposal. The withdrawn proposal is from InvestNow of Toronto, Ontario. Details of the withdrawn proposal were included in the proxy circular at the request of the proponent. We now turn our attention to the proposals proceeding to a vote. The proxy circular includes statements by the proponent in support of their proposal as well as the reasons why the Board is recommending to shareholders that they vote against each of these proposals.

In the interest of time, we won't be revisiting the reasons for the Board's position during the discussion of the proposals. Shareholders and proxy holders will be given an opportunity to comment on each of these proposals. As I indicated earlier, I ask that each speaker be mindful of the guidelines for shareholder participation. I would also appreciate if each speaker would give their name and state whether they're a shareholder or a proxy holder. Shareholder proposals 1 through 9 were submitted by MEDAC and are set out in the proxy circular under the heading Shareholder Proposals, starting on Page 132. MEDAC has provided the bank a brief statement on those proposals to be read out at the meeting.

I will now invite [ Christine Michel ], an employee shareholder, to proceed with reading the statements and moving the motions on behalf of MEDAC.

Thank you, Mr. Chairman. My name is [ Christine Michel ], and I'm acting on behalf of MEDAC, the [indiscernible], which has submitted 9 shareholder proposals, 5 new proposals and 4 proposals that had already been submitted in the past and that received sufficient support to be presented again. In respect of the former proposals, we will indicate the reasons why we would have been ready to agree that these proposals not be put to a vote again, but we will focus on the new proposals. The first proposal aims at strengthening shareholder participation at Annual General Meetings.

This is our key proposal this year. Shareholder participation at annual meetings is extremely important. And we are, therefore, proposing that the bank takes a number of measures identified in our proposal. We would have been prepared not to have this proposal submitted to a vote if one of those measures had been accepted by the bank.

This is the simplest one. We were requesting the annual publication of a simple table similar to the Broadridge table that is illustrated in our proposal that could have made it possible to see at a glance whether the participation rate of shareholders at annual meetings had increased or decreased over the past few years, broken down between institutional and individual shareholders. That measure would not have been costly and would have been very useful to shareholders who otherwise have access to this information only with difficulty.

Proposal 2, inclusion of young people in the bank's governing bodies. It is proposed that the bank's Board of Directors develop and make public by the 2026 Annual Meeting a plan to increase the representation of young people aged 35 and under within its governing bodies. This is a measure that is already applicable to state corporations in Quebec. We have agreed not to put this proposal to a vote, FTD had shown that it is supporting financially and substantively training programs in civil society to prepare young people to participate on Board of Directors. We've identified a number of similar initiatives, and they require financing.

Proposal 3, responsible compensation policy aligned with performance. It is proposed that the bank adopt a more responsible compensation policy that is aligned with the bank's overall performance. This proposal brings into a single proposal, most of the measures that we have proposed in the past related to management compensation. We would have agreed not to put this proposal to a vote if TD had implemented any one of those measures, which it has not done.

Proposal 4, strategic diversification of skills on the Board of Directors. It is proposed that the Board of Directors adopt a new skills diversification policy tailored to the challenges of today and tomorrow. We believe that in addition to the regular review of the Board's skills matrix, there should also be a mechanism for ad hoc in-depth review of the matrix that could be triggered in a situation of crisis as is the case presently. And we understand that is not the case at TD Bank.

Proposal 5, formal recognition of the systemic role of the Board of Directors. It is proposed that the Board of Directors establish a permanent advisory committee on the systemic impact of the bank's decisions. The bank has declined to implement such a committee that would deal with the important question of its systemic role in society. Such a committee could draw upon external resources.

In terms of the 4 proposals that are being presented again, Proposal 6, 27.9% support last year, fighting against forced labor and child labor in loan and investment portfolios. We would have agreed not to put this motion to a vote had TD indicated what it is doing when it learns that one of its clients resorts to forced labor and child labor and whether such a situation has arisen during the year. As an example of acceptable disclosure, we have agreed not to put this matter to a vote this year at the Annual Meeting of Scotiabank.

Proposal 7, 17.36% support last year, regulating artificial intelligence in order to safeguard the human aspect. We would have agreed that this proposal not be put to a vote had TD Bank undertaken, in particular, to adhere to a voluntary code of conduct to ensure oversight of generative AI. As an example, CIBC Bank agreed to adhere to that guideline.

Proposal 8, public disclosure of nonconfidential information, country-by-country reporting, compensation ratios and tax savings. We would have agreed not to put this proposal to a vote had TD Bank disclosed its country-by-country report.

Proposal 9, 17.5% support last year, advisory vote on environmental policies. We would have agreed not to put this proposal to a vote had TD implemented the practice of an annual advisory vote on its environmental policies. We invite all shareholders to support all of our proposals. Thank you, Mr. Chairman.

We'll see. We will now address any questions or comments that have been submitted by shareholders or proxy holders that directly relate to these proposals. There's no questions in person. Are there any on the webcast?

Chairman, no questions have come in related to this matter.

Thank you. Again, your Board of Directors has recommended you voting against proposals -- sorry, I didn't see you down there.

My name is David Peters. I'm a shareholder. One of the more interesting people to raise questions at this meeting in the past seems to be missing today. So the question I have to raise is who miss your Willie Gagnon?

Thank you for your question. I don't have an exact answer for that, but there are 2 conflicting bank Board meetings today. So I think our belief is he is attending the other meeting, and we agreed to put the proposals forward with one of our employees. So -- but thank you for asking the question.

Okay. So again, your Board has recommended voting against proposals 1 through 9. We invite shareholders and proxy holders to submit their votes if they've not already done so. You've already voted or sent in a proxy, there is no need to do anything unless you'd like to change your votes. Again, for in-person attendees, please mark shareholder proposals 1 through 9 on the yellow ballot now. For virtual participants, you should vote now using the Vote tab on the webcast screen if you've not already done so.

[Voting]

Thank you. That completes the shareholder proposals. I'll wait a moment while you finish voting. In-person and online voting will close shortly. And again, for our in-person attendees, please remember to print your name above your signature on the ballot. I'll now ask -- the polls are closed. I'll now ask the attendants to collect the yellow ballots. Thank you. I understand that the scrutineers have a preliminary tabulation of votes cast in respect of each of the business items before the meeting. I now ask Megan Rocha, representing the bank's registrar and transfer agent to provide us with the scrutineers' preliminary report.

For the information of the shareholders, we wish to report that more than 54.1% of the eligible shares were voted at this meeting. The preliminary results with respect to the election of directors are that a substantial majority of the votes cast at the meeting voted in favor of the 14 nominees named in the management proxy circular, with each nominee receiving in excess of 98.6% in favor. The preliminary result with respect to the appointment of auditors is that no less than 96.5% voted in favor of Ernst & Young LLP. The preliminary result with respect to the advisory vote on the approach to executive compensation is no less than 95% voted in favor of the resolution.

The preliminary result with respect to the first amendment to the Toronto-Dominion Bank 2000 Stock Incentive Plan is that no less than 96.5% voted in favor of the resolution. The preliminary result with respect to the second amendment to the Toronto-Dominion Bank 2000 Stock Incentive Plan is that no less than 97.1% voted in favor of the resolution.

The preliminary results with respect to the shareholder proposals are: Proposal 1, no less than 99.3% voted against; Proposal 2, no less than 98.6% voted against; Proposal 3, no less than 94.3% voted against; Proposal 4, no less than 91.6% voted against; Proposal 5, no less than 93.6% voted against; Proposal 6, no less than 79.1% voted against; Proposal 7, no less than 78.7% voted against; Proposal 8, no less than 92.4% voted against; and Proposal 9, no less than 85.3% voted against. Chair, that concludes the scrutineers' preliminary report on voting.

Thank you, Ms. Rocha. I now declare that the 14 director nominees named in the proxy circular have been duly elected. Ernst & Young LLP has been duly appointed as auditor. The resolution on the advisory vote on the approach to executive compensation has been passed, and resolutions on the first and second amendments to the 2,000 Stock Incentive Plan have been passed. Shareholder proposals 1 through 9 have been defeated. Final voting results will be made available shortly on td.com.

TD would like to thank our shareholders for their support and valuable feedback as TD embarks on its next chapter. This concludes the formal business of the meeting. We'll now move to more general questions or comments from shareholders. I anticipate that some of our shareholders or proxy holders may have questions. I'd like again to remind you please keep your comments brief limiting to 2 minutes so that all shareholders and proxy holders have an opportunity to participate. And again, I remind that questions should be of general interest and not a personal nature. For those of us in the room, as I mentioned earlier, a representative from TD Client Care is here today.

Sarah Barrow is located at the back of the room and can assist with personal questions after the meeting concludes. If you're asking a question of a personal nature on the webcast, we'll defer your question and have one of our Client Care representatives get in touch with you after the meeting. We'll now proceed with the questions. I'll invite Ray to the podium to lead the Q&A of the meeting.

Thank you, John. I'm looking forward to this portion of the meeting when we have the opportunity to hear from you, our shareholders, answer your questions. Before asking your question, can you please give your name, state whether you are a shareholder or a proxy holder. So let's begin with the question from the room.

Raymond, one more time. I believe I have the same questions that was asked during the business of the meeting. So my follow-up question, I was listening to that lady shareholder proposal. Our mission is more human. And the proposal was regulating AI, and I'm a strong proponent of regulating AI. If we don't regulate AI, we will have lots of job losses. And sometimes, we will have people serving us outside of Canada, which I, as a client will not like, and I will switch my business to some other bank. That's my only way to stay with one bank or any other organization that I have stayed with. So this is one piece.

The second piece about post-AML regulatory oversight that the bank is undergoing right now. What impact has it made on TD operations in United States? And throughout 2025, how much segment -- like what's the segment of those revenues that are coming to us come from U.S.? Has it slowed down? Or has it kept the same pace? This is part one. And second, again, I commend the entire TD customer service because I have dealt with other banks, too, and you guys ranked #1 right now in Canada. Thank you.

Thank you. Well, first and foremost, thank you for your comments. Thank you for the acknowledgment of all of our 100,000 colleagues at TD Bank. We pride ourselves in the service. And so thanks for that acknowledgment.

On your first question previously on what percentage of our earnings comes from our U.S. retail business, it's approximately 20%. So about 20% of the total TD Bank earnings quarterly, annually, fluctuates, obviously, depending on the quarter, but you can take that as the percentage on that side. If I think about it -- and I'll get back to your AI question in a second. From an AML perspective, as I said during my remarks, AML is the #1 priority and the remediation of our AML for myself, certainly for the entire organization. We have made tremendous progress, and it all starts with making sure that we are hiring the best of the best talent, not just from financial institutions, but from regulators, law enforcement agencies, technology companies.

And we are making substantial investments to upgrade and have upgraded our platforms to allow for detection, monitoring, escalation. And you heard the culture changes we're making in our organization to have our colleagues more curious, more courageous, more accountable. All of that with the changes that we've made around the governance of our AML and the focus of our leadership, we are on track with the milestones that we've committed and do feel very pleased with where we are. Still more to do. This is a multiyear journey as we go on this process. And so we still need to go through validation, sustainability. But from a management action perspective, we are where we set out to be from a milestone.

So -- now let me shift to your question on AI. And as you heard in my speech, everyone, I do believe that AI is probably one of the most transformative technologies in our lifetime. And it is really important with the pace of change and the capability of AI evolving at the rate it is that institutions like TD stay at the front end. And we have been on this journey for well over almost a decade. And I do think AI does 3 things. And I try to simplify it so that everyone within our organization, but also our clients, what are we trying to achieve by leveraging artificial intelligence as we move forward? I think it's 3 things.

First and foremost, I do believe in the near and medium term, it will help every colleague at TD be more effective and be more efficient. Number two, I believe it will help speed up every single process, which drives better client experiences. And you heard that our second strategic pillar is speeding -- is speed and simplification. And number three is that it will help make our products and services better, right? And so we are managing our organization and leveraging AI to enable these 3 capabilities and functions. And yes, it's important that we understand the risks and we understand the implications that AI will bring, as you just commented on, but it is front and center with us. We are proactively managing both the opportunities and the risks. So thank you for your question.

Over there.

I'm [ Abid Raza ], and I'm a shareholder. My question is about data. Where -- which jurisdiction do TD keep information on Canadian clients and shareholders? Obviously, I'm very concerned or we should be concerned under present environment.

Thank you for your question. Really important question, certainly in today's day and age. Let me start by saying protecting your data is one of the most highest responsibilities that we have as an organization, and we continue to invest to make sure your data is protected. A few things that I think are important. First and foremost, what do we do to protect your data? Number one, your data is encrypted, right?

And so regardless of the location of your data, what we make sure is your data is encrypted and that we control your data and no one else has access to your data outside of TD Bank. Then from a where is data located, most of our data now, as is with most institutions around the world have moved to a cloud situation that allows for more flexibility, but more security. But the big important message that I want all of you to take away is your data is encrypted and that only TD has access to your data. And I think that's the important thing as we go forward.

Any other questions in the room? I don't see any other questions. So why don't we see if we can take questions from the webcast. Have any questions come in from the webcast, Tony?

We have received a question on the phone line from [ Jeff Carlson ] regarding the 2023 Stanford settlement and the 2024 AML issue. Mr. Carlson, please go ahead.

Can you hear me?

Yes, go ahead, Mr. Carlson.

Mr. Chairman, I am a proxy holder for my family shares in TD Bank. Over the past few years, TD Bank has lacked ethical oversight of its operation and has at times acted criminally. As discussed in the '25 annual report, this is evidenced in the $1.2 billion voluntary settlement related to the Stanford's Ponzi scheme, that's from 2023 and more recently in the criminal conviction of TD Bank and subsequent $3 billion fine in the money laundering scheme of 2024. In addition, the 24th conviction resulted in a further $1 billion in remediation costs, and those are expected through the end of 2026.

That's a total of over $5 billion of actual shareholder value destruction since 2023. Further, all of these activities have severely limited TD Bank's ability to grow, particularly in the U.S. In fact, it was forced to shrink its U.S. operation as a consequence of the '24 criminal case. So these are very serious matters and shareholders shouldn't be satisfied that the bank's recent share price gains are proof that its previous unethical and illegal behaviors have been resolved. My question is, what is the bank doing to prevent recurrence?

Well, thank you for your very, very important question. And as we've said in the past, and I've said very publicly, it's unacceptable where we found ourselves with our AML matter. Well, let me answer the question directly on what are we doing as we go forward to ensure that TD doesn't find ourselves in that position again. A few things that I do want to call out. I do want to recognize that as we refresh the Board, one of the things that we did to look at the skills and capabilities was to make sure that we were bringing Board members that had large financial institution experience, that had experience certainly in the subject matter expertise around compliance matters, governance matters.

And so you see that play through in both our parent Board and in our subsidiary U.S. Board, and we've had about a 50% Board turnover. Second, we've established new committees within our Board specific to monitor both the remediation of the AML issues, but also to ensure that there is focus around the compliance and all things from a regulatory perspective. We've set up internal senior leadership challenge committees and assigned individuals at very senior levels to have a leadership role in reviewing all regulatory matters and ensuring timely resolution of those matters.

And I would say the investment that we have made in hiring the best talent, and we've spurred no resources over the past 18 months to bring in talent across our organization in the first line, second line, third line to ensure that we have not only the talent at the most senior levels, but talent all the way through the organization to ensure we're able to identify, escalate and resolve issues on a go-forward basis. And then I'll end with the significant, as you called it out, investments that we have made as an organization to modernize our platforms and our capabilities and our reporting.

And so we've done a tremendous amount to ensure that as we go forward that we don't find ourselves as an organization in the situation. But it is -- I appreciate you bringing the topic up. We take it incredibly seriously. I take it incredibly seriously. And I'll end with what I said earlier, it is my #1 priority. It is the bank's #1 priority to not only ensure that we remediate our AML issue, but that we build a world-class platform that is the example for how you actually lead from an AML/BSA compliance regulatory perspective.

Any other questions on -- from the webcast?

There are no additional questions on the webcast.

I'll do one more round in the room to see if there are any other questions in the room. I see there are no further questions. Thank you to our shareholders, our proxy holders for your questions and comments. And I'll turn it back over to you, John.

Thank you, Ray. That concludes our meeting. On behalf of the bank, I'd like to thank you for participating in this meeting and for your ongoing commitment to TD. I wish you all the best for your families and hope you stay safe and healthy. The meeting is now terminated. Thank you all, Mercy.

Thank you for attending the TD Bank Group Annual Meeting of Shareholders.

All right. For our last fireside before the break, I think the break is next, Sona Mehta, Group Head of Canadian Personal Banking at TD Bank.

Thanks for sitting down with us today and catching up on your business, your strategy. And we just had your peer, Royal, do the same thing. So we'll try to compare notes.

It's a pleasure to be here, Gabe. Thanks for having me.

The one thing I want to -- and this is more of a thank-you type of question, but TD went the other way a while back and combined Personal and Commercial from a reporting standpoint. There was a trend of splitting them up, which made it a bit tougher to follow. Is that more of just a segment at how you report the numbers or is there any more behind-the-scenes kind of coordination going on between the 2 businesses?

I like starting with a thank-you question. So if I look back to the last time we had any changes to segment reporting, that was probably last quarter, I think, of 2022. And so at the time, you might recall, we actually had retail -- like Canadian Retail as a segment. And so at the time, what we did is we said CAD P&C stands on its own and Wealth Management and Insurance stands on its own. And so we've largely stayed in that space now. To your point, I think it's simplicity of our external reporting.

There's also assets underneath those 2 businesses that are tied together. So I think about like our branch networks, some of our technology infrastructure. So splitting that apart is a bit artificial. So we have kept it simple and clean from that perspective.

One of the things though that we did very intentionally do at our Investor Day is my peer, Barb Hooper, and myself, we each set discrete business line metrics, so whether it's PTPP, ROE, efficiency ratio, we said, "Here for each individual business, this is our aspiration that we look to drive." And now we're reporting on that each quarter.

So hopefully, our goal is you're getting the best of both. You get the simplicity of one reporting at the segment level, but we do provide you the granularity and progress against our Investor Day commitments at the individual Personal and Commercial bank level.

Okay. Well, when I look at the combined business and, I mean, you could reference the Personal's contribution to that, but margins have been sort of flat for a while. And I know there's differences in how banks manage their treasury and all that stuff. So maybe you can explain some of the divergence we're seeing between TD and some of the others. Is it your decisions you made a few years ago are impacting you today? Are you being more competitive in your pricing, your customer acquisition strategy? Yes, let's go with that one.

Yes, for sure. Happy to go through that, Gabe. So I think we've been performing in line with our guidance. So last quarter, we were up sequentially 1 basis point quarter-over-quarter in NIM, so in line with our relatively stable guidance. And that's where we've been stable over the last little while.

If I decompose that, you look at our tractor on/off benefit, that's modest. And that's purely timing because we locked in less deposits at that time where rates were lowest in the pandemic level. And so naturally, what you get now is modest. But frankly, that was a benefit we took earlier. So I would kind of park that.

Then where we have favorable tailwinds are twofold, really on deposit mix, so we've seen a preferential mix on deposits. And then on our RESL book, we are definitely seeing favorable pricing as older cohorts roll off and they get replaced with better-returning cohorts. And then finally, an offset of balance sheet mix. So altogether, like a bunch of different factors, but they net out to stability in the moment.

As I look further ahead, obviously, for the immediate next quarter, we've guided to stable again because those factors are largely quite similar. But as I look further out into the year, what we're seeing is -- so we've now driven several quarters of RESL sequential origination margin expansion. So those will start to cumulate. You need like a certain aggregate volume, so to speak, for it to be material to NIM overall. So as that cumulates, but also as more and more of the lower-originating margin cohorts roll off, so I'm optimistic about the back half of this year having some potential NIM expansion.

Obviously, this all kind of is backstopped by a constructive competitive dynamic. But the fundamentals, as I see them, are supportive of some potential expansion in the back half of 2026.

And even the size of the book, that could be something that goes into -- and the timing of growth from years ago, that could go into 2027 as well.

Yes. I think we're -- I mean, it's hard enough to look a few quarters out in this kind of market. So we're really more on steady ground, and even that depends on a lot of factors. So I would say really in the back half of this year, we hope it's going to be constructive.

And then I guess the rate outlook, at least the Bank of Canada rate, as central banks -- maybe we have rate hikes again in the latter half. That should be good for margins still because it has been for TD in the past. But the trade-off is growth probably is weaker?

That's exactly the question, right? So there you go, Gabe.

Still got it.

The timing difference isn't hurting you. I mean you see from our NIFs disclosure, like generally, rising rate environments are accretive. We've got a large and stable deposit base, so that's helpful. But then the question is, what's the downdraft? That if rates go up, does that impair customer willingness to get out there? And does that -- you'd have lower growth, right? So there's a bunch of puts and takes.

For me, like I lean into our strategy underpinnings, and we are definitely a growth-oriented institution. And so that's where we'll lean on outperforming.

Okay. So sticking to the things that you can control, your strategy. There, I think probably prior to your Investor Day, there was -- the amortizing HELOCs that TD basically introduced to the Canadian marketplace was a big growth driver for years. And then during the rate hike environment, kind of took a step back because of those trigger rate things. And now it's like you're reinvigorating that product strategy. Why?

And also, I get long questions, but what has been done to the product to make it so we don't have to worry about trigger rates again? Not that that seems like a plausible scenario right now, but could be in the future.

Maybe I'll take those in 2 parts. So on the product construct, of like our HELOC FlexLine product, I would back up the bus and say what we're really focused on in our Real Estate Secured Lending business, which we are transforming end to end, our 2 anchor points are speed and specialization. Maybe we'll talk about speed in another moment, but relevant to this question really is specialization.

And so what we're seeing is as we put specialists in front of each customer, increasingly, so we have leads from our branch channel going to our mobile mortgage specialists, where the deal is complex, as an example. And so as we put deeper specialists in front of each of our customers, what we find is the advice conversation becomes more robust and specific.

Naturally, the FlexLine product has a very rich value proposition in terms of flexibility to the customer. And so more specialization, leading to more advice conversations, opens up the aperture for customers in terms of what might be the best for them.

What we find is there's a segment of customers that really benefit and value this product proposition where you do have access to the floating portion as you pay down your principal. It helps manage life. Maybe you want to do a renovation or you're looking to invest in something else or, frankly, just a vacation. And so those are things that are really goodness that come out of deep client-centric advice conversations.

I would say over maybe the past 5 years, we had more upside in this HELOC FlexLine product, that we've now reinvigorated with the specialized approach. And frankly, from our perspective as an institution, clients, I think because their needs fundamentally are met for flexibility, we find that a client that has had this FlexLine product, they actually retain with us at a higher rate relative to the traditional mortgage.

So net-net, it's kind of the ecosystem where everybody wins. The client actually gets a better product that suits their needs, and as an institution, they stay with us. So it's a business trend that we definitely find is additive.

I think your second question on -- might be more related to the variable rate product and the amortization implications. We've kept that product construct fairly consistent over time. I know a few of our peers have a similar construct. What we notice is that when a customer comes to us and they have this big home purchase, cash flow really matters. And so what we've said is, yes, interest rates, you may choose a variable rate product, interest rates are going to go up, they might go down, but your cash flow is largely likely the same during that term of that mortgage. And so customers value that we keep that mortgage payment fixed and flat, right, through that time.

We do certainly offer them options. So during the life of that term, as rates change, they could increase their payments, they could do lump-sum payments to stay even-keel with amortization. So we offer that option.

What we do though do, which is very important at time of renewal, is that's like a real reset, right? The amortization, the payment amount. And so if there was any temporary negative amortization, that gets reset at that point. And traditionally, that's obviously quite important.

And so I think overall, what you see then is the approach that we're taking, the advice, the way we support our customers during different economic cycles, it all manifests in strong credit performance. So overall, we're quite happy with that combination of product offering, stability for customers, but then naturally a full reset at renewal time.

And I guess the whole refi notion was when we looked at those charts and saw the payment shock type situation last year and this year, and then for some of those borrowers that had -- weren't paying down their principal, they were negatively amortizing, what behaviors did you observe ahead of the renewal? Was it generally more, I guess, conservative or constructive, and similar expectation this year?

We've actually been very pleased with the performance through the renewal cycles. And I think all of us were a little queasy a couple of years ago to say, when we were early days in this, like, how will consumers be able to navigate through this circumstance? What we saw was very strong performance, both through the term of the mortgage as well as at renewal.

One of the things we pride ourselves on is being very proactive with our clients. So we will be monitoring the credit quality of the book in aggregate, obviously, but in segments and then down to the customer level. And we will reach out to customers if we see signs of distress early, and we can offer them constructive options at that time. And so then that also equally applies at time of renewal. And so we can look at: do they need a different amortization schedule? Is it an adjustment in payments?

And frankly, some customers, because it is a planned moment, like it's not like a month-to-month thing that they're reacting to, but they know their mortgage renewal is up a year from now, they will start to make the choices that they need to, to manage their affairs. And then we're there every step of the way to offer advice and constructive options while managing credit quality.

Okay. And have you observed any different behaviors regionally, like Ontario, in particular, that's higher unemployment rate?

Yes. We have a strong book in Ontario by virtue of our footprint, and that holds true in the RESL book as well. About half of our exposure is in Ontario. Naturally, I think the question comes up is the unemployment rate, as it varies between different regions, what's the impact to that region, but in aggregate in the book.

In Ontario, specifically, Gabe, our credit performance is actually slightly higher than the rest of the country. And so you've got an in-built better starting point in Ontario, an in-built resilience. And so to the degree that we see disproportionate impact, obviously, employment does translate into elevated losses, but we're starting out at a better point in Ontario. So net-net, we feel very comfortable with both the credit quality in the book, but the performance that's very much in line with our expectations.

Okay. What about on the unsecured side? We'll start with credit cards. And TD's business is a combination of 2. You've got the first class, you got the Aeroplan, the more affluent customer, I guess. And then you have something we don't talk about that often, but years ago, you bought the MBNA portfolio, and that's a different customer that uses credit cards more as a borrowing vehicle. Like what's going on with that customer right now? And how big is the book?

Yes. So maybe if I talk about the aggregate credit card business first. So it's a business that we highlighted at Investor Day, one that we see considerable upside opportunity. We identified that our aspiration is to deepen our relationships by 700 basis points in the Personal side and 1,500 basis points on the Small Business customer side.

I couldn't be more pleased with the progress that we're making. We're tracking ahead of where we even set our own goals. If I look at our record -- our relationship depth in both Personal and SBB, we're at record levels. And really, we've come off of an incredible quarter where we had the highest-ever acquisitions that we've had in any quarter across the portfolio.

What I really like, Gabe, is...

This is for cards, we're talking.

This is for cards. What I really like is that it's balanced growth. And how we're going about it is 2 very simple things. So we've taken our existing customers. These are checking customers from our leading day-to-day bank, and we're pre-approving those customers and being proactive, reaching out to them increasingly via mobile, which we hadn't done before. And so we've had record uptake in pre-approvals. These are customers we know, we have their data, they're franchise with us. We understand the credit risk and they fit very well within our risk appetite.

And then the second was this opportunity that we had. So we acquire more day-to-day customers every single year. But I would say we were doing okay at deepening the relationship into credit cards. Now we are doing so much better, like record levels of franchising at point-of-sale onboarding. And so it's very balanced growth. So we're really saying our core bread and butter of our business, those are the customers that we're growing with. And it's translating to number one year-over-year loan growth again this past quarter. So really, really strong progress, and then underpinned by these leading credit qualities. I think from soup to nuts, you see like a really well-performing book.

You mentioned MBNA in particular. I think the way I think about it, Gabe, is, and you've kind of articulated this in your question, is what we want to do is have a very full product shelf that has the right product for any customer. And so that's really what the MBNA portfolio gives us, is to have a choice for the customer that is looking for something that's more of that ilk. But at the same time, we have our premium travel cards, we have our cashback cards. Having that right roster of cards and partners is incredibly important. And then we do all the right things to make sure the book grows.

Right. So what's the portfolio, how big is it now, the MBNA one? And is it -- because it is a borrowing -- more of a credit product, right?

Yes. I mean, I think you have pockets of it, Gabe, right? So over the years, that book has diversified as well. Like you see Amazon, our Amazon product is in that portfolio and it has more of a spend kind of profile to it. So I would say that book continues to grow in line with our overall book. So we like the spot that it sits at in the customer continuum. It's really about customer choice.

Okay. And what's been the key to the record quarter for customer acquisition? What was the...

This is on the credit card side?

Yes.

Yes. So I think it goes back to this we have a large back book of clients that we have not, up until now, fully franchised to the full opportunity that we had. And so what we've said, and I think -- I hope you heard this like tone at Investor Day, like this is a TD that is an edgier TD, where we're saying like opportunity that's on the shelf, it's coming off the shelf. We are going to get at it. And these are just like all of the block and tackling pieces that we have to make sure we have pre-approvals ready to go.

It's a very different experience to say to a customer as they walk in, "Yes," versus, "Let me ask you 20 questions." It's a very different experience. Now let me make sure it's served up in mobile, right? We know more customers are in mobile than they are in our assisted channels. So these are all like the really healthy things that you do when you're just getting at the opportunity, the team has done an incredible job.

Okay. And then on the -- I know we talked about deposits earlier, more as a margin question, but the balances itself have been growing, which different banks are doing different things, but yours has been a bit of an outlier. And the story we hear from some of the other banks, which have maybe flatter deposit balances, that the old GICs that we originated back in 2021, '22, those are maturing, they're not coming back, they're going to the wealth product, whatever, and then the core deposits are still growing. So what's your version, I guess? What's happening at TD's deposit business that's maybe a bit different?

For sure. So maybe I'll break out into 2 pieces. So one, I would say, in this part of the rate cycle where rates have moderated, they're kind of at a lower level now, we are definitely seeing the favorable shift from term deposits into non-term deposits. So that is very much a phenomenon in our book and it's a tailwind for us.

What I would say though that underlies that or goes beyond that is, okay, so that's happening. But then the question is, how is the book also being replenished? And so for us, this is an acquisition and a book growth led story. So as new customers, as we bring in more customers, more customers onboard to TD with deposit product. So over 80% of our customers, when they come new to bank, open either a checking account or a savings account, often both. That's what we'd like.

And so when you have this consistent acquisition inflow and we do the things that we do incredibly well -- so we engage the customer, we make sure they're active, they're engaged. That leads to primacy. We have more Canadians view us as their primary bank than anyone else. And so when that happens, a primary customer tends to hold more deposits. They also tend to stay with us longer. And so this isn't something that's once and done. Like this is something we do every day, every week, every month. And it fuels this deposit book that we have.

And so what you see is a very preferential profile. We have 69% of our deposits that are in this non-term, very stable book, versus probably mid-50s in the industry. So this for us is, yes, we're seeing definitely the rundown in term deposits, but we are seeing this healthy, steady, strong acquisition base.

There's obviously going to always be seasonality, Gabe. There are some quarters that people are flowing into RSPs and other investments, so like an individual quarter might behave differently. But in aggregate, this has been a point of strength for TD. I think it's something that we pride ourselves in, and we continue to see strength and momentum here.

Okay. We talked a bit customer acquisition, growth, obvious reasons. But there's also a discussion to be had around what you do during periods of economic weakness. And in the past, we've heard banks say -- you talked about it, but when we're talking about mortgage renewals, working with our customers, getting ahead of them, like what -- the volume of that activity must be higher today than what it normally is. Other than reaching out to mortgage customers before renewal or well before renewal, are there any other strategies you're implementing to kind of make sure during a period of economic softness, that things don't -- we don't have more negative developments than is necessary?

Yes. I think we start with a very client-centric ethos and also a prudential ethos. And so if I start maybe with the second part first, when we underwrite a client, we pride ourselves on being a through-the-cycle lender. So that means then we don't have frothy times and we don't pull back, right? So we have a very consistent risk posture. So I think that matters first. Because we're saying there is a typical type of borrower profile that stays within our risk appetite on a perennial basis and we don't wax on, wax off. We would prefer to have consistency there. So you start out with that. You start out with a strong borrower.

The second thing that we do is obviously very holistic monitoring. And I mentioned that both at the portfolio, the subsegments, down to the individual borrower. I think the key for us is that we reach out early. So if you see distress, that customer can come into our TD Helps group, that I mentioned, in 2 ways.

One is someone -- they've talked to someone in a branch or one of our contact centers, and expressed some financial duress in their life. And then that could be a referral into our TD Helps team.

Equally, when we see things in our portfolio where we see signs of distress, maybe it hasn't manifested, maybe the person hasn't reached out, we will proactively reach out to customers and say, "Hey, can we offer you some help and advice?" We talked about mortgage, it might be like a temporary relief on payment, it might be adjusting actual payments amount and amortization. Like if you hear some of the individual stories, Gabe, like we really help customers through what might be some of their hardest moments. And so we pride ourselves we're there for life's best moments and we're there for the hardest moments.

And so I think it comes down to our borrower-by-borrower approach and to say like, "Let's work with you to try and get you through this." And so we've seen that, as the mortgage book has renewed through multiple cycles, we'll have 27% of that book renewed this year, we're there, we work with our clients. And that serves us really well.

And ultimately, you see it bear out in the results. We have, among our peers, leading performance in our RESL book, in our credit book. And I think it's the -- it's not one part of the ecosystem, like it's the whole thing, starting from underwriting, stability in the profile that we look for and then supporting our clients through tough times.

Okay. Well, I should end on a happier note.

Yes, let's find some happiness. We are very pleased with the momentum, I have to say, in the business. This past quarter, Gabe, we took -- we led the industry in personal deposits growth, in credit card growth and in our RESL growth. Our team has this data back to the last 8 years or so, we've never done that before. Like this is a team that is getting at the opportunity that we have, and we're tracking very well against where we said we were going to chart the path to the future.

Perfect.

Kelvin Tran, the CFO of TD. Kelvin, welcome again to the conference. Thank you for coming.

Thank you for having me. Great to be here.

So as per usual, what we've been -- I've been sort of highlighting for everybody is Canadian Banks just recently reported. So we'll do a lot of follow-up on what we just saw in the quarter. And I think in your case, one of the things that I constantly get asked about is loan growth. It's a function of all banks, U.S., Canada. But essentially, the question that I keep getting is when we look at your loan growth in '25, it was relatively light, below the peer median growth. And a lot of people want to know a little bit more about how you see loan growth evolving over the course of '26. And in your case, in particular, because you have a strong position in Canada, people are quite interested in the mortgage market. And what kind of housing market do you need for much stronger mortgage growth. So why don't we start with the loan growth question, and I'm sure it will evolve from there. But over to you, how do you see it evolving over 2026?

Sure, sure. Thanks for the question. Good afternoon, everyone. Yes. So why don't I just help you unpack the Canadian story versus the U.S. story and talking about how we see our results. So for Q1 this year, we're very pleased with our Canadian loan growth. If you look at the detail for the mortgage business, which is RESL, we call it. Volume grew more than 5% year-over-year, and that's on the back of a relatively challenging mortgage market. What we're laser-focused on is growing the originations of our proprietary channels, right? That's a more profitable channel, stickier. And it proves that -- and our originations there is up double digit year-over-year. So it proves that our specialization strategy is working and our refinement of our referral model between the branch and our mobile mortgage specialists is working as well. So very pleased about that.

The other asset class that we're very focused on is credit cards. And for those in Canada, volume was up 7% year-over-year. And we look at active accounts, and those were at record levels. and still growing at 5% year-over-year. So those are like leading indicators of future growth that you're talking about, the credit card business.

Is that like new accounts, do you mean or...

Active accounts. And so those would -- if you grow your active accounts and over time, they'll build more and more volume. And so they're at record levels and still growing 5% year-over-year. And then on the business loan side, that is up 6% year-over-year despite a fairly uncertain macro environment, as you know, in Canada. So overall, very pleased with the results of our Canadian businesses. And then on the U.S. business, as you know, we've worked really, really hard on restructuring our balance sheet over the last year. Because of the asset cap, we're very focused on creating 10% of balance sheet room so that we could continue to support our customers, our clients. And there, on loans or businesses that are less profitable, we exited them either by selling loans or by putting them in runoff mode.

So when you look at that year-over-year, that is impacting year-over-year loan growth. Excluding those runoff portfolios, we're really looking at core loan growth growing 2% year-over-year. But if you look underneath that on the areas that we really like, like in our proprietary bank card portfolio, that is up 15% year-over-year. And other areas that we really like, for example, is the commercial middle market business where we have synergies with TD Cowen. We like that space, we will continue to double down on that. So overall, that's the environment. We're very pleased with that on both sides of the border, given how we perform and the 2% loan growth ex runoff is fairly much in line with the U.S. market.

And can you speak to what you're seeing in terms of spreads for all of this loan growth? And we do see your net interest margin certainly in the U.S. has had a very big ramp up. And I know you can talk a little bit more about the NIM expansion that you've seen and what you're expecting going forward. But can you talk about the spreads that you're seeing on these loans?

Yes. Loans -- our loan spreads are good. And like we talked about over our strategy deployment per Investor Day, we're much more disciplined in terms of ROE threshold when we issue these loans. And so therefore, you do expect loan margins to be better than what they used to be, plus the fact that working with TD Cowen, it's going to generate fee income as well. So it's not just on an NII growth, but also fee income growth, whether it sits in TD Securities or in U.S. banking.

And a couple of weeks ago when I was fashioning these questions, I was thinking about possibly lower rates. I don't know if that's the case anymore. But if there was a change in interest rates in the U.S., how should we think about your margin?

Well, again, it depends on the week that you're asking me this question 2 weeks ago, maybe 2 to 3 rate cuts, now seemingly potentially no rate cuts depending on who you're listening to. I would say the direction over the last 2 weeks with less rate cuts is going to be a tailwind and beneficial to our margin in the U.S.

Yes. That's what I figured. And maybe just to wrap up the balance sheet growth deposits. How do you see that evolving? What we saw in Canada was a lot of term deposits sort of running off. Are we at the end of that? And can you talk about deposit, deposit mix and how that's affecting your margin?

Yes. I mean you're absolutely right. Several years ago, when rates were really high, you see a migration of core deposit, checking deposit to term. And it's been a while now that consistently every quarter, term deposit is coming down, it's going into core deposit, which we like.

So one of the things that I get asked a lot about is TD's stance on costs. And it became very clear at your Investor Day that you were going to be laser-focused on costs over the course of this time. Now one of the things that you guys did was a fairly large restructuring charge, savings of $775 million. Those are pretax numbers, by the way. And some of that $400 million in run rate cost savings is reaffirmed. I guess the question is, where have you been successful in reducing costs thus far in '26? And where could you maybe accelerate maybe in '26 and into '27 as people think about your efficiency targets and your operating leverage targets?

Sure, sure. So you're right. On Investor Day, we talked about cost take out about $2 billion to $2.5 billion. We have 6 levers where we could pull. And then more specifically by business segment, you would see a higher proportion of cost savings coming from the wholesale banking business and also U.S. banking. But all businesses would -- is expected to contribute to that. And somewhat public, you've already seen it. like in Q1, we announced store closures in U.S. banking. That's part of our distribution transformation lever. But there's also procurement, AI automation as well. And what Ray talked about and the management team is very focused on is reducing structural costs. It is looking at unit cost, how do we wake up every day just grinding down that cost day in, day out. And so if you look at RESL, we talked about that, how do you drive that we did 20% or more savings from just education, funding and discharge through automation and AI.

And then even in the claims and insurance, well, how do you drive claims cost down and prevent fraud and claims. On the procurement side, it is about both driving down volume, which is demand management, like how do you prioritize your activities to drive down demand, but also for unit cost, right? So it's volume times cost. And given our purchasing power, we continue to negotiate with the power of our franchise. And one recent win was looking at a very large contract on a North American basis and driving down significant savings through that renewal. And those are structural unit cost savings because those are vendors that we use on a continuous basis. And so that would drive down unit costs. And so very pleased about all of those levers that we have.

And what's the -- I mean, it was interesting, we had one of your peers up here was talking about sort of a bit of a philosophy. Do you guys kind of have a philosophy on, okay, we've driven down, I don't know, i will take the number. How about -- I've driven down $775 million pretax of costs. And part of that is going to go towards reinvestment in AI or is there a general philosophy at TD in terms of reinvestment and specifically into AI because there's probably going to be some follow-ups. AI has been very topical here.

Yes. We look at AI as one lever as any. So no specifically that we have to do that or not. It is all depending on the business case. And this year, where we guided to is expense growth of 3% to 4%, and that's all it. So meaning we're investing in the business, investing in areas where it would drive future growth, net of the productivity savings.

Yes. I mean your expense growth was up 7% year-over-year and a bit ahead of your -- I think, your longer-term guidance. So does it -- when do you think it moderates this year? Is it a back half story just like credit? Or is this something that can happen relatively quickly?

Right. So if you look at our expense growth, we're already bending the expense growth curve. 7% is the lowest expense growth in the last 6 quarters, right? And you would see that expense growth continue to come down as we, I would say, implement these strategies and these levers quarter-over-quarter. Okay.

And maybe just shifting gears now to credit, credit quality because I had a little bit of -- there's a few things out there on private credit that's hitting the markets recently. So I did want to touch on maybe just that first before we dive into some specifics. Can you speak to private credit exposure at TD and just give everybody a general idea of how you view the issues that we're seeing today in the private credit space?

Sure. Like we don't have big exposures to private credit around 1%. So nothing that we would call out or be concerned about.

And how is it -- is it -- what is it mostly consist of? Or is it very diversified by industry sector?

Yes, it's quite...

It's quite okay. So then looking at your ACLs and your existing and your PCLs that we recently saw. First and foremost, I think one of the things that everybody is really nervous about is the upcoming discussions on USMCA. Now we've got oil, high oil sort of some volatility around that. Can you maybe discuss how we should think about provisions for credit losses sort of playing out for the rest of the year? And maybe give us a range, like how -- everybody -- every Canadian bank is suggesting that provisions for credit losses are going to fall in the back half of the year. Why is that particularly true for your bank?

Yes. So number one, our guidance for PCL ratio is 40 to 50 basis points this year. We haven't changed our guidance despite the fact that there are changes in macro environment. And that's down from 45 to 55 basis points of last year. So that's an improvement year-over-year. In terms of our coverage ratio, we're at 99 basis points. So we feel very comfortable with that. And within that 99 basis points, is inclusive of over $500 million of tariff and trade policy-related risk reserves.

So we feel comfortable with that number because the way we go about it is actually looking at various scenarios that could play out given the information that we have now. Plus we also do a bottoms-up file-by-file review on the non-retail portfolio. And so that gives us confidence and a good understanding of where the risk resides, and we continue to be comfortable with that number. And then on top of that, we do stress testing on different possible scenarios that could come up. And so nothing right now tells us that we need to change that number.

And when you do this file-by-file review, how much of a future look can this actually play out for you? Because I mean typically, I remember that the old adage we really only have a view on this credit about 6 months. Is that a fair assessment?

I would say it's more than 6 months. But yes, you have to look at the customer, the geography, the industry they're in, vulnerable they are in terms of financial situation, but also to the shock that you're seeing in the market. You take that all into account, you stress them notches of downgrade differently. And then you go, okay, well, what is your exposure? And then using some expert judgment overlay on top of that.

And so what do you tell investors that ask about the small creep up we see in the consumer delinquency statistics across all Canadian banks. Why is that not -- why is that something that's not concerning the bank?

Because we expected that to happen. And so in when consumers are under pressure, which they are, you do expect consumer credit to deteriorate. And where you expect to first go would be credit cards and auto, and you're seeing that playing out. And when we look at our models, it's playing out fairly much as what we expected. And so therefore, from that perspective, we're not concerned. And we would expect continued pressure in that -- in those categories throughout 2026.

Okay. So that's not a function -- that's not what's going to help your PCL in the back half of the year.

Well, we're not one of the banks that said back half, first half. We said the 40 to 50 basis points. And I think in Q1, it was 43 basis points.

So you're still within the range for the rest of the year?

Exactly.

Okay. And how should we think about it -- or have you thought about discussing your longer-term loss ratio?

Well, there's so much depending on the macro environment, but what makes us feel good about it is when we look at the credit quality of our book, it is strong. And that gives us comfort. We haven't seen anything that causes us concern. And with the $500 million of reserve, we feel very comfortable.

So one of the other things that really sets you apart versus your peers is an extraordinarily high level of capital and a very active buyback program.

Good place to be in, right?

Yes. No, absolutely. There's no harm there. So last year, you returned a lot of capital. This year, I think you committed to about $7 billion of return on capital.

Yes.

The issue that I have is I can't model down your common equity Tier 1 ratio even after that large outlay. So realistically, where could we expect your common equity Tier 1 ratio to land at the end of the year? And are you -- is this a burning issue for you? Do you guys feel like really needs to come down to 13%. And I know you guys want to, but is it realistic for us to see it?

Right, right. And so one of the governor is ROE. We're very focused on driving ROE growth. We want ROEs to get to 16% in 2029 and hopefully even sooner. And so that's the amount of capital -- excess capital matters because that's the denominator. And what you heard us talking about it on Investor Day is that we are disciplined in deploying our capital, right? We're deploying our capital organically because that is the highest return that we get. And that would drive earnings growth, which would then come with higher dividends because we have a payout ratio that we want to stay with within 40 to 50 basis points. And then if there's any excess capital, bearing any additional usage, we will return that capital consistently back to our shareholders. And that's what we said, and that's what we were going to do.

And our goal is to get to 13% CET1 by the second half of 2027. And if that means that we need to launch another share buyback after this one, we will consider it, obviously, subject to approvals and market conditions and whatnot, and we're not shying returning capital that way.

And a question that I get from a lot of investors is, I mean, at some point, does the stock price stop you from buying back your stock?

Well, if you ask whether I care about what share price I buy back the stock, I do care. We're using shareholders' money to buy back our stock. But if you look at the increase in the stock price, it's just a reflection of our strong execution. And so we believe that if we continue to -- so don't look backward, but look forward, continue to execute on our strategy, we will continue to drive earnings growth. We will continue to drive ROE growth, and that would be further reflected in our share price. So we will be -- continue to be comfortable in doing that.

And so is it possible, Kelvin, that I don't have enough RWA growth built into the model because I can't get your common equity Tier 1 ratio down to -- I think I still -- I can't remember -- I think I've got like almost 14 by the end of '27. So it's really hard to grind it down. Is it -- is there a potential for RWA inflation here? Or what am I missing on that?

No, I think it's just a good problem to have. Like I said, we just spin off so much organic capital. But if there's a need, we're not shy of returning capital back to our shareholders through share buyback.

I will take questions from the audience. So don't be shy. If anybody wants to ask a question, please go ahead and raise your hand. Kelvin doesn't mind either, right?

No.

By any means, no. If there's no questions, we'll march on. It's been a really strong capital markets kind of environment. We've had a lot of volatility in the markets, a lot of client activity, a lot of business. Several of the Canadian bank CEOs, CFOs have all told me a lot of momentum bleeding into 2026. Maybe you can give us a view. And maybe give us a reminder on what it is that you're trying to accomplish with TD Cowen.

Sure. So I agree with that view. If you look at '25, there was good momentum going into Q1 and then Q1 now going into Q2. The market generally continues to be constructive, though last 2 weeks, there's quite a bit of volatility. We'll see how that plays out over time. It's early days. But you're right, if you look at Q1, our results were very strong. Earnings of $560 million, up 65% year-over-year, record revenue of $2.5 billion. And that's the combination of efforts that we spent is a multiyear effort in investing in wholesale banking. We like that business. We want it to grow. And TD Cowen filled the gap that we had. And with the successful integration and the continued building investment in prime services or global transaction banking, we see a lot of potential with wholesale banking.

Now when you step back, what's interesting is we do talk about a good macro environment. But if you look at the last year, they're actually quite different quarter-to-quarter because they're not -- it's not the exact same environment over time. In some quarters, fixed income is stronger. Some quarters, equity, equity derivative is stronger. Some quarters, advisory is stronger. And even in Q1, it was commodities but precious metals. And now in Q2, it seems like commodities but oil. And so to be able to perform in different markets just shows that we've built a diversified business that could capture opportunities when they arise. And so I feel really good about that.

Is the build over? Is there verticals that you need to work on?

There's no major gaps, but like I talked about, prime services, we're launching a few products, still more to go, but also global transaction banking is on its way. But a lot of the investments have been made already, but still some to go.

It's interesting, the global transaction banking. I mean, you hear it a lot, everybody is building it out, working on it. Is it getting to be a crowd space, what's your...

No, no, I don't think so. Like if you look at Global Transaction Banking in my oversimplified world, it's just the equivalent of the deposits business on the retail side, right? But it's helping corporate. And so those are sticky deposits that you'd like, you're servicing the customer, helping them with cash management. So all these are very similar to retail on the core checking and deposit. We like that business. We like the space.

And not getting competitive?

Everything is competitive, Darko.

Fair enough. But increased competition...

Right. But I think increased competition is good, but we were strong and we're up for it...

All right. And one other thing, I mean, it's now been how many years that Cowen has been in the fold. And I think we're past the point where people were once concerned that there were sort of handcuffs on employees. And like where are we in that journey?

What I would say is what we find is that you have to have the right culture to begin with. And we do spend a lot of time looking at cultural fit when we first acquired TD Cowen. And then at the end of the day, People want to work for a winning bank. People want to work for a bank that they're building something together. It's exciting when you're building something together. That's what we're being told for people who are from TD Cowen, but also people that are now joining the wholesale bank and say, we see that you are committed to investing in this franchise. We see that you're building something special here. We want to be part of it. And so I think like what's not to like.

And I guess maybe just draw the link between TD Cowen and the U.S. Bank. I mean I think that's the one thing that I think a lot of people really want to get a little bit more firmer in their mind in terms of the opportunity set.

Sure. Like so if you look at our U.S. banking business, they deal with small business and middle market clients. And TD Cowen, that is their sweet spot from an advisory perspective. But before when TD Cowen was on their own, they didn't have a balance sheet. So this is like a perfect marriage where we have a balance sheet in U.S. banking. We didn't have the capabilities, the expertise that TD Cowen would bring in. And now there's really good synergies.

From a booking point perspective, it's a little bit different, right, because you see some of the fees that go into wholesale bank -- so it's slightly different. But at the end of the day, I see this as one big bank, one big TD bank and how we are servicing our clients.

And -- I mean, have we seen tangible results? Or is this still more of an opportunity?

No, there's tangible results. And then -- but some of these relationships are multiyear relationship, like you build a relationship. It doesn't mean that there's an opportunity right away for them. But if you service them well and they build that relationship and you build that trust, it's just a matter of time.

And so another question that gets lobbed at me, and it's not one that I like to think about too much is Darko, what is your absolute best case scenario for TD and the asset cap? When could it come off? Maybe you can give us a bit of an update on the AML work that you've done and just give a reminder of kind of that asset cap and sort of the parameters around it.

Sure, sure. Just high level, we're making good progress on the AML remediation. We try to be as transparent as we can. So in the investor deck that you see, we talked about what we've been able to accomplish this quarter, but also what to expect next quarter. And so this way, next quarter, if we say, hey, we're missing something, then you know whether we're on track or not. And that's the transparency that we want to provide. In terms of the asset cap, we were so laser-focused, as you know, when we had the global resolution back in 2024, immediately, we announced how we're going to create the capacity. And that was really important for us.

It's not just the numbers game, but our clients want to know that we are there for them. And we want to be able to tell them right away, this is our strategy, look at our execution and the execution was really, really strong, creating 10% of balance sheet room. So we're very comfortable that we have enough room and we have additional levers we wanted to pull in servicing our clients. So from an asset cap perspective, we really like the space where we're at today.

Okay. Great. You mentioned earlier that you had some success with your credit card business. I think it was a 15% growth in U.S...

Bank card in the U.S., that's right.

But on the flip side, you just did something with Nordstrom. So maybe you can talk about the changes. What are the financial benefits we should think about with the changes and more -- and the business case, too? Maybe you can touch on that.

Sure, sure, sure. Stepping back, we just like the credit card space, the good space, not easy. You have to have scale, you have to have data so that you can manage the risk. Proprietary bank card is important because it helps us deepen relationship with our existing customers on the stores, the branches. And then the partnerships are important because we can leverage on their customer relationship to help us build scale. And this is just another evolution of that building scale because we now have taken over the servicing of Nordstrom's clients, right?

So full service provider. And so we've taken that over from Nordstrom. That required us to add people, a little bit of system. But that shows the importance -- the strategic importance of this asset class that we're committed to this partnership. We're committed to investing in this business. And this is what we know what to do. Like this is our space and it helps us build scale. And the benefits are with Target and Nordstrom is a revenue sharing and a credit risk sharing agreement. And so by taking the servicing over, we will take a bigger share of revenue but also expected credit losses. But net-net, it's a benefit to the bottom line.

So it's an overall better benefit, but now you're participating in some of the credit risk?

We always participated in the credit risk, but it was a different percent -- but yes, so I'm making it up here. So let's say it used to be 90-10. We had 10%. Now it was like 80-20, right? So we just have more revenue, but also more expected credit losses. But overall, the revenues we expect to be higher than the credit losses. And so therefore, you make more money out of the deal.

So that was Nordstrom. The obvious question is Target? Or is this something that you -- and is this a commercial for more of these kind of relationships?

No, we like the space. We think that we could operate this more efficiently. And so we've done it now with Nordstrom. It was converted this quarter. And so with scale, it's just going to be more profitability for us.

Okay. We're coming up to the end of our time together. Maybe you can give us a couple of key takeaways that you'd like to leave with investors.

Sure. Well, thank you for having me. I always enjoy this conference. We're very pleased about the execution that you've seen so far. We've laid out our strategy at Investor Day. And what we're asking our shareholders to do is trust us, we will do what we said we would do. If you look at Q1, that is playing out as we expected. And we're committed to delivering the financial targets and the strategies that we've laid out on Investor Day.

Okay. That's it. Thank you so much. Appreciate it.

Good morning, everyone. Welcome to the TD Bank Group First Quarter 2026 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Hales, Head of Investor Relations. Please go ahead, Ms. Hales.

Thank you, operator. Good morning, and welcome to TD Bank Group's First Quarter 2026 Results Presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO; followed by Leo Salom, Group Head, U.S. Banking, after which Kelvin Tran, the bank's CFO, will present our first quarter operating results. Ajai Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from analysts on the phone. Also present today to answer your questions are Sona Mehta, Group Head, Canadian Personal Banking; Barbara Hooper, Group Head, Canadian Business Banking; Paul Clark, Group Head, Wealth Management and Insurance; and Tim Wiggan, Group Head, Wholesale Banking.

Please turn to the next slide. Our comments during this call may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provided readers with a better understanding of how management views the bank's performance. Ray, Leo and Kelvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our Q1 2026 MD&A. I would also like to note that effective this quarter, the bank renamed its U.S. Retail segment to U.S. Banking to better reflect the segment's financial products and services.

With that, let me turn the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. Thanks for joining us. We had another strong quarter as we continue to demonstrate momentum across our strategic priorities. In Q1, the bank delivered a strong quarter with record earnings of $4.2 billion and EPS of $2.44, powering an ROE of 4.2%, up 100 basis points year-over-year. We saw robust trading and fee income growth in our markets-driven businesses, volume growth in Canadian P&C Banking and margin expansion. Impaired PCLs ticked up quarter-over-quarter in wholesale and U.S. commercial, reflecting a small number of borrowers across various industries. Overall, credit performance was in line with our expectations. We continue to expect fiscal 2026 PCLs to fall within a range of 40 to 50 basis points. Ajai will share more details shortly in his remarks.

Our year-over-year expense growth continued to moderate this quarter, and we delivered positive operating leverage for the third consecutive quarter. We are on track to achieve our 3% to 4% expense growth target for fiscal 2026. The bank's Q1 CET1 ratio was 14.5% with strong organic capital accretion in the quarter. In January, we completed our $8 billion share buyback and launched our new $7 billion share buyback. As of the end of Q1, we had bought back approximately 84 million shares across these 2 buyback programs. We remain committed to consistently returning excess capital to our shareholders. We have conviction that TD's current share price does not fully reflect the bank's intrinsic value. TD has strong momentum, and we see considerable upside from here. Even with significant share buybacks, TD's robust organic capital accretion means it will take time for the bank to reach a 13% CET1 ratio. This is an enviable position for any bank and a unique advantage for TD. We are managing towards a 13% CET1 ratio by the second half of fiscal 2027.

Overall, we have momentum across our businesses as we continue to deliver on our strategies to deepen relationships, make TD simpler and faster and execute with discipline. We continue to see potential upside to our 6% to 8% EPS growth and 13% ROE targets for fiscal 2026, provided that positive macroeconomic conditions continue.

Please turn to Slide 3. Canadian Personal and Commercial Banking delivered record revenue, PTPP, earnings, deposit and loan volumes. In real estate secured lending, loans were up 5% year-over-year, and we continue to achieve sequential origination margin expansion. In addition, we saw record Q1 originations in our proprietary channels. In cards, we delivered the highest quarterly acquisition in a decade, driven by record pre-approvals for our existing clients and record point-of-sale deepening in our branches. We saw continued acceleration in the business bank with loans and non-term deposits up 6% and 7% year-over-year, respectively.

At Investor Day, we laid out our strategy to capture deepening opportunities, including frontline expansion. We have added over 300 business bankers, an increase of 10% since the end of fiscal 2024, and we are seeing the benefits of that strategy play through. In U.S. Banking, we saw continued momentum across our core business lines as we deepen relationships with our clients. Mid-market lending balances were up 4% year-over-year, and we saw strong pipeline growth with commitments up 15% over the same period. U.S. proprietary credit card balances were up 15% year-over-year with record digital acquisition. Earlier this month, we completed the conversion of Nordstrom's card clients onto our servicing platform. This is an important strategic milestone that provides scale as we build out our credit card franchise.

In our U.S. wealth business, total client assets were up 12% year-over-year with mass affluent client assets up 18% year-over-year. Wealth Management and Insurance delivered record earnings and assets. Let me start by congratulating the direct investing team. Last week, our leadership in the market was once again recognized when personal finance expert, Rob Carrick, said TD Direct investing is still king among Canadians online trading platforms. As we saw in Canadian business banking, our frontline expansion strategy is also delivering results in wealth. We added almost 200 financial planners and advisers since the end of fiscal 2024. In the most recent data, TD took 19 basis points of market share in financial planning with newly hired planners delivering strong growth. This month, we successfully combined our discretionary business in private wealth management.

This simplifies our business model, enhances our value proposition to clients and helps position us for outsized growth. It is expected to unlock $40 million in platform and operational efficiencies as outlined at Investor Day. And in insurance, we continue to build on our position as Canada's leading digital direct insurer with almost 80% of our clients digitally engaged, strong progress to our Investor Day target of 90% plus. We have significant growth aspirations for our insurance business, and we are mitigating the volatility that comes with that growth.

This quarter, we issued another innovative cat bond in the Canadian market, the first that offers protection against aggregate losses of small- and medium-sized cat events. Wholesale Banking delivered record revenue and earnings, supported by strong client activities across Global Markets and Corporate Investment Banking. The team continued to make progress on disciplined execution, achieving improved ROE and moderated year-over-year expense growth this quarter. Reflecting continued momentum, TD Cowen ranked in the top 10 in 10 categories in the 2025 Extel Global Fixed Income Survey and TD Securities was awarded the Best Trade Finance Bank in North America by Trade Treasury Payments.

Please turn to Slide 4. This quarter, we continue to make progress against our strategy to deepen relationships, make TD simpler and faster and execute with discipline. As we shared at Investor Day, TD has significant opportunities to grow franchise relationships across the bank. This quarter, we drove increased penetration rates in both consumer and small business credit cards in Canada and in our proprietary bank card in the U.S. We are also making progress on our deepening targets in TD Securities. We launched Synthetic Prime in the U.S. and Europe. Our clients have told us they want to diversify their prime providers and our robust balance sheet and capabilities position us well for this opportunity. Our target of $1 billion in value from AI over the medium term reflects both our progress to date and our confidence in what's ahead. A core tenet of our AI strategy is to build once and use many times, scaling AI through repeatable patterns that lead to faster AI deployments and reduced cost of delivery. We saw the benefits of this approach with our GenAI knowledge management solution, which we first introduced in our contact centers last year and have now deployed across our over 1,000 branches in Canada.

Questions that used to have colleagues jumping through screens are now answered in seconds. We are taking the same approach with agentic AI. We launched the initial scaling of an agentic AI solution to simplify the RESL pre-adjudication process. This provides the foundation for broader agentic AI adoption across RESL and other businesses. We are executing with discipline across the bank. Kelvin will share more details on our efforts to deliver structural cost reduction in his remarks. We have a clear strategy that is driving higher ROE with 4 consecutive quarters of ROE improvement in U.S. Banking and ROE up over 400 basis points year-over-year in Wholesale Banking. I remain confident that we will achieve the medium-term targets that we laid out at Investor Day. In fact, for ROE, we may get there faster than we expected.

At our current earnings, achieving a 13% CET1 ratio through share repurchases translates into approximately 100 basis points of ROE. Delivering on our $2 billion to $2.5 billion cost takeout would yield an additional 150 basis points of ROE. And all our businesses are laser-focused on driving ROE to their Investor Day targets. With these levers and our strong performance in Q1, I am confident in our path to 16% ROE.

Please turn to Slide 5. TD is the only Canadian company ranked in the top 100 most valuable brands in the world by brand finance, and we continue to invest to extend this leadership and deepen our client relationships. Earlier this month, we launched our new brand, reinforcing that in this complex digital-first world, TD will always be more human by delivering simpler, more intuitive and more connected banking experiences in every interaction and in every channel.

Thank you to our colleagues across the bank for your dedication and commitment. TD is back to winning because of you. With that, I will hand it over to Leo.

Thank you very much, Ray, and good morning, everyone. Please turn to Slide 6. As we enter into 2026, we remain focused on our #1 priority and continue to make good progress as expected against our U.S. AML remediation program. This quarter, we continued to improve the efficiency, the efficacy and the accuracy of our program. This month, our new KYC platform went live to our business users. This is an important milestone as it delivers a centralized platform that enables the collection and maintenance of customer information in a single know your customer profile. As we complete the full implementation of this new system in the coming months, we will gain better insights about our customers, establishing an important building block of a strong AML program.

In addition, as we've spoken about previously, we are continuing to work on additional AI and machine learning capabilities. We implemented machine learning models in our transaction monitoring system last year and additional models will be deployed in our program over the coming quarters. Finally, we rolled out an enhanced financial crime risk assessment methodology that is data-driven, resulting in a more sophisticated assessment of the bank's financial crimes risk. I'm pleased with the work that our teams have been able to accomplish, and I'm certain that we are building a sustainable program that will serve us well into the future. From a financial perspective, while investments will fluctuate from quarter-to-quarter, we continue to expect our AML remediation spend to be $500 million in fiscal 2026.

That said, the composition of our spend will gradually change towards validation work and look-back costs as we complete our remaining management remediation actions. With that, I'll turn it over to Kelvin.

Thank you, Leo. Please turn to Slide 7. Driven by robust top line momentum, coupled with disciplined execution, TD delivered a strong quarter with record earnings. Total bank PTPP was up 19% year-over-year after removing the impact of the U.S. strategic card portfolio, FX and insurance service expenses. We've shared the details on Slide 23. Revenue grew 11% year-over-year, reflecting growth across all of our businesses. At 43 basis points, total PCLs were within our guided range. Expenses increased 7% year-over-year with approximately 1% driven by variable compensation, foreign exchange and the impact of the U.S. strategic card portfolio. We delivered our third consecutive quarter of positive operating leverage.

Please turn to Slide 8. This quarter, we incurred restructuring charges of $200 million pretax driven by further workforce optimization. We have now concluded the restructuring program with total charges of $886 million pretax. We expect fully realized annual cost savings of $775 million pretax. Our restructuring program is one part of our broader efforts to drive structural cost reduction across the bank. As you heard at Investor Day, we are targeting $2 billion to $2.5 billion in annualized cost savings over the medium term. AI is helping power these savings as we scale through repeatable patterns driving faster deployment and reduce cost of delivery. Strong cost management and a deeper understanding of unit costs are also critical components of this effort.

In insurance, we expect to deliver over $150 million of claims cost reductions over the medium term through vendor optimization and AI deployment and fraud detection and process reengineering. This will drive reduced time lines for claims fraud detection and increase speed and accuracy for claims resolution, further enhancing the client experience. We're also making progress in wealth. Investments in process improvement, digital and AI capabilities are expected to reduce the time it takes to complete a financial plan by 50%, creating capacity for higher-value advisory and business development activities. This is just the beginning. We look forward to providing further updates as this work progresses.

Please turn to Slide 9. Canadian Personal and Commercial Banking delivered record revenue, PTPP, earnings, deposit and loan volumes. Average deposits rose 3% year-over-year, reflecting 3% growth in personal deposits and 5% growth in business deposits. Average loan volumes rose 5% year-over-year with 5% growth in personal volumes and 6% growth in business volumes. NIM was stable, up 1 basis point quarter-over-quarter. With good revenue and disciplined expense management, we delivered over 200 basis points of operating leverage. We made strategic investments to deepen relationships such as adding business bankers in priority markets and equally to create simpler and faster client experiences that also reduce structural unit costs, including our launch of the RESL pre-adjudication agentic AI capability that Ray shared. Going forward, we will take the opportunity to invest in our strategic priorities while continuing with disciplined execution. As we look forward to Q2, we again expect net interest margin to be relatively stable.

Please turn to Slide 10. In U.S. Banking, year-over-year, earnings were up 22%, PTPP was up 7% and ROTCE expanded by 330 basis points to 14.7%. Excluding sweeps and targeted runoff in our government banking business, deposits were up 1% year-over-year. Core loans grew 2% year-over-year, reflecting continued strength in bank card, home equity and middle market. Net interest margin was 3.38%, up 13 basis points quarter-over-quarter, driven by an adjustment for client deposit rates in the prior quarter and higher loan margins from improved product mix. As we look forward to Q2, we expect NIM to modestly increase.

Expenses increased 8% year-over-year, reflecting higher governance and control costs and employee-related expenses. As Ray mentioned, earlier this month, we completed the conversion of Nordstrom card clients onto our servicing platform. Going forward, for Nordstrom, TD will have a higher share of revenue and expected losses. Slide 22 provides an illustrative example of the accounting for our strategic card partnerships. As a result of the Nordstrom change and consistent with similar transactions, we expect the receivable adjustment of USD 145 million to be treated as an item of note in Q2. The Nordstrom conversion was fully reflected in the guidance that we provided at Investor Day. U.S. Banking is on track to achieve our target of USD 2.9 billion in earnings in fiscal 2026.

In addition, I wanted to highlight a change in the presentation of our financials for U.S. Banking. TD invests in tax advantaged entities to support the communities in which we operate while generating income tax benefits. Previously, losses on these investments were recognized in noninterest income, while the related tax benefits were recognized in provision for income taxes. Effective this quarter, to promote comparability with U.S. peers, we reclassified the losses from noninterest income to provision for income taxes in U.S. banking. In accordance with IFRS, we made offsetting adjustment in corporate segment so that there is no change in noninterest income or provision for income taxes at the total bank level. This change lowers the efficiency ratio in U.S. banking. As a result, we updated our medium-term target and now expect U.S. Banking to deliver an efficiency ratio in the mid-50s by fiscal 2029.

Please turn to Slide 11. In Q1, Wealth Management and Insurance delivered record earnings and assets. We saw market share gains across our businesses, led by 97 basis points of revenue share growth year-over-year in direct investing. Trades per day were up 10% year-over-year, driven by new client growth and deeper relationships. ETF assets surpassed $31 billion, up from $17 billion at the end of fiscal 2024 and well on our way to our medium-term target of $54 billion. In Insurance, we continue to focus on profitable growth, increasing ROE by 80 basis points year-over-year. Sequentially, expenses for the segment, excluding variable compensation, were down 2%, reflecting disciplined expense management. We are driving structural cost savings while investing for the future, including unifying our discretionary private wealth businesses and our new TD Easy Trade app.

Please turn to Slide 12. Wholesale Banking delivered record revenue and earnings driven by broad-based performance across Global Markets and Corporate and Investment Banking with strength in commodities, global equity derivative and advisory fees and equity underwriting. Overall, performance reflects the depth and diversification of the platform, combined with high levels of client activity and constructive market conditions. Impaired PCLs increased, reflecting a small number of borrowers across various industries. Ajai will share more detail shortly in his remarks. Expenses increased 5% year-over-year as we continue to invest in technology and front-office capabilities, spending to support business growth and higher variable compensation. Return on equity for the quarter was 12.6%, driven by strong revenue growth, moderating expense growth and disciplined capital management.

Please turn to Slide 13. Corporate net loss for the quarter was $153 million, a smaller loss than the same quarter last year, reflecting higher revenue from treasury and balance sheet management activities, partially offset by higher net corporate expenses.

Please turn to Slide 14. The common equity Tier 1 ratio ended the quarter at 14.5%, down 15 basis points sequentially. We delivered strong organic capital accretion this quarter. The bank repurchased 19 million common shares under its previous and current share buyback programs in Q1, which reduced CET1 by 38 basis points. As Ray said, TD's capital position is a competitive advantage. We remain committed to consistently returning excess capital to our shareholders.

And with that, I will turn it over to Ajai.

Okay. Well, thank you, Kelvin, and good morning, everyone. I was pleased with the bank's overall credit performance this quarter. Now let me turn to the results, starting on Slide 15. Gross impaired loan formations were 27 basis points, an increase of 4 basis points quarter-over-quarter. The increase was largely recorded across the wholesale banking and U.S. commercial lending portfolios related to a small number of borrowers across a range of industries, partially offset by lower formations in the Canadian commercial lending portfolio.

Please turn to Slide 16. Gross impaired loans increased 2 basis points quarter-over-quarter to 58 basis points or $5.59 billion. The increase was reflected in the U.S. commercial and Canadian consumer portfolios, partially offset by lower impairments in Canadian commercial.

Please turn to Slide 17. Recall that our presentation reports PCL ratios, both gross and net of the partner share of the U.S. strategic card PCLs. We remind you that U.S. card PCLs recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income. The bank's provision for credit losses was 43 basis points, an increase of $57 million or 2 basis points quarter-over-quarter, driven by the Wholesale Banking segment, partially offset by lower provisions in Canadian Personal and Commercial Banking.

Please turn to Slide 18. Impaired PCLs were $1.16 billion, increasing $221 million quarter-over-quarter, largely as a result of credit migration in the wholesale and U.S. commercial lending portfolios related to a small number of borrowers across a range of industries, partially offset by lower provisions in Canadian commercial. More than half of the increase in the bank's impaired PCLs this quarter was due to a single borrower in the wholesale segment. We do not expect the level of impaired provisions in wholesale this quarter to be reflective of a typical run rate moving forward. The bank recorded a performing PCL recovery of $125 million, reflecting improvement in the macroeconomic forecast and migration from performing to impaired in the wholesale and U.S. commercial lending portfolios. The performing PCL recovery was primarily recorded in the U.S. Banking and Wholesale segments.

Please turn to Slide 19. The allowance for credit losses decreased $144 million quarter-over-quarter related to a $156 million impact from foreign exchange, improvement in the Canadian and U.S. economic forecasts, partially offset by higher impaired allowance in the wholesale and U.S. commercial lending portfolios. Now to summarize, the bank exhibited strong credit performance this quarter as PCLs were within the guidance offered at the end of last year. Additionally, we remain prudently provisioned with allowance coverage of gross loans at 99 basis points, including more than $500 million in reserves set aside for ongoing elevated policy and trade uncertainty.

Looking forward, while results may vary by quarter and are subject to changes to economic conditions, we continue to expect fiscal 2026 PCLs to fall within a range of 40 to 50 basis points. TD is well positioned to operate through a variety of economic scenarios, considering our prudent provisioning, broad diversification across products and geographies, our strong capital position and our through-the-cycle underwriting standards.

With that, operator, we are now ready to begin the Q&A session.

[Operator Instructions]

The first question comes from Matthew Lee with Canaccord Genuity.

If we assume you reach 13% CET1 ratio by the end of 2027 and your cost savings continue to improve and you achieve the earnings growth in your targets, I think my math suggests that you can get to that 16% ROE by the exit of 2027. Can you maybe talk about factors might prevent you from getting there or whether it's just a matter of accounting for the unknowns?

Thanks, Matt. It's Ray. Thanks for the question. As I said at the end of our Q4 results, I mean, we are definitely seeing good momentum coming out of, first and foremost, fiscal 2025, and you saw that momentum carry through. And you're seeing that play through on our ROE at 14.2% after the first quarter. The way I would think about it, Matt, is on some of the things that we control. If you think about our CET1 ratio getting down to the 13% by the second half of 2026 -- 2027, as I commented in my comments, that gives us another 100 basis points. We are well on pace on our $2 billion to $2.5 billion expense takeout and the discipline and the structural cost reduction. We're actually a bit ahead of schedule, I would say, on the things that we're focused on. That gives us another 150 basis points pickup on that. And so -- and if you look across our businesses for the quarter, every business at TD improved their ROE as per our Investor Day commitment.

So, what I would say is that we're certainly -- as I said even in our Q4 comments, we are ahead of pace as to what we thought during Investor Day, and our confidence is high on getting to the 16% ROE that the guidance that we gave. That's the way I would think about it.

Okay. That's helpful. And then maybe just a quick one on the U.S. loan book. Total loans were down 9%, but core loans were up 2%. Can you just maybe help us understand what the areas of focus are in terms of growing that book in the U.S.? And when we should start thinking about core loan growth being to outpace the identified sales and runoffs?

So Matt, thanks for the question. So if you look at the core loan growth for the quarter, it was 2%. If I can break that down for you, we saw really strong consumer lending growth. As I prioritized in our Investor Day discussion, our credit card book, particularly our bank card book is a major area of focus for us. So just to give you a sense of the momentum that we've got in that segment, we saw 15% balance growth for the quarter. Unit sales were up 33% on a year-on-year basis. We use the term penetration rate as a critical indicator of the cards portfolio success, and we saw a 200 basis point increase in the penetration of credit cards to our deposit client base on a year-on-year basis. So we're making progress towards that plus 30% figure that we gave at Investor Day. And sales activities were strong coming out of the seasonal Christmas rush. So you put all those things together, we are pleased about our consumer lending growth anchored by that cards performance.

On the commercial side, a bit more of a tale of 2 cities. at the higher end, at the corporate mid-market business, we're seeing relatively good activity and loan demand. So our mid-market business, we saw 4% growth. And Ray, I think, commented in his comments, we saw 15% growth in actual commitments. So the pipelines look good at the top end of the -- at the larger corporate end of the market. Likewise, in our specialty business, higher education, which is a really important segment for us, we saw loan growth of about 5%. So at the higher end, we're seeing good loan demand and the economic momentum in the U.S. is translating into good loan growth.

Where we're seeing a little bit of sluggishness in the U.S. market broadly is at the small business and sort of the lower-end community banking level. That segment is growing a little slower. And I think that those businesses are just more susceptible to the trade uncertainty, the supply chain disruptions and just the current state of interest rates. So I think there, we're still seeing some muted growth. But when you take everything as a whole, I'm quite pleased with the 2% growth on balance. I would expect that growth rate to moderately accelerate over the next couple of quarters. And we should -- to your point around when should the entire portfolio switch over to a net growth position. We are targeting that in the third quarter, total loans, so that would include the -- those loans that have been identified for runoff, we would actually post net loan growth at the aggregate bank level in the U.S.

The next question comes from Gabriel Dechaine with National Bank Financial.

Yes. I just got a quick one here on credit performance because we saw the impaired going and performing going in a different direction here, and you did a good job explaining the -- what was going on in the impaired book and your expectations going forward. Just wondering about the performing release. I guess part of it is the U.S. some runoff, but what macro changes did you make that might have resulted in these pretty material releases?

Yes. Thanks, Gabe, for the question. So again, I'll start by saying our performance release, it's well founded, and it's been through all our governance processes. And there are really 2 drivers of that release. One is the macro changes. And if you go and look at our disclosures, you'll see the unemployment numbers have improved both Canada and the United States, and you'll see the GDP numbers have also improved. That drove part of the release, okay? The second part, actually don't even think about it as a release, okay? We built performing against names that were migrating. When that loan moves from performing to impaired, I have to reverse the performance and add it to the impaired. So those are the 2 component parts. But again, as I said, it's well founded.

The next question comes from Paul Holden with CIBC Capital Markets.

Two questions related to Leo's business. I guess, first is with respect to the NIM expansion, 13 basis points this quarter, guidance for modest expansion next quarter. I think that was the same guidance we got this quarter. So what drove the upside this quarter and the potential it follows through next quarter? And then second part of the question, with that good NIM expansion with you talking about loan growth starting to improve and crossing over to positive in Q3 and what I'm seeing good expense discipline, can we start to expect to see positive operating leverage and lower efficiency ratio out of the U.S. Bank in 2026?

So Paul, let me take both of those, and then maybe I'll give you a sort of a summary view on the aggregate U.S. performance. Let me start with the NIM. We delivered NIM of 338 basis points, up 13 basis points quarter-on-quarter, 52 basis points on a year-on-year basis. So obviously, a strong print. Really 3 factors. One, the remaining impact of all the loan repositioning work that we did last year, which obviously gave us a strong tailwind. Second, selective repricing activities across both the deposit and loan book as we adjust the overall balance sheet to its new size. And third, the tailwinds that we're enjoying from tractor on rates. So those were the 3 primary drivers. And that was offset ever so slightly by the repricing by the Fed rate cut.

As we look at the next period, I won't have quite as much tailwind from the bond repositioning activity because that's already reflected in our NII. But I till think that we'll have margin expansion opportunities that'll be more modest in nature.

And then as we think about the rest of the year, obviously, that tractor tailwind will still be there, but we'll have to absorb the Fed rate cuts that are planned for the second half of the year. So that's basically in a nutshell where we think overall NII is going to be. But as you saw, the net interest income number on an absolute basis from a revenue perspective was up 10% year-on-year. So we're really pleased with the momentum that we're seeing there in aggregate.

With regards to overall loan performance or the state of the business broadly, I couldn't be more pleased with the quarter. NIA $723, up 22% on a year-on-year basis and driven by both top line revenue growth and sound credit performance. I think it was a good solid profile. We are seeing acceleration in those critical loan areas that you mentioned, and I would expect that to continue over the next few quarters. But I do want to hit your expense point. A lot of effort is going into our expense strategies, expense -- strategic cost management strategies. As you would have seen this quarter, we did close 51 stores as we announced in the Investor Day.

So we are going to see distribution savings. We continue to lean into our vendor management programs with a sizable win this past quarter, which certainly will contribute to our expense run rate profile going forward. AI and some of the process automation work is still front and center. And we are beginning to see some degree of opportunities to at least change the resourcing mix associated with our remediation programs, all of which should create some downward pressure on expenses for the balance of the year. So you put the revenue momentum that we're enjoying now, the pricing discipline we've 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.

Okay. That's good. One follow-up, if you don't mind. Just looking at the quarter-over-quarter change in branch count down roughly 5%, but FTE up roughly 2.5%. Maybe you can just talk quickly into in terms of where you're adding headcount, and then I'll stop there.

Paul, I'm glad you brought it up because I should have mentioned it before, but we had a really important transaction that we closed. We successfully converted the Nordstrom portfolio onto our platform. So effective this past weekend, we are now servicing all of Nordstrom onto our platform. So the FTE increase that you saw was essentially additional call center representatives, our collection staff and fraud to be able to manage that expanded volume flow that now we'll be managing directly. Previously, it was managed in Nordstrom. So we've taken -- we've expanded our staffing to be able to support that portfolio.

The next question comes from Sohrab Movahedi with BMO Capital Markets.

I just wanted to -- a question for Sona. If I remember correctly, I think at the Investor Day, the medium-term type of targets for your business would have had efficiency ratios, which I think you're at right now and ROEs around, I think, where you're at right now or at least where in this quarter. So is this as good as it gets for your business from those sorts of metrics? Or is there still room for improvement here, Sona?

Thanks, Sohrab, for the question. Yes, you're referencing our Investor Day targets. So both on efficiency ratio and ROE, we're targeting the 40% range. Sohrab, maybe if I just step back and look at both of those. So our efficiency ratio, obviously, this quarter, both from a revenue and an expense perspective, we're pleased with the performance this quarter. As I look at what we talked about at Investor Day, there's a number of levers that we have to manage efficiency ratio and improve efficiency ratio. We talked about distribution optimization. We talked about tech platforms and procurement. But what has become an even greater driver, I would say, since Investor Day is how we will deploy AI to favor efficiency ratio.

Maybe I'll just spend a few seconds on that. Our approach there is really to drive simple and fast experiences, but they come with real P&L outcomes. One example I would share with you. So you heard me talk a lot at Investor Day about speed and specialization. It's absolutely core to our RESL strategy. And so we recently deployed and started to scale agentic AI into the RESL workflow. That's taking pre-adjudication processes from 15 hours down to minutes. So it's delivering speed to decision. As we said, speed was a big strategy, a better colleague experience that helps us win more business. And of course, it takes out structural cost as well.

So I think what you will see is a number of things that we will do will benefit efficiency ratio and will benefit ROE over the long term. And these are short-cycle cases that we get up and down and deliver real value. So back to your point, I think we're very pleased with the performance, and we'll continue to lead in, and we're making very good progress on our Investor Day targets across the board.

And I think if I heard you correctly, but correct me if I'm wrong, since Investor Day, you would have -- you would move these targets higher basically, lower expense ratio and higher ROE just because of the traction on AI. Is that fair?

Not quite. I think you will see us lean heavily in. Our targets, we hold on our specific targets, but the momentum and progress is incredible. We just see an engine that is humming and we see lots of possibilities.

Maybe I'll just jump in for a second also. What I would add is that the benefits that we think we will get now from an AI perspective, how we put out the $1 billion, $500 million in revenue, $500 million in expenses, as Sona outlined with one example with the agentic. We now see how much that can be scaled across the organization across every business line. So if you think about this mortgage example, it can be applied in credit cards, can be applied in small business banking, can be applied in commercial banking in the U.S. And so I do think we're going to get more from the value from an AI perspective beyond the $1 billion that Sona commented on. And then again, we're seeing good momentum, better momentum than what we had thought during Investor Day as -- which was only 6 months ago. So I think a great start to the year and lots of momentum. And then if the macro environment continues, we do think we have upside both to our ROE at the enterprise level and to the EPS guidance that we provided.

There are no more questions in the queue at this time. I would now like to return the call to Mr. Raymond Chun for closing remarks.

Well, thank you, operator, and thank you, everyone, for joining us today. We appreciate your questions and comments. In Q1, we continued our strong momentum, delivering robust top line growth, positive operating leverage and record earnings. ROE was 14.2%, up 100 basis points year-over-year as we continue to execute against the strategies and targets that we've shared with you. Fiscal 2026 is off to a strong start, and I'm confident TD will continue to deliver for its shareholders. I look forward to connecting with all of you again next quarter. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Next session. But before we begin, I've been asked to tell you that Raymond Chun's comments today may include forward-looking statements. Actual results could differ materially from forecasts, projections or conclusions in these statements. Listeners can find additional details in the public filings of TD Bank Group. Okay. Raymond, thank you for joining.

Thanks for having me here, Darko.

Always a tough one to have with a bank that had an Investor Day so close to and then a good fourth quarter. So -- and your fourth quarter, in particular, was interesting in the sense that when I went through the results, there was an amazing amount of guidance in your numbers. So a lot of what I'm going to ask today is maybe for some refinement on a few things.

And I do want to go back to the Investor Day and the plan. So what I wanted to sort of touch on is -- some of the things you said in the last fourth quarter call was pretty interesting in terms of credit card penetration, referrals from wealth, the strength in mortgage originations. So I wanted to touch on knowing a little bit about sort of how that's coming about so quickly, so strongly, the momentum that you pick, what's changed? How is execution going? And how should we think about those things as we head into 2026?

Sure. Lots there. I could take 35 minutes just on that one question there, but I'll try to maybe get it down to 5, everybody. We had our Investor Day, which was in September. I mean, in some ways, it feels like it was a lot long -- lot much longer, but it's not that long ago.

Let me start by saying if -- as we come out of the Q4 earnings season, the momentum that we have at TD coming out of the Q4 would be better than I would have anticipated at Investor Day back in September.

And so part of what I said on the call is around EPS and ROE. Do we think that there is some tailwind opportunities in those metrics, assuming that the macro environment conditions stay relatively stable, I would say yes. And so I do think we are further down the journey than I would have anticipated already at this point, even though Investor Day was only in September. So the execution portion -- and so what gives me that sort of confidence or the proof points that you would say that the momentum is better than we would have said. I mean when we exited 2025 on the Canadian Personal Banking, which is certainly the area of the organization that from an organic growth perspective is driving a lot of our growth.

We were -- from a year-on-year growth perspective, we were #1 in personal deposit growth, #1 in credit card growth and #1 in RESL growth.

In the Wealth Management business for direct investing, which is a critical business for us in Wealth Management, we had 27% account growth on a year-on-year basis, 37% growth in trades per day. I mean these are huge numbers on top of already sort of on a year-on-year basis. So I'd say the momentum there. Then you look at TD Securities and Q4 at $2.2 billion in revenues, we continue to see the benefit of the fully integrated North American global platform that we've introduced, and we're just getting started on that journey.

I'd say the cost management piece, and I'm sure we'll talk about cost management, Darko, is the piece that we are early days, but I'm excited about. We are doing cost management differently under my leadership and moving to this unit cost management and driving structural costs out, and I'll be happy to talk about that.

On the RESL side, I think it's been a very positive story. Honestly, for me, winning on RESL absolutely does matter. right? If we look at our RESL portfolio, for our clients that have a mortgage with TD, they are 2x more likely to have a checking account, a savings account and a credit card, right? And so this whole -- remember, the 3 big themes that we have at TD Bank that came out of the Investor Day strat review, right, that we laid out was, number one was deepening our relationships across every business line with our clients. Number two was a simpler and faster bank. And number three was disciplined execution.

I would tell you, having a mortgage matters when you're trying to deepen relationships across the organization. And we are doing things differently on the mortgage side to drive that growth. The mix is one. We've gone from sort of more on the broker side historically to a mix move towards proprietary mortgages. And so we're adding 500 mortgage specialists inside of our 500 largest mortgage branches. We have 1,000 MMS, and these are our mortgage mobile sales force that are the hunters. Historically, those individuals would have been hunting externally while the branches were taking care of the organic growth, Darko.

Last year, what we did is we brought the mortgage sales force back into the right? And so what I would tell everybody is that the turnover rate in the personal banking inside of a branch is every 18 to 24 months, you see the personal bankers sort of rotating through. There's probably 30% of mortgages that no matter how well you train that group, think self-employed, think rental properties, multi-units, multiple properties. They're just more complex for someone that's only been on the job for 18, 24 months.

Get the mortgage experts, the 1,000 colleagues that are TD proprietary to do that, and that's exactly what we've done. And even in a down home market in 2025, we had record closed deals in mortgages in TD Bank, and it's because of some of these changes that we've made on the RESL side.

And then from a profitability perspective, what you've seen Sona and team has put significant attention towards managing the profitability and the margins. And you're seeing margin expansion on mortgages on both acquisition and renewal, right? And so the product itself is becoming much, much more profitable from a margin perspective, deepening the relationship, it's key. And then for us, making sure that we become the bank of choice from a relationship banking is critical as part of our strategy.

And so how do you manage the spread, especially with all these renewals going on? Is it just a function of the rates are in a better place?

I think it's a combination of a few things. One is -- and I'll speak specifically to TD Bank, right? I would say, historically, over the last number of years, part of our portfolio was the mix of the product, meaning we had a higher percentage of our mortgage portfolio in mortgages versus HELOCs. Right? And so disproportionately higher. And so we are certainly rebalancing that with our clients. And so you'll find better margin on the HELOC portfolio versus the mortgage portfolio. And so you're seeing that.

For us, we were over concentrated a little bit too much on broker, from a broker channel perspective. And as you move back to the proprietary channel, you're starting to see margin expansion on that piece of it. And so -- and yes, pricing matters, right? And so we've introduced much, much more sophistication using machine learning, but we've also made real-time pricing engines available for the broker channel. And so as much as rate matters to a broker, speed matters incredibly. And so speeding up that entire RESL process, Darko, has had huge benefits to us from -- not just from a closing of deals, but from a profitability.

Okay. Great. That's great insight. Maybe switching gears a little bit, thinking about commercial loan growth. I've heard mixed views on commercial going into '26. Some people are saying, look, it's still uncertain, pens are down. But I'm hearing we're -- there's also some green shoots. How do you see it in Canada and in the U.S.? And where do you see actually the better opportunity in '26 for your franchises in Canada or the U.S.?

On the commercial banking side, if you look at our Q4 numbers, you'd see that we actually had good momentum in commercial banking on both sides. On the -- in Canada, you saw deposit and loan growth somewhere in that 5%, 6% in Q4. What I would tell you in Canada, we are making significant investments in distribution expansion and that's right across the board.

And so remember, if you go back to the Investor Day presentation, what we've said is we're adding 1,200 wealth advisers in Canada, we'll be adding 880 -- that's over the next 3 years. We're going to add 880 business bankers, and that's a mix between small business bankers and commercial bankers in Canada. And we're going to add 1,000 specialists inside of our branches, the 500 mortgage specialists, but also 500 investment specialists inside of the Canadian.

On the U.S. side, we're going to add 500 wealth advisers in wealth, 200 commercial bankers in the United States. And so part of the accelerating our growth, where we underinvested potentially as a bank over the last number of years is on our frontline distribution sales capabilities, and that's where we're actually redirecting some of our investments.

And so if you think commercial bank specifically, -- if you go back again to Barb's Investor Day presentation, we were the fifth largest commercial bank 20 years ago. We've grown that business now to be the #2 largest commercial bank in Canada, right? And that's in both commercial lending, also the small business lending.

But we fundamentally believe that local leadership matters and having feet on the ground in the local markets with the specialized skills in the local markets is a differentiator for TD Bank. And so adding all of these bankers in local markets across the country where we've done the analysis, we have the demand.

From a risk perspective and a risk appetite, risk curve, you'll see no change at TD Bank in all of our businesses across the organization when it comes to risk appetite or risk curve. But we need more bankers on the ground across all of our businesses, not just business banking. And that would be true both in Canada and the United States.

But which area do you think you're more optimistic on with respect to loan demand? Would it be Canada or the U.S.?

I think loan demand right now, Canada. I mean the numbers that I'm seeing would predict that, but we are growing in the United States and especially in our mid-market businesses in the United States and our partnership between Leo's U.S. commercial banking business and Tim Wiggan's TD Securities business, we're seeing terrific opportunities to build volume in those areas. We haven't had that type of partnership in those 2 businesses ever before, and we're seeing that now between the commercial bank in the U.S., Darko, and TD Securities with the fully integrated Cowen integration now complete.

And where are you on this journey of adding all of these frontline staff? I mean it's just very early days, right?

Very early days, but I would say on the business banking side, we added 200 business bankers last year. And again, that's between commercial banking and small business banking.

On the wealth management side, we added 50. So we actually intentionally slowed the machine a little bit on the wealth. We're going to now accelerate that in Canada on a go-forward basis. And on the U.S. side, I'd say early days from a wealth management perspective. And about half of our growth in each of these areas will be sort of internal colleagues that are moving up inside the organization.

So think about personal bankers or the investment specialists becoming financial planners. Think about financial planners becoming investment advisers and those types of things. So you see a natural movement there, small business bankers becoming business bankers on that side of it. And that would be true in the U.S. And then the other half is external recruiting that we're seeing coming in from other organizations.

And that might be tough in this environment. Markets are up. It's expensive. It's...

You know what, it's -- listen, it's competitive for sure, especially in the wealth management space. But I do think our value proposition that we're presenting to the Street and the opportunities is resonating, and we're seeing actually good take-up.

So lots of frontline expansion brings you to costs, right? I mean so -- and one of the interesting things that we heard about at your Investor Day was a far more focused, I would say, focused view on costs. You talk about structural costs. Maybe you can talk a little bit about where you are in that journey. And since Investor Day, have you unearthed more opportunities? And what can you say to us about the cost.

Absolutely. And I do think cost management is very, very important, as you saw what we said at Investor Day. I was clear that we're looking at cost management under 6 buckets, and it's structural costs. And so those buckets, distribution transformation, AI automation, data technology, you're going to get moderation of our expense spend overall. You've got the global resourcing strategies that we have.

And what am I missing? I'm missing one, right? But if I look across those buckets, the biggest thing that I would say to everybody, and I'll give you a couple of examples, is moving to a unit cost management, right? And so -- procurement would be the last one, right? And so when you move to a unit cost management, it is fundamentally different, how you're trying to take the real structural cost out of company permanently, right?

And so historically, when you would have heard organizations talking about some sort of an expense management, cost management, you'd see project spends being cut, you'd see marketing spends being cut. You might see FTE hiring freezes. All of that, as I've said, is like a fad diet, right? It all comes back in time, right? And so what you got to do is say, how do you take the run rate cost of your business completely out?

And let me give you a perfect example. On the mortgage side of the business, here's what we're doing, right? And you can replicate this into the top 20 processes across TD Bank. There's 3 buckets of costs when you look at mortgages. There's adjudication, there's funding and then there's sort of end-of-life discharge. Those are the big buckets of cost. And so if you look at TD Bank's unit cost on adjudication of a mortgage 2 years ago, that was $514 per unit.

Funding was $124 per unit. Discharge was $24 per unit. And through the use of AI, automation, modernize, redoing our processes, policies and what have you, you fast forward to 2025, Darko, that adjudication cost went from $514 down to $390. That's down 21% now. And it is a fundamental restructuring cost that's permanent. If you look at our funding, it's gone from $124 down to $97. And for discharges, we've gone from $24 down to $19. That's 24% and 23%, respectively. That's not the end of the journey.

The exciting part actually starts in 2026 when we start to layer in Agentic AI on top of that. And so in the next 2 quarters, you're going to see Agentic AI layered into each one of those buckets. And I give you -- on the discharge component, as you layer Agentic AI and you actually make the entire process where you don't involve people, we're going from the $19 that we're at today, and we can take out another 50%, we'll be down to $9 per unit on the discharge. So you go from $24 two years ago down to $9 on that.

If you look at adjudication that we're at $390, the big part of adjudication is sort of that pre-adjudication, and then any of you that have purchased a home, you see like think about your down payment confirmation, income confirmation, purchase agreement validation. That's a lot of prework that needs to get done. Historically, that has taken 1.5 days to 2 days. That is now down to minutes under our new process. And so you just layer this stuff in, Darko, and these are permanent reductions, and we do a lot of these.

Now you can take what we just did in the discharge side of the Agentic AI, and there's dozens of applications of that exact process of the Agentic that you can apply to other things in the organization. And an example that I've been giving people is to say, I ran the -- when I ran the insurance business, if you had a glass claim that came in, and we have tens of thousands of glass claims. Today, that's all done manually by people.

Tomorrow, that same Agentic AI process that we apply to discharges, you could apply to processing and paying out glass claims through an Agentic AI process. So lots of opportunities. And so the $1 billion target that we set for AI, we've done -- we did 75 use cases in 2025, netted us $170 million of value. We have 20 -- sorry, $200 million booked of initiatives that's going to drive $200 million of value for AI-related initiatives in 2026 and $1 billion overall over the medium term. And I actually think one of the things that I'm seeing is that there's more opportunity than even what I had thought initially back on Investor day.

So that's great detail. I was busy writing down a bunch of room. But in addition to the structural work that you're just talking about, you took restructuring charges in '25. And as the way we measure it, restructuring charges as a percentage of your base, expense base, whatever, it was relatively high, right? So some of the feedback I've been getting is, wow, this is a bit of a left turn for TD, so focused on cost, Darko, is it too aggressive for TD? Is there friction? Are there -- what do you say to those peers -- because I literally look back and I say, TD has the most aggressive cost targets. It just is what it is. But how do you allay those peers that it's...

On the restructuring piece, so we've said $825 million of restructuring charge, will be finished that at the end of Q1 will be the last sort of [ ION ] treatment. Going forward, no more restructuring charges on that. That's going to net us -- that's going to generate $750 million pretax annualized benefits from the $825 million restructuring charge. That's that.

What I would tell you is this, if you go across TD Bank, there is a real excitement. And what I would tell people is usually when you talk about cost management or expense management, that doesn't naturally fit into excitement. Right? And so -- but what we're positioning inside the organization is to say, it's not -- we are not reducing your project budgets. We are not reducing our hiring freeze of FTE. I'm not cutting marketing spend.

What we're going to do is restructure the waste that's in the organization and go to this unit cost. It allows us to invest and innovate. It allows us to add the distribution FTE that I just talked about. There is excitement across the organization that we're actually investing in the things that we need to invest in Darko while we bring this discipline.

And the last part of our strategy was disciplined execution on cost management, capital management. and governance and control, right? And that has really resonated across the organization because it isn't just we're going to take it all and starve the businesses. Usually, when you get into this expense management push, the worry is, are you starving the businesses and then ultimately, from an innovation, competitiveness, growth, what happens there. You saw in our commitment at the Investor Day from an MTO perspective, we are driving earnings growth throughout the MTO and have high confidence in our commitments and targets that we've set for the MTO.

And maybe just a final sort of touch on that is I thought that at Investor Day, I think in total was $2 billion to $2.5 billion of cost takeout, inclusive of the restructuring, but that a large part of that would fall to the bottom line. Is that still the case today?

That's still the case because what I've said to everybody and externally, but also internally, we don't need more project spend. We have sufficient budget for what we need to get done on that piece of it. And so where we are going to take some of it is to invest in the areas that we think can accelerate our growth on a go-forward basis. But think about something like distribution transformation, everyone. That to me is TD Bank probably, in my opinion, certainly in Canada, probably just the same in the United States.

We have more opportunity in the distribution transformation than any of the other Canadian banks. Part of that is just a model that over time, TD Bank, and it's been a great model, and we're going to continue to be a leader from a branch perspective, but our longer hours or comfort, convenience has driven more transactions into our branches to the tune of about 30 million more over-the-counter transactions happen today at TD Bank branches in Canada and the U.S. than our next closest competitor.

And the vast, vast, vast majority of those transactions, everyone, can be done on the mobile device today without one more dollar of technology spend. That's bill payments, depositing a check, moving money, so on and so forth, right, setting up your direct deposit. And so we have a huge opportunity to migrate those transactions and move forward. In the contact center, we get 2 million calls a month in phone channel calls every single month.

And the vast majority of those calls are simple banking transactions that can be done through a mobile digital device today, right? And so if you look at all of that, that's just pure cost takeout that we can do and actually goes right down to the bottom line. And I believe it's a win for customers. I keep pushing to my team, certainly in the middle of winter, I don't know how it is actually a good thing for clients to have to go into a TD branch in minus 20 degrees and 3 inches of snow to deposit a check. We have that capability.

So you will see a significant push in TD Bank to improve the experience for our clients, but also to educate our clients on how to use the digital mobile tools and the capabilities and channels that we have, Darko, and that will be a big benefit for clients, but it will also be a good benefit from a shareholder perspective.

Okay. So one of the things that sort of has been helping the Canadian banks and certainly TD with a large deposit base has been tractoring improvement in mortgage spreads and all that's positive. And I think a lot of that -- the expectation is that a lot of that will continue into 2026. I think one thing that's different, though, is maybe the Fed -- the U.S. Federal cut rate.

So maybe you can talk about -- because you have a big U.S. business and you repositioned the balance sheet there. So maybe you can talk a little bit about how we should think about the environment in the U.S. with rates going down, how that might affect or not affect your net interest income and net interest margin.

So on the NIM perspective, I would tell you, I mean, we have in TD economics, we've called for 2 rate reductions in the United States, probably in the first half of the year, let's see. But lots can change as the administration makes changes, right, as we go forward. But that's what we have in our plan.

In Canada, we have rates staying stable for 2026. And so I do think a little bit of a different environment. If you look at the U.S. from a NIM perspective, we do think our guidance on the NIM, at least certainly in the first quarter, but as we look forward, still moderate expansion of NIM in the U.S. And that's part of that is the bond investment portfolio that we executed. The benefits of that will continue to play through.

And again, we'll continue to manage the interest rate environment and the tractors on that side of it. I'd say Canada, a little bit different guidance. It's first half, second half. I'd say the first half guidance around NIM has been more to that it's going to be stable. And then in the second half, you'll start to see some potential NIM expansion in Canada for TD Bank, talking TD specific.

And the expansion is driven by...

Well, you've got a combination of expansion that you're seeing in our RESL margins, right? Our on-off tractors are still positive in both the U.S. and Canada. And so you're going to still see some tailwinds there. But there are still some headwinds that we're managing on the rates perspective. And again, I'll preface all of this by the USMCA is still the big uncertainty. And depending on where that lands, some of these, obviously, macro issues can change quite rapidly and quite significantly. But at least from the perspective that we would have is that, that environment is better today than it was last year and the Canadian government and Prime Minister Carney, I think, is doing all the right stuff right now to manage that, and we'll hopefully see where that lands.

And so that's NII. What about the fee side of the business? How should we think about fees?

We've been very clear. If I go back to the Investor Day, I think one of our biggest opportunities that TD Bank has is to increase our fee revenue. We are still too much from an interest rate perspective in NII. And so you're seeing that the businesses, first and foremost, that we are investing to accelerate is between TD Securities, Wealth Management and TD Insurance. all right? And so those 3 businesses, as you heard at Investor Day, have significant upside growth opportunities and it is to drive the fee income side. And you're seeing that.

So whether it's TD Securities, record revenues on a quarter. Every quarter, they're producing record revenues. We're still early in that journey. From a wealth management perspective, record earnings in 2025. And I think you're going to see that continue as we make investments in these 1,200 wealth advisers. We're also launching new capability in direct investing, the next generation, what I call TD Easy Trade to go after new to investing clients that are sort of go toe-to-toe with Wealthsimple. You're going to see that play through.

And then I think in the insurance business, we just fundamentally have, I believe, the winning model with a direct model that is a digital model. And when I ran the insurance business 6 years ago, everyone, and this is part of the structural cost reduction, that business was the #1 direct investing business back then and it still is today. But we were a phone channel business exclusively. And so all sales would have been done through the phone channel. And so as we grew the TD Insurance business 6 years ago, what did you have to do? You have to add more people in the contact center, more underwriters, more people in the back-office operations.

We made the decision 3, 3.5 years ago to modernize the entire tech stack of the insurance business at TD Insurance. It is the most modern tech stack that is available in Canada for home and auto insurance. And last year, 50% of all policies underwritten in TD Insurance for home and auto insurance were done digitally with straight-through processing, no human intervention. That goes from shopping to binding to all your servicing, issuers of your digital pink slips.

So as you go forward, we've taken a massive variable expense business, and we've made it into a fixed expense business at a marginal cost of pennies at the next policy level. That's not true for traditional brokers. You've got to pay large commissions for every single deal. That gives us a significant cost advantage as we move forward in the insurance business. And that's why you saw the ROE that I know surprised a lot of you as to how much ROE the insurance business the TD generates on a go-forward basis. That will get even better, everybody.

When I think about AI, TD Insurance is further down the AI journey than any other part inside of TD Bank. And so whether that's in pricing sophistication to fraud, to claims management, all of those areas will become significantly more efficient leveraging AI as we move forward, and they are the furthest down that journey.

Okay. At this point, I think I'm going to quickly rush over to the questions.

Sure. Sure.

So first question, once your loan reduction efforts in the U.S. are complete, where -- which loan categories do you think will have the highest growth potential in '26 and '27?

Yes. So I think, again, we have finished the -- for the most part, we finished the balance sheet restructuring. And so we've got the $52 billion of asset cap room. And so we are definitely back into trying to drive the growth as per the question. I will say everybody -- I want to make sure that everybody understands the AML remediation in the United States, it is -- Leo and team have done a terrific job in making sure we get to the milestones and the commitments, but we are not at end of job. And that is still #1 priority in the United States and for TD Bank is to make sure in 2026 that we complete what we need to do and actually deliver on the commitments that are still required around the AML remediation side.

So I just want to make sure that even though the conversation today is more around growth, that is still the #1 priority and has to be, and we won't be distracted from that.

On the growth side, I do think from a middle market commercial banking perspective and small business banking, we see significant opportunities, not just to grow, but to grow it more profitably. And so what you're seeing in the United States is a significant move towards ROE right? And so we have gone through and looked at every single client on our books, whether it's in TD Securities or whether it's in the commercial bank, both Canada and the United States to make sure what do we need to do with each one of those clients to deepen the relationships to get to the ROE hurdles that we want to get to.

And so it's a combination of growing, but deepening the relationships that we have to actually be more from an ROE. And we need -- those are the 2 businesses that I would say we said it at the Investor Day. From an ROE perspective, both of those targets are at 13%. And it's great to see for Leo and the U.S. Bank, this shift to an ROE focus last year, they improved ROE 180 basis points year-on-year. And you saw in the TD Securities business, another business that's heavily shifted towards an ROE focus. Q4, we ended the quarter at 12.6% ROE, and both of those have a medium-term target of 13%. And so again, 2 businesses that to me are ahead of the pace that we had thought we'd be at during Investor Day.

Okay. Interesting question. So digital banking and stablecoins looking to disrupt traditional branch banking. How do you defend against this? And how big a threat do you view these trends?

So if you look at stablecoin, and I think there's maybe 2 separate questions. There's the digital banking question, which I'll get to. And then there's a sort of digital assets, stablecoin. I think you've got to break that whole digital assets piece into 3 buckets, everyone. You've got tokenized deposits, you have stablecoin and you have crypto, right? And so I would say the piece that I think has the highest opportunity and the one that certainly from a TD Bank perspective, we'd be most focused on immediately is on tokenized deposits. I think there's huge benefits. It's regulated.

The benefits to -- from a P&L perspective, from a client perspective, it's an on-us transaction. So I think tokenized deposits is certainly real and it has terrific opportunities. The stablecoin piece, lots of, obviously, attention, and that's the one that's certainly in the U.S., the Genius Act. What you're seeing that played through in 2025 is sort of regulation around stablecoin, which is actually a good thing. You're seeing Canada quickly coming up behind that.

And so the question that I think everybody needs to think their way through on stablecoin is you need interoperability. You don't need -- you can't have 200 different stablecoins out there. Otherwise, it's a very little value. And so what's the platform or what's the way in which the ecosystem will allow interoperability of stablecoin and at different currencies, whether it's a U.S. dollar stablecoin, Canadian dollar stablecoin.

And so you're seeing lots of discussion in the industry around various different operating models as to how you might launch stablecoin. And it's different potentially in a country like Canada, where you have a concentration of banks versus in the United States where you have over 4,000 banks, right? And so a lot more to be played out, but that's where the noise or a lot of attention.

And then on crypto, that to me is much, much more of an investment and certainly on the direct investing side, and that's more of a sort of a different conversation, a retail conversation that I think about it, right? So that's the way I would think about that.

On the digital transformation on banking, what I would say to everybody is, listen, I think if you're going to win in the future, you have to be able to win on not even just digital, you have to win on mobile, right? And that's just the way we live our lives today. And I always say to people, it doesn't matter like there's only one thing that I drive back to my house in the morning, if I forget, and that's my mobile phone, right?

And so we have to make sure that TD Bank creates mobile experiences that are simple, fast and engaging. And it matters because if you think of all the new to Canada that's coming to Canada, where are they all coming from? They're all coming from countries that are much, much more advanced, Asia, Europe, India, Africa. These countries, they lead with mobile in many, many cases. And so I do think getting that mobile leadership matters to Darko as you go forward.

So we're at the last few minutes. Over to you for some key takeaways for investors.

I appreciate that. First of all, I think last year when I was here for my first time at the same point, I sort of said, if I'm back next year, judge us on whether or not we delivered on sort of the 4 big critical initiatives that matter to TD.

And the first one was ensuring that from an AML that we do what we say we're going to do and deliver from an AML perspective and rebuild our trust relationship with regulators. And I think Leo and team have done that.

The second part I'd say is we need to restructure the United States from a balance sheet perspective, so we have the asset cap room, we had the investment bond portfolio that we needed to execute and then pivot the organization to be much, much more ROI focused, and I'd give them a checkmark on that.

The third part that we said is that we're in the midst of doing a strategic review. We'll roll that out at an Investor Day and be more transparent with all of you on guidance targets and what we plan to do as an organization as we go forward. And I think that's really, really resonated, not just externally, internally with our colleagues, the move to deepening relationships, building a simpler and faster bank, leveraging AI automation and driving discipline around cost management, capital management and governance and control has mattered, and we've simplified that.

And I'd say finally, and probably the most important part that I thought for 2025 was making sure that we retain our best talent, that we create an environment that attracts top talent and we start to rebuild the trust between our critical stakeholders that includes yourselves, our investors, our regulators, our clients and of our colleagues. And I would tell you today, not only is there excitement across TD Bank, the pride is back within TD Bank and this idea of winning at TD has really, really resonated. So I would say, feel great about delivering on the things that Darko that we said that we would deliver in 2025. And that's part of what we want to be known as a management team is that what we say we will do.

And so as I think about 2026 and when I'm back here next year, I'm hopeful that there's probably 3 things. And the first thing I would say is hold us accountable to the targets that we set at Investor Day for 2026.

On EPS, on ROE, on cost management, expense management, positive operating leverage that we deliver what we say we're going to deliver. I think you should hold us accountable.

Number two is clear proof and evidence that we are building deeper relationships, a simpler and faster bank and more discipline on how we run our organization.

And I would say three is that we are fundamentally operating our capital differently as we go forward. And so we start with always organic capital and we are more disciplined now around the organic capital. We are exiting noncore businesses, and you've seen us do that across 2025. But even in the businesses that we are operating in, holding them to ROE standards and making sure that they have a road map on the organic side, investing in businesses organically that are accretive from an ROE perspective and add value to the shareholder.

And then two, on the capital piece, what I've said very clearly and very publicly is if we do not have a need, if there is excess capital after the organic investments that we will return consistently capital back to the shareholders on an ongoing basis. And so I think it's -- those are the 3 things that I would say will guide us in 2026 when I'm back here next year.

Excellent. Thank you very much.

Thank you everyone.

Good morning, everyone. Welcome to the TD Bank Group Fourth Quarter 2025 Earnings Conference Call. I would now like to turn the meeting over to Ms. Brooke Hales, Head of Investor Relations. Please go ahead, Ms. Hales.

Thank you, operator. Good morning, and welcome to TD Bank Group's Fourth Quarter 2025 Results Presentation. We will begin today's presentation with remarks from Raymond Chun, the bank's CEO; followed by Leo Salom, Group Head, U.S. Retail, after which Kelvin Tran, the bank's CFO, will present our fourth quarter operating results. Ajai Bambawale, Chief Risk Officer, will then offer comments on credit quality, after which we will invite questions from analysts on the phone.

Also present today to answer your questions are Sona Mehta, Group Head, Canadian Personal Banking; Barbara Hooper, Group Head, Canadian Business Banking; Tim Wiggan, Group Head, Wholesale Banking; and Paul Clark, Senior Executive Vice President, Wealth Management. Please turn to the next slide.

Our comments during this call may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide readers with a better understanding of how management views the bank's performance. Ray, Leo and Kelvin will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in our 2025 annual report. With that, let me turn the presentation over to Ray.

Thank you, Brooke, and good morning, everyone. We ended the year with another strong quarter, which I'm looking forward to discussing in a minute, along with the progress we've made against our new strategic pillars. First, I'd like to share my perspective on the external environment. There continues to be a high degree of uncertainty around tariffs and Canada-U.S. trade dynamics with important impacts, particularly to industries facing the highest tariffs such as steel and aluminum.

While economic uncertainty has impacted business and consumer confidence, Canada's economy and employment remain largely resilient. New government actions such as the Canadian Mutual Recognition Agreement, defense spending increases, the major projects office and other measures to incentivize private sector and foreign investment will help support economic activity as Canada prepares for CUSMA renegotiations.

As one of Canada's largest employers serving 1 in 3 Canadians, we will continue to work with our clients and governments to build a stronger economy. In the U.S., the economy continues to perform with businesses and households benefiting from regulatory and monetary policy changes, and we're seeing a pickup in investment activity in some sectors. With the strong presence across the Eastern Seaboard of the U.S. serving more than 10 million American businesses and households, we are focused on helping them achieve their financial goals.

Across our business, TD is well positioned to manage through this period and help our clients successfully navigate a changing landscape. Now before I move to our performance, on behalf of all of our colleagues on the Board, I want to share our deepest condolences with the family and friends of Nadir Mohamed. We were fortunate to have him as a director from 2008 to 2023. And like in all of his other professional endeavors, he made a tremendous and lasting impact on our organization. Our thoughts are with everyone who had the privilege of knowing him.

With that, let's turn to the next slide. At our Investor Day, we described our strategy to deepen relationships, make TD simpler and faster and execute with discipline. I'm looking forward to providing updates on our progress each quarter. Our single greatest growth opportunity is to deepen relationships with clients across our businesses. This year, we achieved record personal credit card penetration rates and delivered record closed referrals from the Canadian Personal Bank to wealth, and we're just getting started. In TD Securities, we are leveraging our platform to provide a full suite of services to our clients, including acting across advisory and financing products for National Fuel Gas' recent acquisition of the CenterPoint business.

As you heard at Investor Day, AI is a massive opportunity for TD, and we have concrete plans that are already delivering clear outcomes. This year, we implemented approximately 75 AI use cases that generated $170 million in value. These use cases span from transforming loan underwriting to creating intelligent leads to deepening relationships to meet more of our clients' needs. For next year, we expect the AI use cases to generate $200 million in incremental value, including use cases to reimagine end-to-end processes as described at Investor Day.

We are prioritizing our AI investments with use cases focused across categories such as customer acquisition, customer insights and risk management. We are also delivering disciplined governance and controls. In fiscal 2025, fraud losses were down 26% year-over-year, driven by ongoing investments in fraud modernization across capabilities, data, systems and processes. We have a clear strategy that will accelerate growth and returns and drive long-term shareholder value.

I remain confident that we will achieve the medium-term targets that we laid out at our Investor Day. This year, we delivered 5% earnings growth, much stronger performance than we anticipated at this time last year when we expected it would be challenging to deliver earnings growth through a transition year. Our year-over-year expense growth moderated this quarter, and we delivered positive operating leverage. We are on track to deliver 3% to 4% expense growth and positive operating leverage in fiscal 2026, aligned with the targets we shared at Investor Day.

TD delivered a strong Q4, and we are carrying that momentum into fiscal 2026. We expect to achieve the 6% to 8% EPS growth and 13% ROE targets for fiscal 2026 that we provided on Investor Day. And we see potential upside to these EPS and ROE targets from our strong business momentum and the outcomes we are driving by deepening relationships, delivering a simpler and faster bank and executing with discipline, supported by tailwinds if positive macroeconomic conditions continue and from PCLs if trade and tariff uncertainty reduces. Both Ajai and Kelvin will provide more details on our fiscal 2026 outlook in their remarks.

Please turn to Slide 3. In Q4, the bank delivered a strong quarter with earnings of $3.9 billion, EPS of $2.18 and ROE up 110 basis points year-over-year. We saw robust fee and trading income in our markets-driven businesses and volume growth year-over-year in Canadian Personal and Commercial Banking. TD delivered positive operating leverage this quarter. PCLs were stable quarter-over-quarter, reflecting strong credit performance. Ajai will share more details shortly in his remarks. We have moved from an annual dividend review cycle to a semiannual cycle to support alignment of shareholder return with earnings growth.

Today, we announced a $0.03 dividend increase, bringing our dividend to $1.08 per share, reflecting confidence in TD's future growth and earnings power. As we shared at Investor Day, we expect earnings growth to accelerate over the medium term. The bank's Q4 CET1 ratio was 14.7% with strong capital generation in the quarter. As of quarter end, we were over 3/4 of the way through our current $8 billion share buyback with 65 million shares repurchased for a total of over $6 billion. We continue to expect to complete this share buyback by the end of the first quarter of 2026.

At that time, we will announce -- at that time, as we announced at Investor Day and subject to regulatory approval, we plan to initiate a new share buyback of $6 billion to $7 billion. Through these 2 share buyback programs, we will effectively return all the capital generated from the Schwab sale to our shareholders. For fiscal 2025, we delivered a total payout ratio of 93%, including share buybacks and common share dividends.

Please turn to Slide 4. In Q4, we saw strong momentum across our businesses. Canadian Personal and Commercial Banking delivered record revenue, deposits and loan volumes. We had a record year in digital sales for day-to-day banking products, continuing our momentum in mobile leadership. Real estate secured lending posted robust sequential growth, delivering higher origination margin and record Q4 originations.

In cards, we delivered strong momentum with the best year of cards acquisition in nearly a decade. In the Business Bank, loans were up 6% year-over-year, reflecting growth across our commercial business. We also saw strong small business checking account openings, up 10% year-over-year. In U.S. retail, we delivered continued momentum and core loans were up 2% year-over-year. U.S. bank card balances were up 14% year-over-year with the strongest account acquisition in 7 years.

In our U.S. wealth business, total client assets were up 10% year-over-year with mass affluent client assets up 21% year-over-year. In addition, for the ninth year in a row, the bank ranked #1 in small business administration lending in its footprint as we continue to serve our communities from Maine to Florida. Leo will provide updates on our U.S. balance sheet restructuring and AML remediation in his remarks.

Wealth Management delivered record earnings and assets. We had a particularly strong quarter in direct investing with new accounts up 27% and trades per day were up 37% year-over-year, respectively. As you heard at Investor Day, direct investing is an acquisition engine for the bank and drives outsized opportunities to deepen relationships. This year, we saw record flows, $3.9 billion from direct investing to advice. We saw record sales of $1.6 billion in ETFs this quarter.

For the year, TD's ETF market share is up 48 basis points. In Insurance, we continue to build on our position as Canada's leading digital direct insurer. This quarter, we saw record digital adoption, supported by the launch of the new usage-based program for auto insurance. This quarter, Wholesale Banking delivered a record $2.2 billion in revenue, showcasing the power of our client franchise and breadth of capabilities as we benefited from a more constructive backdrop, especially in capital markets.

We also generated record net income and ROE over 12% and executed on RWA optimization opportunities to grow revenue well above RWA growth for the quarter and fiscal year overall. Another indicator of our strong momentum, we rose to #6 in the U.S. corporate access rankings, which demonstrates the strength of our relationships across corporate and institutional clients and our ability to deepen our share of wallet.

Please turn to Slide 5. Before I turn it over to Leo, I want to thank our colleagues across the bank. Every day, you come to work with a commitment to our clients and the dedication to our bank that is truly remarkable. At Investor Day, we outlined a clear strategy to accelerate growth and deliver peer-leading performance. You, our colleagues, are the source of TD's strength and why I'm confident we will deliver. With that, Leo, over to you.

Okay. And thank you, Ray, and good morning, everyone. Please turn to Slide 6. It's now been more than a year since we announced the global resolution, and we've made significant progress against our U.S. AML remediation program. As you've heard me talk about previously, we have an outstanding AML leadership team guiding us through this critical work, and we've completed a number of key milestones this year, such as the deployment of the next-generation transaction monitoring system, improved technology for investigation practices and the implementation of our first AI-powered financial crimes automation platform and machine learning case triage model, which improved our team's productivity and risk assessment accuracy.

This quarter, we deployed another round of machine learning enhancements to our transaction monitoring system. These AI and machine learning tools are not only improving the efficacy and accuracy of our program, they are important levers in creating an efficient and sustainable program that will serve us well into the future. We also introduced a new and enhanced system for submitting unusual transaction referrals, improving the end-to-end process from intake through investigation through reporting.

UTRs are a key tool in facilitating early detection and by increasing both the accuracy and efficiency with which our teams submit these reports, we are doing our part in detecting, reporting and preventing criminal activity. Turning to our look-back activities. I'm very pleased to say that this quarter, we made good headway against the suspicious activity look-back reviews required under the OCC Consent Order.

Importantly, thanks to the hard work and dedication of our teams, we've completed the majority of our U.S. management remediation actions this year, in line with our previous commitment. That being said, we're not at end of job and AML remediation remains our top priority with significant work ahead and important milestones to come in 2026 and 2027. For fiscal 2025, total U.S. BSA AML remediation and governance and control investments in the segment were $507 million, in line with our guidance. And while investments will fluctuate from quarter-to-quarter, we continue to expect similar investments in fiscal 2026.

Now I'd like to give you an update on the balance sheet restructuring activity. So please turn to Slide 7. You will recall this effort has 2 critical objectives. First, to strictly comply with and maintain a buffer to the asset limitation; and second, to ensure that we can continue to serve our clients and communities as their needs evolve. We made meaningful progress against our objectives this quarter. At the end of the fiscal quarter, total assets were $382 billion, reflecting continued runoff of noncore lending portfolios. We've achieved and exceeded the 10% asset reduction that we announced on October 10th, 2024, creating $52 billion of capacity versus the asset limitation.

With the actions taken to date, coupled with selective actions in fiscal 2026 and beyond, U.S. Retail has the capacity to grow core loans at a rate consistent with our historical performance through the medium term without risking a breach to the asset limitation. As disclosed in the third quarter, we completed the U.S. investment portfolio repositioning by selling lower-yielding investment securities and reinvesting the proceeds into similar composition of assets at higher rates.

During the fourth quarter, we identified additional bonds and sold approximately $7 billion notional for an upfront loss of $274 million pretax. In the aggregate, through our investment portfolio repositioning, we have sold approximately $32 billion notional for an upfront loss of $1.6 billion pretax. The investment portfolio repositioning generated an NII benefit of approximately $500 million pretax in fiscal 2025 and is expected to generate an NII benefit of approximately $550 million pretax in fiscal 2026.

We expect our investment portfolio repositioning, together with our asset reduction program to help us improve return on equity through fiscal 2026 and deliver on our target of 9.5% ROE. We aim to deliver approximately $20 billion of RWA release, which will help support our medium-term target of 13% ROE. With that, let me turn it over to Kelvin now.

Thank you, Leo. Please turn to Slide 8. TD delivered a strong quarter. Total bank PTPP was up 25% year-over-year after removing the impact of the U.S. strategic card portfolio, FX and insurance service expenses. We've shared the details on Slide 26. Revenue net of ISE grew 15% year-over-year or 12%, excluding the $388 million net negative impact of severe weather-related events in the prior year, reflecting growth across all our businesses.

Expenses increased 10% year-over-year with approximately 1/3 of the growth driven by variable compensation, foreign exchange and the impact of the U.S. strategic card portfolio. We delivered positive operating leverage while taking the opportunity to accelerate investments to drive business growth. Impaired PCLs were relatively stable quarter-over-quarter, reflecting strong credit performance and performing provisions were also stable quarter-over-quarter.

Please turn to Slide 9. Through our restructuring program, we are reducing structural costs and creating capacity to invest to build the bank for the future. We expect to conclude the restructuring program next quarter with approximately $125 million pretax in additional charges for a total expected program size of approximately $825 million pretax. We identified additional opportunities to drive productivity, including U.S. store optimizations as part of the distribution transformation described at Investor Day and impacts from organizational reviews. We expect to generate higher savings from our restructuring program with annual run rate savings now estimated at approximately $750 million pretax.

Please turn to Slide 10. Canadian Personal and Commercial Banking delivered record revenue, deposit and loan volumes. Average deposits rose 4% year-over-year, reflecting 3% growth in personal deposits and 5% growth in business deposits. Average loan volumes rose 5% year-over-year with 5% growth in personal volumes and 6% growth in business volumes. Strong loan growth across our businesses this quarter capped a record year in RESL proprietary channel originations and in retail auto finance originations.

Net interest margin was relatively stable quarter-over-quarter. The impact of balance sheet mix was partly offset by higher RESL origination margins. Tractor on and off rates were offset by rate reduction. As we look forward to Q1, with similar drivers, we again expect NIM to be relatively stable. Expenses increased year-over-year, reflecting higher employee-related expenses and other operating expenses.

Please turn to Slide 11. U.S. Retail sustained business momentum and continue to execute against critical deliverables. Deposits, excluding sweeps, were down 1% year-over-year and were up 1% excluding targeted runoff in our government banking business. Core loans grew 2% year-over-year, reflecting continued strength in bank card, home equity and middle market. Net interest margin was 3.25%, up 6 basis points quarter-over-quarter, driven by higher deposit margins, higher loan margins from U.S. balance sheet restructuring and normalization of elevated liquidity.

As we look forward to Q1, we again expect NIM to moderately expand. Expenses increased USD 84 million or 5% year-over-year, reflecting higher governance and control investments and higher employee-related expenses, partially offset by costs associated with the extension of the Nordstrom program agreement last year. Overall, we continue to expect U.S. Retail expense growth in the mid-single-digit range this year.

We remain focused on productivity initiatives to help fund investments in our core franchise. These include the conversion of Nordstrom strategic card customers onto our servicing platform in the first half of fiscal 2026 and investments in our digital and mobile capabilities and technology modernization.

Please turn to Slide 12. In Q4, the Wealth Management business serves almost 2.7 million clients fired on all cylinders. We saw client growth, net asset growth, strong trades per day and market appreciation. We saw strong fundamentals in insurance with double-digit premium growth in general insurance in fiscal 2025 and more than 3.5 million quotes, which drives future client acquisition. For the Wealth Management and Insurance segment overall, revenue net of ISE was up 39%, with approximately 2/3 of the growth driven by the impact of prior year catastrophe claims. Expenses were up year-over-year, reflecting higher variable compensation, technology spend supporting business growth and employee-related expenses.

Please turn to Slide 13. Wholesale Banking delivered record revenue and net income, driven by broad-based growth across Global Markets and Corporate and Investment Banking. This quarter, we benefited from a constructive backdrop, especially in capital markets, and our pipeline of future deals remains robust. Reported expenses include acquisition and integration-related charges for TD Cowen. We do not expect these charges to continue going forward.

Adjusted expenses increased year-over-year, reflecting higher variable compensation and spend supporting business growth, including technology. These investments are part of the strategy we outlined at Investor Day. We are continuing to mature our platform to support our ambition to become a top 10 North American investment bank.

Please turn to Slide 14. Corporate net loss for the quarter was $195 million, largely flat year-over-year. Higher net corporate expenses were offset by higher revenue from treasury and balance sheet management activities. Please turn to Slide 15. The common equity Tier 1 ratio ended the quarter at 14.7%, down 15 basis points sequentially. We delivered strong internal capital generation this quarter, which was partially offset by RWA growth, excluding FX. The bank repurchased 19 million common shares under its share buyback program in Q4, which reduced CET1 by 33 basis points. And we continue to expect to complete our current share buyback by the end of Q1, subject to market conditions.

Please turn to Slide 16. At this time last year, we noted that 2025 would be a transition year for the bank. Throughout the year, we took charges as we restructured our U.S. balance sheet. We do not expect balance sheet restructuring charges to continue going forward. Looking back over the year, I'm pleased with -- that we largely delivered what we said we would deliver in 2025. And in many cases, we delivered more.

Even with a prudent reserve build for policy and trade uncertainty, fiscal 2025 earnings were up 5% year-over-year. And reflecting our commitment to return value to shareholders, we bought back over $6 billion in shares this year, helping drive EPS up 7% year-over-year. As Ray said, TD is entering fiscal 2026 in a position of strength. We expect to achieve our fiscal 2026 targets with upside potential driven by strong business momentum and execution against the strategy we laid out at Investor Day, supported by tailwinds if positive macroeconomic conditions continue and from PCLs if trade and tariff uncertainty reduces. With that, Ajai, over to you.

Okay. Thank you, Kelvin, and good morning, everyone. Our key message for the quarter is that credit results for the bank are strong. Please turn to Slide 17. Gross impaired loan formations were 23 basis points, a decrease of 3 basis points or $256 million quarter-over-quarter. The decrease was largely recorded across the wholesale banking and U.S. commercial lending portfolios, partially offset by higher formations in Canadian personal and commercial.

Please turn to Slide 18. Gross impaired loans were stable quarter-over-quarter at 56 basis points. Please turn to Slide 19. Recall that our presentation reports PCL ratios, both gross and net of the partner share of the U.S. strategic card PCLs. We remind you that U.S. card PCLs recorded in the corporate segment are fully absorbed by our partners and do not impact the bank's net income. The bank's provision for credit losses was stable quarter-over-quarter at 41 basis points as higher provisions in the Canadian Personal and Commercial segment were offset by lower provisions in the wholesale and U.S. Retail segments.

Please turn to Slide 20. Impaired PCLs were $943 million, increasing $39 million quarter-over-quarter, driven by the Canadian and U.S. consumer lending portfolios, including the impact of seasonal trends in the U.S. card and auto portfolios. Performing PCL was $39 million, a decrease of $28 million quarter-over-quarter. The current quarter performing build largely reflects the adoption impact of a model update in our Canadian credit card portfolio, partially offset by improvement in the Canadian and U.S. economic forecasts.

Please turn to Slide 21. The allowance for credit losses increased $40 million quarter-over-quarter, reflecting the adoption impact of a model update in our Canadian credit card portfolio and a $47 million impact from foreign exchange, largely offset by lower impaired allowance in the Canadian commercial and wholesale lending portfolios, driven by resolutions and some improvement in the Canadian and U.S. economic forecasts.

Now in summary, the bank exhibited strong credit performance in the fourth quarter, reflected in lower gross impaired loan formations and stable gross impaired loans and PCLs. Our fourth quarter credit results capped off a strong fiscal 2025 as elevated performing provisions for policy and trade uncertainty were offset by good underlying credit performance, resulting in a full year PCL rate of 47 basis points, stable year-over-year and within the guidance we offered at the start of the year.

Looking forward, while [indiscernible] quarter and are subject to changes to economic conditions, we expect PCLs to be in the 40 to 50 basis points range, an improvement from the 45 to 55 basis points range guided for fiscal 2025. Though economic uncertainty remains elevated, TD is well positioned considering our prudent provisioning, broad diversification across products and geographies, our strong capital position and our through-the-cycle underwriting standards. With that, operator, we are now ready to begin the Q&A session.

[Operator Instructions] The first question comes from John Aiken at Jefferies.

Sorry about that technology. Ajai, I know that most of the deterioration on the domestic consumer portfolio came out of residential mortgages and really no risk on that front. What I was hoping that you might be able to explain to me is the dynamic where we've seen degradation on the residential mortgages year-over-year, but we really haven't seen the HELOC portfolio show any -- really any degradation. What are the dynamics behind that? And would incremental impairments on residential mortgages, when will that start to impact the HELOC portfolio?

Yes. No, thanks, John. Let me talk more generally about Canadian housing and our asset quality, and that should give you very good color on what's going on. So you would have seen that our Canadian housing outlook is actually slightly better. And the reason it's slightly better is that there is pent-up demand and the job market is also a little better. Our customer profile continues to be strong. And again, this is across all of RESL, HELOC and residential mortgages. If you look at some of our stats, and I'm very focused on what's the distribution and what's in the tails, we have less than 1% of our uninsured Canadian RESL portfolio which scores less than 650 and LTV greater than 75%, okay?

And if you look at some of the other metrics like our uninsured current LTVs, again, they're low, like at 56%. Now let me just turn to quality, okay? And I'm seeing this quality broadly across residential mortgages and HELOCs. And I look at things like delinquencies across both those asset classes and -- or sub-asset classes, they are stable, okay, quarter-over-quarter. And I'm not seeing huge differences between residential mortgages or HELOCs. And if I look at the greater than 90-day delinquencies, it's up 1 bp quarter-over-quarter at 15 bps. And that 15 bps is a pre-COVID number. Again, charge-offs across both these books very, very low.

Impaired PCLs, yes, are slightly higher. But if I were to quantify that, that's $6 million, okay, very low. And then I think you talked about gross impaired loans. The gross impaired loans are slightly higher. I think that number has gone up $55 million or $60 million. I don't remember the distribution between residential mortgages and HELOCs, but what's occurring there, that's actually vintages from '22 to '24 that were originated at higher rates. So that's where we're seeing the migration, and that's probably what you're talking about. And that's coming largely from the marginal segment. So again, some uptick in residential mortgages. But again, if you ask me, am I concerned about that portfolio? No, I think that portfolio is a very strong portfolio. So hopefully, I've given you enough color and tried to answer your question as well.

The next question comes from Ebrahim Poonawala at Bank of America.

Maybe for Kelvin or Ray, just in terms of capital, when we look at the CET1 at 14.7%, half of retained earnings going into dividends, half going into buybacks, I guess, would be the way to think about it. Do you think you can flex this capital ratio into -- I think you've talked about mid-13s over the next year via RWA growth? Or should we expect the pace of buybacks to materially increase over the next few quarters?

Ebrahim, maybe I'll start it off and then pass it over to Kelvin. I would say that as per my comments, I do think that there are opportunities and tailwinds as we head into fiscal 2026, both on the EPS side and from an ROE perspective, Ebrahim. But I said I preface that with making sure that the macro conditions prevail and then certainly from the uncertainty that we have around some of the tariff and trade uncertainty.

But as you saw in our Q4 results, the momentum of the businesses, I think, will have a strong play with respect to ROE. With respect to capital, as we said in our Investor Day, we are definitely taking a very different -- disciplined approach on capital allocation. First and always, the priority is capital organically to be allocated. And that's looking at, Ebrahim, all of our existing portfolios, the noncore businesses, and you've seen the actions that we've taken.

We'll continue to go through that and make sure that any of our existing businesses that are noncore do provide appropriate returns, and we're looking at that. And then making sure that we're deploying the capital even within our organic businesses to the ones that have the most accretive ROE on a long-term basis to give shareholder value. And then we've said very publicly at Investor Day that we will continue to consistently return capital back to shareholders if we don't see -- if we don't have a need on an organic perspective. So on that, I'll pause there and maybe hand it over to you, Kelvin, to talk about RWA.

Sure. It's Kelvin. So as Ray said, first, we plan to complete our existing share buyback program by the end of Q1 and then initiate the next buyback program of $6 billion to $7 billion, subject to regulatory approval. And we will strive to grind down our CET1 ratio as much as possible, subject to market conditions. And I think the issue is that we continue to spin off and generate significant capital accretion every year. Again, it all depends on market conditions. But right now, we're seeing that it is still -- we're not getting to 13% yet in '26, but maybe in '27.

That's helpful. And if I can have a follow-up for Leo, maybe on Slide 6, Leo. So I just want to make sure I understand this correctly. I understand you need to demonstrate sustainability, nothing needs to break in a material way. But just hypothetically, if we go through all of '26 through the sustainability review, I'm just wondering in a world where there was no big sort of leakage in terms of all the systems that you put in place. Is there anything different that needs to happen in 2027? And I'm asking this in the context of a U.S. regulatory framework that's becoming a little bit more pragmatic and not sort of belaboring banks that have had issues in the past. I'm just wondering, is there a scenario where assuming you check all the boxes in '26 on sustainability, where maybe the asset cap could get reviewed as early as '27?

Yes. No, thank you very much for the question, Ebrahim. I won't comment with regards to the timing of any sort of relief. But I will -- I just want to maybe provide a little bit of color to your question. I think to your point, I think we've made really good progress on the delivery of the management actions. And I've iterated some of the areas where we've made progress, whether that's the transaction monitoring platform, the work that we've done on the customer risk rating tools, the AI tools.

So I think we feel very good about the residual risk reduction that we've actually brought forward in terms of the overall AML program. But as I've said before, I think we've got a couple of stages. Everything we do, every management action we do is going to be subject to internal challenge and ultimately to internal audit validation. And that's an important process. Much of that will take place in 2026. And then thereafter, as you know, we're working very closely with the monitor and as well, we're working with the regulator to ensure that we can demonstrate sustainability over the long term.

Both of those stages are an important part of the process. So I think being able to demonstrate that not only we've implemented the right actions, we've reduced residual risk, but that we can demonstrate that over time will be critical in terms of earning release from the consent order eventually and then potentially any interim relief. So I think we're making good progress at this point. We'll keep you abreast of the progress over the next few quarters. But at this point, I feel very comfortable with the AML remediation plan.

The next question comes from Gabriel Dechaine at National Bank.

The margin outlook more stable or relatively stable, whatever. In Canada, I'm just wondering because a few of your peers, I mean, there's a bit of a mixed bag, frankly, but some peers are talking about and exhibiting a wider -- benefit from wider mortgage spreads. And I'm wondering if that's something that could factor into your outlook and surprise on the positive side.

Then on expenses, you had guided to 5% to 7% growth this year, came in at 10%, including 10% in Q4. And you talked about some year-end investment undertakings that you took advantage of the strong revenue growth. That's fine. I'm just wondering about 2026. You're guiding to mid-single digits now. You've taken another restructuring charge. Those investments you made perhaps help your efficiency performance. Are you -- you should be more capable to deliver? Are you more committed as well is the question?

Thanks, Gabe. Sona. Maybe I'll start with your first question on Canadian margins and specifically RESL. And I can share a little bit more on what's underlying our NIM. Kelvin had already alluded to the 3 factors. If I start out in RESL, we had a really good volume growth quarter. And what I'm particularly pleased to see is we're staying true to our strategy where we're anchoring on speed and specialization to drive growth, but with incredible pricing discipline.

And so again, that enabled us to drive sequential origination margin expansion. So that's obviously positive to NIM. But then when I step back and look at overall Canadian, CAD P&C NIMs, that strong loan growth outpacing deposits, that naturally has a balance sheet dilutive impact to NIM. And then finally, tractor on-off, Kelvin alluded to, is an important factor. And when we look at that, the magnitude of the NIM benefit that we see is really quite dependent on the maturing tractor rate. And so if I go back -- yes, sorry, go ahead.

That tractor tailwind is sort of flattening out, I guess. Is that what you're saying?

Yes, in a sense. And like that really is reflective of the maturing tractor profile. So if I go back several years ago, when rates were the lowest, we locked in less tractors through prudent treasury management. And so as we fast forward to today, our tractor on-off lift was largely offset by the recent Bank of Canada rate cut. So like in some total, many factors, but that's what's driving stability in NIM.

So I'm not quite clear on the mortgage commentary then some other banks are being quite specific that it's going to be good. They originated a bunch in 2021, 2022 that were -- it was a very competitive environment and the renewals are coming in at higher spreads. That's not something a dynamic that will work in your favor?

No, absolutely. It is something that we are seeing, Gabe. It's been several quarters. we've had positive expansion. And so as this accumulates, that becomes a broader tailwind.

The other thing, Gabe, I think you'll see in our mortgage portfolio, and Sona has commented on that on a number of occasions is just the mix of the mortgages, right? And so you're going to see more and more proprietary mortgages that are booked through our proprietary channels, whether it's our branches or our MMS, which are both proprietary and obviously, better margin in those, and you're seeing that margin expansion in our residential book while we continue to take market share and loan and mortgage growth, as you saw on a quarter basis.

So I think it's a good story from both a volume perspective, but also from a mix and margin expansion in the RESL book that you're going to continue to see favorability as we play through.

All right. Then on the expenses...

Just on the -- just on your expense, the second part of your question, Gabe, on the expense side, let me just sort of walk you through a little bit. On the 5% to 7% guidance that we provided at the beginning of the year, if I sort of take you back, I mean, that was with the guidance that we thought and Kelvin commented in his comments that we thought earnings was going to be relatively flat on a year-on-year basis, and we delivered a 5% earnings growth.

So I think some of the expense that you see growth on that side of it is due to the outperformance on our earnings growth. I'd say the second piece is where we've been saying that you're going to start to see moderation of our expenses on a quarter-over-quarter basis, and you saw that from a Q3 to Q4 moderation of our expenses. And so if you factor in the variable costs and the FX that Kelvin said, we're probably down to about a 7% expense growth on Q4 and definitely trending in the right direction to get us to the 3% to 4% expense growth in 2026, and I have high confidence we're going to deliver on that.

And where that confidence comes from is the 6 buckets of expense categories that we outlined in the Investor Day, Gabe, where we have -- that was a bottoms-up exercise, and we actually have identified initiatives and tactics in each one of those 6 expense buckets, and we've already started to make progress. And so the $900 million of the $2.5 billion expense takeout that we've committed to over the medium term -- $900 million of that is in 2026, of which $500 million is the restructuring that carries from 2025 to 2026 and the incremental $400 million, we already have clear sight lines into that.

And then I'd say, finally, what's really important that we said in our Investor Day is that we continue to deliver positive operating leverage. And you're seeing that for the second consecutive quarter, TD Bank has delivered positive operating leverage, and we expect to have that continue in fiscal 2026. So on your question about conviction and commitment, absolute on what we said in the Investor Day and cost management and the disciplined execution around that is one of our strategic pillars.

The next question comes from Doug Young at Desjardins.

Hopefully, this will be relatively quick. But Leo, you set out a target at the Investor Day, and thanks, Ray and everyone for all the other targets and guidance provided in the remarks. But Leo, you set a target of USD 2.9 billion NIAT for fiscal '26 at the Investor Day. Just wondering how you're feeling about that as you sit and look at today and all the different variables, macro rates, balance sheet restructuring expenses. Can you unpack that?

Sure, Doug. Maybe I can just ask you to take a look at the quarter as sort of an indication of the momentum going into 2026. We're really pleased with the quarter revenue growth of 7%, and that was driven by a 7% growth in NII on 6 basis points worth of NIM expansion. But also, we had about an 11% growth in fees, where we saw service fees, our lending fees and wealth management all contributing to a double-digit growth rate. And I do think that's a sustainable momentum as we go into 2026.

Expenses, we did very aligned -- to Ray's point, we did see moderation in the expense growth profile in the fourth quarter, expenses were up 5%, but we did manage positive operating leverage of 232 basis points and our commitment and our guidance of mid-single-digit expense growth stands, we feel quite comfortable with that. And then as Ajai outlined, I think from a PCL perspective, PCL came in at $220 million, which was down on a quarter-on-quarter basis and down year-on-year, and it was the lowest level of PCL that we've had since the last quarter of 2023.

So if you look at all of the fundamental indicators, I feel quite comfortable with the guidance of both the $2.9 billion NIAT target for the year, but also the return on equity number. Our return on equity for the quarter closed at 9.3%. We've managed to post 180 basis points worth of ROE improvement since the fourth quarter of last year. So Doug, at this point, obviously, we still have a lot of macro uncertainty. We still have to work through potential rate declines, et cetera, that will obviously add some degree of uncertainty for next year. But from an underlying business momentum perspective, I'm quite confident with some of the guidance that we provided on the September Investor Day.

Appreciate it. And then just second, I know insurance is a small business, but the earnings were quite weak. And I was a bit surprised given I think it was relatively low CAT this quarter relative to last year, at least in companies that I'm following. So maybe you can -- is there anything unusual like actuarial assumption reviews or anything unusual [indiscernible] going through the insurance results that caused the weaker bottom line results?

Thanks, Doug. Let me take that. So from an insurance perspective, I do think having run the business, I look at the insurance from a full year perspective. And if you look at it from a full year perspective, gross written premiums continue to be very strong, 10% growth on the General Insurance gross written premiums. As per the Investor Day, our goal is to double the size of our home and auto business by 2029.

And so when you look at it from a full year's perspective, I think strong performance. The ROE came in at 24.4% above what we expected -- sorry, 24.2% above what we had expected on a full year basis. But when you double-click into the Q4, your specific question, one nuance that we did in the -- over the course of 2025, but it hit more in 2020 -- in the Q4 is that we did look at making sure that we are growing profitably across all of our geographies across the insurance business. And we've rebalanced in some of the higher severe weather regions. And so you saw that play through. That's actually going to prove to be a positive around resiliency and stability of our earnings as we play through.

And so I feel very confident in the Investor Day commitments that we made on the insurance business, but we did actually use it as an opportunity in Q4 to rebalance from a geography perspective and the profitability in the high CAT zones.

So you moved out of the high CAT zones or you were in high CAT zones and therefore, that impacted Q4, and therefore, you've moved out of that, and that should benefit you going forward? Is that...

Yes. Just a little less concentration. And so where we had higher concentration in some of the high severe weather zones, we've moderated the concentration there while accelerating growth in 2026 going forward in the geographies with less CAT exposure.

The next question comes from Paul Holden at CIBC.

I want to ask a couple of questions on deposit growth, maybe starting with Sona because you already gave some flavor on NIM sort of tailwinds and headwinds and you mentioned that deposits is not quite growing at the same pace as loans. So maybe you can talk about why that is and what TD is doing to accelerate particularly low-cost deposit growth.

Yes, absolutely. Thanks for that question, Paul. I'd start by saying it's been a tremendously strong quarter, closing a really strong year. So we've had #1 growth actually across our 3 major product lines in the Canadian Personal Bank. So that includes deposits, cards as well as RESL. So we're feeling really good about the growth momentum that we're seeing. In terms of the mix in demand deposits and term deposits, similar to what you would see right across the industry, we are seeing a decided shift. So that is a positive trend with a much faster clip of growth in non-term versus term deposits.

What I would say, Paul, is we start from a position of real strength here in non-term deposits. I think as we shared at our Investor Day, 86% of our new clients onboard with a checking or savings accounts. And that fuels -- that continues to fuel what is an enviable portfolio mix. So we have 69% of our deposits in non-term deposits versus an industry profile that's more in the mid-50s. So overall, we feel really comfortable with what we're seeing in the industry and certainly what we're seeing amongst our own client base.

Okay. So no reason to suggest any kind of change in trend then in the near term?

Correct.

You're happy with where you are.

Yes, we're very pleased with where we are.

Okay. So I also wanted to ask Leo about deposit growth there. It's down a little bit Q-over-Q and year-over-year. I'm not going to make a big deal of it because it's not down a lot, but still down. Like how should we think about that in '26? Should we start to see those personal deposits growing again? Or do they continue to shrink as maybe you continue to rationalize the retail store count? Just help us think through that.

Sure, Doug. Thank you. So if you look at our deposit numbers on a headline basis, they were down slightly. The runoff is really coming from the Schwab sweep deposits running off essentially as planned. We had indicated that under the new agreement, Schwab did have the ability to bring down the overall level of sweep deposits and they're executing that plan as per the agreement.

In addition, we've targeted the government banking collateralized portfolios, those that provide us very little liquidity, largely commoditized in terms of pricing. We targeted about $5 billion of that portfolio for runoff, and that was aligned to the overall portfolio balance sheet restructuring activity. In addition, we have taken from about, as you know, earlier this year, we had taken a very defensive posture in terms of pricing to defend our deposit base. As we move through the year, as we've made progress on the balance sheet restructuring on the lending side or on the asset side of the house, we've also looked at our deposit business and implemented much more pricing discipline around some of our higher-priced deposit categories, both in consumer and corporate to make sure that we are managing healthy deposit margins.

And in the quarter, we saw a 5 basis point expansion in deposit margins as a result of the actions that we're taking. So given where we are in the U.S., given the restructuring activities, we are being more selective around our pricing, and we have the opportunity to do so, and that is translating into some margin expansion for us. So to your point with regards to the outlook, absolutely, I expect us to go back to a growth posture, but particularly around our core deposits, our core checking account interest and noninterest-bearing checking account balances, we believe that's critical for long-term profitability. And so we did provide guidance as part of Investor Day that we would target mid-single-digit deposit growth rates over the MTO period, and I fully expect us to go back to that profile.

Okay. Is it too early to ask for that in '26 or not?

I think we've already provided enough guidance at this point. So maybe next quarter.

Maybe I can just ask Paul Clark to jump in. I do think we have a terrific momentum in what we said at Investor Day on referrals from retail to wealth and the momentum that we see there because that, to me, is also another significant deepening of our client relationships and will play into sort of our volume story as we move forward.

Yes. Thanks, Ray. For the full year, we saw over $31 billion in assets as a result of our relationship with retail and commercial. So this is closed referred business. In the quarter, the number was over $7 billion, Paul, which is just a testament to the momentum that we continue to gain. When you think about that in the context of Sona and Barb's business, but predominantly Sona, the way that you have to think about that is for every dollar that Sona sends us, we're consolidating $3 roughly from our competitors.

So in the quarter, that results in 2 things. Sona graciously sends us business, which is obviously going to impact our numbers, but we're consolidating from our competitors away. And if you remember at Investor Day, we committed to get that number to $40 billion annually, and we're already up 11% year-over-year. So just great momentum from both Sona and Barbara in the context of this.

The next question comes from Sohrab Movahedi at BMO Capital Markets.

Ray, I just wanted to focus on Slide 16. You have some targets for 2026, including 6% to 8% adjusted EPS growth. I wonder if you could just tell us which business segments are likely to exceed that and which may be a little bit below that? In other words, how is that -- how are you arriving at that by business segment?

Listen, why don't I start it? And then I think you've heard from Leo and Sona some of the terrific momentum. Maybe I'll also ask Tim to jump in. But I think what you see, Sohrab, when you look across our Q4 results is actually strength across all of the businesses. And I see momentum in every single one of the businesses. And so I would say, as I said in my comments, we do have positive tailwinds on EPS and ROE as we head into the 2026. And that's on strength of both -- a lot of that is on the strength of our fee income businesses, our markets-driven businesses in TD Securities and in the Wealth Management business.

But our fundamentals, as Leo said, in our core banking businesses in Canada and the United States, the fundamentals are better than we had expected even at Investor Day as we ended Q4 and jumped into the fiscal new year. So why don't I let Tim and Paul talk about their businesses because they're the ones that really from a fee income perspective is also providing tailwinds. And then Barb can maybe comment on the strength of the business bank, and then you'll get a full view of all of the businesses since already Sona and Leo have commented.

Thanks, Ray. And Sohrab, I would just say, obviously, an exceptionally strong Q4, a record revenue and NIAT number. I would say that the shape of the year continued to play out in favor of investment banking in the second half of the year. And so if I look at Q4, specifically for our investment banking business, we had a record revenue quarter, exceeding Q2, which obviously had Schwab in it.

Early days for Q1, although I will say that the momentum is carrying through into the new fiscal year. And finally, something that we talked about at the Investor Day, a tremendous amount of focus on capital discipline and optimization, and that applies both to the market side as well as the loan book and investment banking, which accounts for about 40% of our overall RWA. And so if you look at the ROEs, obviously high in the quarter at 12.4%, up close to 500 basis points. But more importantly, if we look at revenue growth, the RWA growth in Q4 came in at 2.6x and 1.6x for the year as a whole.

So I would say, overall, results for the year exceeded our expectations. We had talked about delivering anywhere from $375 million to $425 million in NIAT on average per quarter, and we're at the high end there and exceeded our revenue targets per quarter that we expected, which were $1.8 billion. So I feel very good about the momentum that we showed in Q4 and thus far carrying over nicely into the new fiscal year.

The only thing I'd add on ours, and I know Kelvin took you through the numbers and people tend to focus on the top line revenue line at 16% year-over-year. And each of our businesses have had tremendous market share growth this year, which bodes well for earnings next year. But what I would tell you, I've been most impressed with this year is just the focus on efficiency. Our efficiency ratio through the year improved about 250 basis points, and that really sets us up nicely as we head into next year. ROE for the full year was just over 62%, and we continue to see strong momentum this quarter and heading into 2026.

Barb, quickly...

Thanks, Sohrab. So for the Canadian Business Bank, we are seeing very strong momentum as well. We laid out the strategies at Investor Day that we are looking at to accelerate our growth. And I'm happy to report that we did add about 200 incremental frontline bankers in 2025. Almost half of those were in small business banking, and we add -- we made those additions a little bit earlier in the year. And we did see in our results in Q4, a pickup in our new client originations and our deposit growth. We're looking to add more small business bankers in 2026. And so we expect good momentum to continue. We also added to our commercial banking that was a little bit later in the year. So I don't think we're really seeing a significant amount of benefit in Q4, but we certainly expect to see that in '26. So we're feeling very positive.

Sohrab, I hope that gives you a sense of the momentum that we're carrying.

Yes, that's very helpful. And I just wanted to put Kelvin on this but and get him to clarify something. In the context of buybacks, I think a couple of times you mentioned subject to market conditions. So under what conditions would you not do the buyback?

Just how fast you can buy given the volatility in the market and how much you can actually -- from a regulatory perspective, you can buy back. So if we would and the market is conducive like earlier this year, we would step in harder on that front.

So you're price sensitive?

Not really, but at the margin, we would be.

There are no more questions in the queue at this time. I would now like to return the call to Mr. Raymond Chun for closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. We certainly appreciate your questions and comments. TD delivered for its stakeholders in Q4 with robust top line growth, positive operating leverage and strong credit performance. We are well positioned for the year ahead. So let me take a moment to wish you and your families all the best for the holiday season, and we certainly look forward to connecting in the new year. Thank you, everyone.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good afternoon, everyone, and welcome. On behalf of our entire senior executive team, thank you for joining us for TD's 2025 Investor Day. It's fantastic to see so many familiar faces. For those of you I haven't met, I'm Brooke Hales and I have the privilege of leading Investor Relations here at TD. Whether you're joining us in person or on the webcast, we're delighted to have you here as we share our renewed strategy.

Before we begin, I'd like to acknowledge that tomorrow is National Day for Truth and Reconciliation in Canada as we honor the indigenous people on whose lands we gather. Now let's turn to today's Agenda.

We'll begin by hearing from our Group President and Chief Executive Officer, Raymond Chun, who will share our strategic priorities and financial targets. As you'll get a glimpse of today, Ray is known as a decisive leader who drives results and challenges the status quo. And I have to tell you, he absolutely loves to win.

After Ray, you'll hear from our CFO, Kelvin Tran and each of our business leaders. We'll have two breaks and two Q&A sessions where we'll take your questions. Finally, after we wrap up the formal agenda, we hope you'll join us for a networking reception.

Now the inner lawyer in me needs to remind you that today's presentation will include forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially.

I'd also like to remind you that the bank uses non-GAAP financial measures to arrive at adjusted results. The bank believes that adjusted results provide a better understanding of how management views the bank's performance. Our speakers will be referring to adjusted results in their remarks. Additional information about non-GAAP measures and material factors and assumptions is available in the Investor Day materials on the TD Investor Relations website.

And with that, let's kick off the day. There's a renewed energy across the bank, and our colleagues are excited about the future. It's because of our next speaker, our Group President and Chief Executive Officer. Please join me in welcoming Ray to the stage.

Thanks, Brooke. And let me start by saying, Brooke, you're absolutely right. I do love to win everyone. Good afternoon, everyone, and welcome to TD Terrace. Thank you so much for joining us here in person and for all of you that are on our webcast. I've been looking forward to this day for a long time. And I hear there's a little bit of interest amongst all of you also.

When I was named CEO about a year ago, I couldn't have been more energized to lead our bank. The team has accomplished a lot since then. We've taken decisive action to remediate the AML program, we've sold our stake in Schwab, exited certain non-core businesses. We initiated an NCIB and have already bought back approximately $5 billion in TD stock. And we've restructured our U.S. balance sheet to build capacity for growth. I'm proud of what we've already accomplished, I'm excited that we are getting back to winning and I'm even more energized about the opportunities that are in front of us.

We have a massive organic growth opportunity. Today, we'll lay out our strategy to capture it, to deepen client relationships and accelerate growth in Canada, the U.S. and TD Securities. We'll also take you through detailed plans to fundamentally reset our cost base, lower our efficiency ratio and increase ROE.

Our strategy builds on our strengths. Thanks to our clients and the trust they put in us, and thanks to our colleagues who care for them, we have built a formidable bank. Let's take a look at where we stand today.

We have a diversified portfolio with personal and commercial banking leadership in scale in North America, a powerful $2 trillion balance sheet with unique capital advantages. I'll come back to that in a minute. We have Canada's most valuable brands. We run the country's premier retail franchise. It's a deposit-taking powerhouse with the primacy advantage, that's the envy of other banks. We have market leadership in core deposits, credit cards and RESL and the country's second largest business bank in both loans and deposits.

We also have the #1 direct investing platform in the fastest-growing private wealth management business in the country. And in insurance, we've disrupted the market to become the #1 direct insurer.

In the U.S., in just 20 years, we've built a top 10 bank with more than 10 million clients. That's exceptional. And yes, we have room to grow. Leo will tell you more about this later on.

In TD Securities, we now have a full-service platform. Our clients are responding and we're winning new mandates and growing faster.

Now let me describe our tremendous financial advantages. Our core deposit leadership and powerful capital base provide us with margin and earnings advantage. This delivers significantly more annual organic capital generation than our peers. This means we can maintain a strong CET1 ratio, serve our clients, invest in growth and return capital to shareholders. These advantages cannot be easily replicated.

We're also very strong risk managers are through the cycle approach to credit risk management has served both TD and our shareholders well. We're very well reserved, as you can see from the allowance coverage ratio on this slide. And on the right, you can see a well-managed $1 trillion diversified loan portfolio. This allows us to support clients through changing market dynamics.

Now this afternoon, we're going to talk a lot about growth and performance. But let me be clear, AML remediation is our #1 priority. This has my full attention. We're making steady progress in building a world-class program. We've hired specialized talent and leaders with deep expertise. We're investing in leading-edge technology and redesigning processes to build a strong AML program and further strengthen our governance and controls across the enterprise. And we're purposely changing certain parts of our culture.

Look, I'm proud of our culture. It's why I've been here for more than three decades. But there are some aspects that absolutely must change. Accountability at all levels is nonnegotiable. Curiosity, as you know, curiosity sparks discovery and insights accelerates progress, it also drives innovation, encourage leaders and colleagues with the courage to drive change and always do the right thing. As we've all seen, strategy provides direction but its culture that enables teams to win.

Strengthening our winning culture is one of my most important jobs as CEO. As we build for the future, we know the world isn't standing still. We face new risks, economic changes, disruptive technologies and new innovations. Here in Canada, our trading relationship with the United States is center stage. We'll continue to work with governments and clients to unlock the country's potential. I meet regularly with clients and leaders in Canada and the U.S., and I remain confident in our collective future. TD will successfully lead through change and uncertainty, innovate and develop new technologies to power our future and deliver for our clients.

Now as we look ahead, we know we have lots of work to do. TD has historically outperformed for our shareholders. However, as you can see on this slide, in recent years, our performance has slipped in ROE, EPS growth and total shareholder return. That's unacceptable. That's changing. Through the strategic review, we examined every part of our business and asked ourselves tough questions such as how do our competitive advantages create opportunities to win and grow.

How do we reset our cost base, operate efficiently and move with speed? What's the best use of our shareholders' capital? Here are the key takeaways. We have a clear opportunity for accelerated growth in Canada. We've created the balance sheet capacity to grow in the United States, and there's tremendous runway to deepen our clients in TD Securities. To meet changing client demand, we need to reshape distribution, including growing digital sales, enhancing the productivity of our branch network and adding sales capability in key segments. We also see an important opportunity to accelerate fee income growth in wealth, insurance and TD Securities. To fund these initiatives and investments and improve our efficiency ratio, we must reset our cost base and moderate expenses.

It's an absolute priority as you'll hear today. We also need to sharpen our focus on capital allocation to maximize returns. Let's look at what this focus and discipline will deliver for our shareholders.

For fiscal 2026. Fiscal 2026 will be the first year in our journey towards premium total shareholder returns. We expect to achieve ROE of 13%, grow EPS by 6% to 8%, reduced expense growth to 3% to 4% and deliver positive operating leverage. We also expect a 40 to 50 basis point PCL Ratio. By fiscal 2029, we expect to achieve 16% ROE, 7% to 10% EPS growth and mid- to high single-digit PTPP. We'll also drive a comprehensive program to deliver $2 billion to $2.5 billion in run rate expense reduction.

We are targeting a mid-50s efficiency ratio with positive operating leverage. In the long term, we plan to drive towards efficiency ratio leadership by deploying AI and other technology. I'll walk you through detailed plans to achieve these targets shortly.

Now let me turn to capital. In fiscal 2025, we deployed almost $3 billion of capital to reposition the U.S. Bank's balance sheet and execute a bank-wide restructuring program. We also initiated an $8 billion NCIB program, which we expect to complete in Q1 of fiscal 2026. For fiscal 2026, we are targeting a CET1 ratio of approximately 13%. TD's capital position will remain substantially above that even after we complete our current NCIB program.

We've assessed our near-term capital needs, and I'm pleased to announce we plan to initiate a new buyback of $6 billion to $7 billion in fiscal 2026, subject to regulatory approval. This will return virtually all the capital generated from the Schwab sale to you, our shareholders.

TD has a bright future. And we don't believe our current share price reflects the bank's intrinsic value. The additional NCIB also demonstrates our ongoing commitment to return capital to our shareholders. This brings me to the overall approach to capital allocation, which will be very different at TD going forward.

First, we'll deploy capital organically with more discipline. So what does that mean? It means we're doing the hard work to optimize capital where necessary within our businesses as we've demonstrated, this includes exiting businesses that are non-core or don't provide an appropriate return. It also means deploying capital in ways that are accretive to ROE, while accelerating growth to drive long-term shareholder value.

Second, we will consistently return capital to shareholders. Over the past decade, we've returned capital just above our 40% to 50% dividend payout ratio with some acceleration in recent years. As you can see on the right, we're targeting a total payout ratio of 94% this year and over 100% in fiscal 2026 based on analyst earnings estimates.

We also expect enhanced capital accretion starting in 2027 as we accelerate growth and increase operating leverage with no change in our risk appetite. This will allow us to generate more than 75 basis points or approximately $5 billion of excess CET1 annually on today's RWAs, even after paying dividends. We're generating the capital to execute on organic growth strategy, consider inorganic opportunities, maintain an additional capital buffer and still return the majority of excess capital to shareholders. This is an enviable position for any bank in a unique advantage for TD.

Our commitment to returning capital is an important part of our total shareholder return story, and it's an important part of how we'll deliver on our 16% 2029 ROE target.

Let's take a look at our strategy to deliver this growth. So we have three strategic pillars. I'll start with deeper relationships. So throughout my career, I've always believed when our clients win, we win. This isn't a slogan. It's at the heart of our bank, and it's how I've led in every single role in my career. When we serve clients with excellence and deliver outstanding experiences, we build trust and relationships get stronger.

It's how we'll deepen share of wallet, digital engagement and fee income. Earlier, I told you we have a massive organic growth opportunity. Here's why. In Canada, we've earned the trust of an enormous client base and lead in retail banking in primacy. This is a tremendous strength. Sona describes this as the holy grail of banking, and we have it. Given this powerful advantage, our client relationships should be much deeper. As you'll hear from our leaders throughout the afternoon, we have a singular enterprise-wide focus on deepening with clear plans, targets and scorecards across every business.

We're also making strategic investments in frontline talent and digital capabilities to deliver. As we drive these programs forward, we'll increase card penetration, capture the RESL opportunity with our clients expand our wealth client base and grow both AUA and AUM.

Let me provide some more detail on the plans we're executing. First, we're reimagining our distribution and sales model. As you can see on the left, we're investing significantly in frontline distribution and deploying specialized talent closer to our clients. Look at the right side of this slide, branch referrals to wealth advisers are already up 18% and revenue per frontline colleague is up across personal and business banking. Sona, Barb, Leo and Paul have exciting plans to drive these numbers even further.

Now branches have always been a TD strength, and they will continue to be a strong competitive advantage, but we need to reshape the role of a branch in a digital era. We're transforming branches from transaction hubs to high-value advice centers. Do you know how many more simple day-to-day transactions like depositing a check, paying a bill are done in a TD branch every year versus our peers? 30 million transactions. That's a lot of transactions and our clients can do all of them today on their mobile device without one more dollar of investment.

We already have 13 million users across North America and every day, we're helping more clients do more of their banking digitally. This will improve their client experience and created tremendous capacity and efficiency in our branch network.

Without question, digital is critical to our future, and we have a leading position. We have 8 million mobile users in Canada, more than any other bank and 5 million in the U.S. As we migrate to digital, we will also increasingly sell through digital. Clients are changing, banking is changing, and we will lead the way. As we drive these changes and accelerate growth, we're also targeting a significant increase in fee income. We expect fee income growth to drive 170 basis points of ROE contribution over the medium term, primarily in TD Securities, wealth and insurance.

In TD Securities, we've always had strong client relationships. What we didn't have was a full-service North American platform. We do now. With the successful integration of TD Cowen, we've added U.S. equity sales trading execution, advisory capabilities and one of the top investment research platforms in the industry. We have tremendous upside, as Tim will explain.

In wealth, we're growing advice. In Canada, we're tapping into our massive direct investing base and capturing more referrals from Canadian personal and commercial banking, which Paul will take you through. In the U.S., we see a significant opportunity. We're investing in new capabilities and frontline advisers to build out this business.

In insurance, we have the winning model, direct-to-consumer. As I mentioned, we've disrupted the market to become the #1 direct insurer. James has a clear plan to expand on our success and significantly grow gross written premiums through the medium term.

As we drive these outcomes across our business, we will deliver peer-leading performance and build undisputed leadership and client experience. To do this, we need to be simpler and faster. We are a large, regulated complex organization. But that doesn't give us permission to be bureaucratic, slow or inefficient. I've always believed that speed is a competitive advantage. Across TD, we're deploying the capabilities needed to drive speed, such as AI-powered virtual assistance, AI-enabled adjudication, predictive tools and new applications. These new capabilities are already driving strong outcomes.

We're approving mortgages in hours instead of days. We're pre-approving credit cards with data-driven insights for millions of clients. We're producing reports in minutes versus hours or days, and we're responding to clients in just a few seconds, significantly shortening call and wait times. Tremendous progress with more on the way.

We're also simplifying our operating model. We're stripping out complexity, reducing management layers and speeding up decision-making. In the third column, you'll see we've now given our line of business leaders increased end-to-end ownership, putting decision rights closer to the client.

For instance, global transaction banking used to sit under three leaders. We pulled it now together under Tim and TD Securities, and we're building a world-class platform. One owner, one budget, one strategy, one decision-maker. To drive these and other growth initiatives, we're focusing our investments for maximum impact.

TD is a growth bank and we'll continue to invest in our future. We're investing in new platforms, technologies, data and talent. And the benefits of these investments are starting to flow through the organization. And over the medium term, we'll spend less money to run the bank and more to grow the bank, as you can see on the left.

You can see some of the outcomes targeted by these investments on this slide, 90% of our data simplified in the cloud, 90% of our products digitally enabled. AI is an important part of this strategy. We're targeting $1 billion in annual value from AI, half through revenue uplift and half through cost savings, with concrete plans already delivering clear outcomes.

Now we've been building our AI leadership and competitive advantage for years. We acquired Layer 6 in 2018, which gave us a head start. Its Co-founder, Max Volkovs, is our Chief AI scientist. Max is one of the most renowned AI experts in the world. He's attracted the brightest minds in the field to our hub in Toronto, and we just opened a second hub in New York City to extend our leadership.

2,500 scientists, engineers, data analysts and experts are building proprietary platforms and applications right here at TD. This is huge. AI is fast becoming fundamental to business and to client experience. Having in-house talent of this scale is a powerful advantage for us. Max and other top AI and digital leaders are with us today. They're showcasing concrete examples of our leadership just outside this room. Ultimately, the success of our strategy requires our third strategic pillar, disciplined execution.

Disciplined execution is part of my DNA and is now part of our DNA at TD. Let's start with Disciplined Governance and Controls, protecting the bank our clients, our shareholders and the financial system is a responsibility that we take seriously. We have a strong financial risk foundation and will continue to be disciplined. We're making ongoing investments in talent, technology, data and AI to enhance compliance and address dynamic risk categories like cyber and fraud.

We will never lose focus on this and are actively benchmarking capabilities, testing our resilience and elevating performance.

This brings me to our cost base. As you know, our efficiency ratio is 58%. To achieve our mid-50s target, we're fundamentally restructuring our cost base and we're moderating expense growth to drive $2 billion to $2.5 billion in annual savings. We're managing this program in a coordinated cross enterprise way. Everyone is a part of it, and every leader is accountable to deliver their savings targets. We have not addressed our cost base in this focused, comprehensive and disciplined way before. We are permanently resetting our cost base.

This effort is far reaching and absolutely necessary. Our 2025 restructuring program is on target, and we expect $500 million in savings to hit in fiscal 2026, largely from the businesses we've exited or restructured.

As you can see on the slide, we plan to take an additional $400 million in fiscal 2026. The majority of these savings will come from distribution transformation, AI and automation and our global delivery workforce programs, which I'll cover in a minute. Combined, this will drive almost $1 billion in savings in 2026. We will realize an additional $1 billion in savings through 2027 and 2028 as we advance towards our mid-50s target.

Let's dig a little deeper here. To achieve our cost reduction goals, we're driving change across six core initiatives. And earlier, I discussed the massive opportunity in distribution transformation. We're targeting up to $450 million in annual savings as we migrate transactions to digital, grow digital sales, enhance frontline productivity, optimize branch size, hours, location and capacity. A portion of this will hit in 2026, as I mentioned.

Next, we're reshaping our top 20 processes, which represent approximately 60% of our processing costs. So how are we going to do that? We're harnessing AI and automation to simplify our processes and deliver $0.5 billion in savings. And we already know how.

For example, in TD Insurance, AI claims management alone will take out $40 million and make the process simpler and faster for clients. We also expect to save $400 million a year through the tech and data modernization initiatives I discussed earlier.

Procurement is another significant opportunity. TD has an addressable spend of over $6 billion with vendors. We have clear sight lines to the first $200 million to $300 million in annual savings. We're also consolidating vendors within our global delivery workforce strategy to deliver an additional $200 million to $300 million in savings, which will begin to flow through in 2026. And expense moderation will deliver an additional $400 million in savings. Now combined, all of these savings will significantly enhance our bottom line, help us achieve our mid-50s efficiency ratio target.

To enable this program and ensure its success, we recently hired Taylan Turan as Chief Operating Officer. Working with leaders across TD, he will accelerate our change agenda, reshape operations and drive bank-wide efficiency. This program will allow us to achieve our efficiency target and invest in our growth. We're applying rigor and discipline as we make investments to grow the business and achieve our goals. This investment discipline and the consistent execution of our plans will drive our growth and enhance ROE.

Now as you can see on this slide, Canadian Personal Banking and Wealth Management are very strong ROE businesses. We'll maintain those industry-leading levels as we build stronger returns in TD Securities and U.S. retail. I've covered a lot of ground today. So let me sum it up. We have a tremendous opportunity to reclaim client experience leadership, accelerate growth through deeper relationships and deliver peer-leading performance and shareholder returns. As we drive change, harness AI and extend digital leadership, we're building a more disciplined, simpler and faster bank.

To fund our growth and achieve our efficiency ratio target, we've launched a comprehensive enterprise-wide program to restructure our cost base. Make no mistake, we will get this done. And with a strong capital base and industry-leading organic capital generation, we plan to buyback an additional $6 billion to $7 billion in TD stock in 2026 and consistently return capital to shareholders going forward. These initiatives, combined with disciplined capital allocation, will lift ROE to 16% by fiscal 2029. We're getting back to winning for our clients and for you, our shareholders. Thank you.

Now over to you, Kelvin, to dig a little bit deeper into the financials.

Well, thank you, Ray, and thanks, everyone, for joining us. I'm Kelvin Tran, the bank's Chief Financial Officer, I'm sure many of you know me by now, I've been CFO since 2021, and I have been with the bank for over 20 years in various leadership roles. This Investor Day marks an important milestone in TD's journey. I will start by recognizing where TD stands today and then talk about where the bank is heading in the future.

We have a fantastic franchise with diversification and scale across our footprint. TD is a top 6 North American bank by total deposits and total gross loans. Over the past five years, we have grown deposits and loans by about 7% per year, and the team has delivered growth across all [ our ] business segments and footprint.

The bank's growth has been supported by our leadership in core deposits. That is our bread and butter, so to speak. These are sticky deposits, and they are highly profitable. In Canada, TD has top market share in non-term deposits. And in the U.S., ex. Sweep deposits, almost 90% of our deposits are non-term. And this strength drives lower deposit costs for TD, which is a significant competitive advantage for the bank.

Our discipline through the cycle approach to underwriting is also a competitive advantage. And as you can see in the middle of the slide here, TD has consistently delivered net charge-offs below the Canadian peer average. And that's across diverse products from mortgages to credit cards and from personal loans to commercial loans. Together, stable non-term deposits and lower NCOs coupled with our diversified business mix have supported steady earnings for TD through the cycle.

And over the past five years, the bank's adjusted EPS volatility was about 250 basis points below the Canadian peer average as shown on the right of the slide.

Now I want to dive deeper into the three financial objectives that Ray described in his remarks. Accelerating revenue growth, managing expense with discipline to create the capacity to invest for the future and allocating capital with a focus on shareholder return. As you can see in the lower left corner, we have grown revenue at about 5% per year over the past 5 years. In U.S. retail, we have weathered overdraft and other regulatory fee reductions. In our insurance business, the industry saw record weather-related events in fiscal 2024 and in Wholesale Banking, we have delivered faster revenue growth. Today, our business leaders will walk you through detailed strategies to accelerate revenue growth.

And the keyword here is acceleration. As you heard from Ray, the strategy center on enhancing digital engagement and helping our clients succeed. And we know that if they succeed, we succeed. And then we will earn the right to have a deeper share of wallet and grow our fee income businesses. And most importantly, these are organic growth opportunities that already exist within TD's four walls.

I want to pause for a moment on the U.S. Retail segment. This is a very, very important slide. I want to emphasize that this business has the capacity to grow while still complying with the asset cap. As you heard on our Q3 earnings call, we have already reduced assets by over 10%, creating room to continue to support our clients' needs.

And it's important to note there is additional dry powder on our balance sheet, with over 77% of loan-to-deposit ratio, and that's ex. Sweep deposits in the U.S., we have a sizable investment portfolio where almost USD 40 billion of that represents non-HQLA securities, which could then be run off to create additional room for core loan growth.

Now what does this mean? All in, our U.S. retail business could grow loans faster than their historical growth rate and still has the capacity against the asset cap over the medium term.

I'm sure you're thinking Kelvin, revenue growth is great, but what about expenses? I'd like to spend some time on our efficiency ratio and productivity initiatives, which are important topics that we're talking a lot about today. We are focused relentlessly on controlling cost growth by driving productivity to bend the expense growth curve. The $2 billion to $2 billion in savings that Ray highlighted earlier, will help drive efficiency ratio improvement, and that's across the bank.

So let's take a look at history to put TD's approach to expense management in context. The bank had a peer-leading efficiency ratio from 2015 to 2022. And our approach was to invest to drive top line growth. and the realization of this revenue growth enabled TD to maintain a strong efficiency ratio for many, many years.

If you look at the last couple of years on this slide, our efficiency ratio deteriorated. Due in part to elevated governance and control expenses, but also reflecting our decision to continue to invest in the business. Now let's call it like we see it. Not only we are no longer peer-leading in the efficiency ratio, we have fallen behind the Canadian peer average. We know we need to do better, and we will.

In 2025, year-to-date, our expenses are up 12% year-over-year. And if you remove the impact of FX, variable compensation and the strategic card portfolio PCL, that number is closer to 9%, driven mainly by governance and control costs and business investments. We believe that 2025 represents a high watermark for governance and control expense growth for the bank. We have made the required investments and this cost is now mostly in our run rate. Next year, we expect expense growth of 3% to 4% year-over-year, with constant levels of FX, variable compensation and our strategic card portfolio PCL. And that is predominantly driven by business investments, which includes those investments we're making in the strategic initiatives that you hear about throughout the day from our business leaders. And this number is net of productivity savings.

While the expense guidance is helpful, let me reiterate that our goal is to manage to positive operating leverage. We have multiple levers that we can flex expenses up or down depending on the macro environment. And as Ray has said, we are targeting $2 billion to $2.5 billion in cost takeout. We're confident we can achieve this goal because we have clear line of sight across various levers. And this includes distribution transformation as we migrate more transactions to digital channels global delivery workforce as we consolidate with vendors to drive synergies from scale, automation and AI and technology in data modernization.

So how do we get back to a mid-50s efficiency ratio? You can see that on this slide. If you take 2024 results and remove $2 billion in structural costs, our efficiency ratio would have been closer to 54%. And as governance and control cost growth moderates, and we maintain our relentless focus on prioritization of investments and driving productivity, we will drive positive operating leverage. You will also hear throughout the afternoon that we have many levers to drive productivity and a commitment from each of our business leaders to deliver on those opportunities. And this combination gives me confidence that we will deliver on our targets. And as a result, we expect efficiency improvements across our businesses.

In Canadian Personal and Commercial Banking, you will hear from Sona and Barb about opportunities to automate processes and leverage AI to drive colleague productivity. In U.S. retail, we will benefit from the normalization of remediation investments over the medium term. But Leo will also speak about data rationalization, technology modernization and core process transformation to take out significant costs.

In Wholesale Banking, you will hear more from Tim shortly about strategies to grow revenues and deepen the TD Cowen integration, both of which will improve efficiency ratio over time. And we expect productivity improvements by enabling our bankers with a broader product suite to sell and win more business. It would be very fun to watch.

I also want to pause on TD Insurance. As it is a great example of how we can restructure our cost base and further leaning into digital capabilities. And as you would hear from James shortly, our insurance business operates a digital direct model with a largely fixed cost base. Thanks to the significant investments we've made over many, many years in technology. And as we further scale that business and grow revenue, the efficiency ratio will improve over time. And on top of that, we are leveraging AI to improve the claims experience by lowering claims costs, while at the same time, enhancing customer satisfaction.

At the total bank level, we expect to improve our efficiency ratio by over 300 basis points. Now the combination of accelerated revenue growth, enhanced efficiency and disciplined RWA growth will lift ROE to 15% by 2028 and to 16% over the medium term.

As you know, our Canadian businesses deliver strong organic capital generation, and that will continue. However, we must, and I repeat, we must improve our ROE in U.S. retail and in Wholesale Banking. In U.S. retail, we have already taken actions to improve ROE through the balance sheet restructuring activities that you've seen this year, but there's more work to do. And as you would hear from Leo, the team will further enhance U.S. ROE by driving underlying business performance through deepening client relationships and further optimizing cost and capital.

And in Wholesale Banking, with the acquisition of TD Cowen, we now have a more diversified revenue stream. And you have seen that play out real time in our strong and consistent results year-to-date.

Earlier in the year, our Global Markets businesses benefited from market volatility. And in Q3, as market volatility normalize, we saw an acceleration in our capital markets and advisory businesses. TD Securities has already extended balance sheet to a strong [ roster ] of client. So this business does not need to consume outsized RWA growth to drive outsized revenue growth. And as you would hear from Tim, with the new capabilities from the TD Cowen acquisition, we will do more business with existing clients and drive higher client relationship returns. And to wrap this up, our strong organic capital generation will enable the bank to buyback shares to further elevate ROE.

Now I want to emphasize this point. TD generates organic capital at a very, very impressive clip. And as a group that follows TD closely, I'm sure you know that already.

As you can see on this slide, on average, from 2015 to 2022, TD had delivered 89 basis points of adjusted organic capital accretion annually. And in '23 and '24, our annual capital accretion was lower, reflecting the AML resolution and the related operational risk capital impact, the transition to Basel III and the TD Cowen acquisition, among other impacts.

And over the medium term, on average, we expect to deliver more than 75 basis points of organic capital accretion this year, which is highly achievable given our history. And this will fuel investments in our businesses with a focus on our highest return opportunities to deliver long-term shareholder value. It will also enable the bank to consistently return capital to shareholders through share buybacks. In short, TD's superior capital accretion provides us with tremendous flexibility to execute our strategy, invest in our business and deliver returns for our shareholders.

For fiscal '26, we expect to deliver a positive operating leverage. And this despite the headwind from the significant share buybacks, which, although they are accretive to EPS, they impact revenue growth by reducing earnings on excess capital. In addition, in fiscal '26, we expect to deliver adjusted EPS growth at the low end of our medium-term target range depending on the timing of the share buyback, expense growth of 3% to 4% and an adjusted ROE of approximately 13% as we execute against our vision and strategy.

We will build deeper relationships, make TD simpler and faster and execute with discipline. And over the medium term, we're confident that we can deliver mid- to high single-digit PTPP growth as we manage revenues and expenses together. And with share buybacks, we expect adjusted EPS growth to be higher at 7% to 10% over the medium term, and we expect to deliver 16% of adjusted ROE.

As of Q3, TD had a 14.8% CET1 ratio. We're committed to driving higher ROE. And therefore, we'll look at both the numerator and the denominator very carefully. We will not sit on excess capital, holding it just in case. And as you heard from Ray, subject to regulatory approval, we expect to initiate another upon completion of our current share buyback program. We will deploy our capital to drive significant value for you, our shareholders. And with that, I'm going to hand it over back to Brooke. Thank you.

Thank you, Kelvin. It's now time for a short break. Refreshments are available just outside the back doors to your left. See you back in 10 minutes.

[Break]

Welcome back, everyone. We're now going to hear from three of our business leaders, Sona Mehta, Group Head, Canadian Personal Banking; Barbara Hooper, Group Head, Canadian Business Banking; and Leo Salom, Group Head, U.S. Retail. After the presentations, we'll host a Q&A session, where we'll take questions both from the room and from our virtual audience.

[Presentation]

Good afternoon, everyone. I'm Sona Mehta, and I am thrilled to be here with you today.

The Canadian Personal Bank has unmatched scale, incredible acquisition power and a best-in-class primary core deposit-rich franchise that truly sets us apart. With this leading position, my team and I are bringing curiosity, pace and uncompromising disciplined execution to get after our organic growth upside. I hope you can feel the energy in the air. We are fired up. And as Ray said, we are excited to get back to winning.

So this afternoon, my goal is to share three things: how we'll capture the deepening opportunity, accelerate PTPP growth and achieve a lower efficiency ratio. All of this is through a simpler, a faster TD. Our ambition is bold. Our strategy is sharp, and we have momentum. So we're going to dive right in.

It starts with we are so honored to serve 14 million Canadians, 1 in 3 Canadians bank with us. Their trust has enabled us to build Canada's #1 leading core banking franchise. And our #1 branch presence is matched only by our #1 digital reach. So taken together, these #1 positions are powerful. This is what drives our consistent track record in new acquisition and fuels our top two position in real estate secured lending and in cards.

So with over $300 million in deposits and over $400 million in loans, last year, we delivered $13.8 billion in revenue. This drove 45% ROE in the Canadian Personal Bank. And on a comparative basis, the segments CAD, P&C segment, 33% ROE is more than 1,000 basis points above peers. Between our #1 positions, consistent earnings and leading ROE, there is a lot to like here.

Now our distribution advantage has been a key franchise enabler. We have kept ahead of evolving client expectations. Our leading distribution network drives results and it is hard to replicate. Today, we have 8.4 million clients using mobile that is the most of any bank in this country. We have been #1 in active mobile clients for 11 straight years. And let me just say, these clients are active. They are using mobile an average of 22x per month. So let's just pause. That translates to 2 billion times a year, where we can build connection and relationship over mobile.

This level of engagement has enabled us to double digital sales over the past five years.

Now in parallel, our branches across the country continue to serve important client needs, including complex advice. Now while we do not have the most branches in Canada, we do believe we have the very best positioned network. As you can see here on the top right, our branches are 91% urban, that means we over-index in high-growth markets. This translates into a larger book of business for our branches, serving 25% more clients and $60 million more in core deposits than the peer average. These are commanding scale and efficiency advantages. We've long been innovators in distribution from the early days of [ 8 to 8 ], 6 days straight to our then pioneering Johnny Cash machines. And each year, we elevate the experience across all channels. Our nonstop practical innovation has built up a strong distribution advantage. And that is key to consistently attracting new clients.

As you can see in the middle chart, we are outpacing the Canadian population growth and by our widest margin yet. We are an acquisition powerhouse. At our last Investor Day, we set a big target to grow new to Canada acquisition by 50%. So how did we do? We crushed it. In 2024, we delivered 55% growth and achieved this way ahead of plan. And we did it by creating unique segmented customer packages. We mobilized thousands of TD bankers across the country who together speak over 80 languages.

And language matters. Like at our Jackson Square branch in Hamilton, Ontario, a family came to us after learning that one of our bankers, [ Haytham ] spoke Arabic. Within minutes, by speaking in their mother tongue, our clients were finally at ease, confidently working through their banking.

It's through superstar colleagues like [ Haytham ] that we deliver comfort and build lifelong relationships always. Our colleagues' heart, their focus, their execution this drives our ability to win across all segments. Years of this acquisition excellence has built up what is today, Canada's leading core banking franchise.

Checking and savings relationships, they are like the heartbeat of a retail bank. 86% or nearly 9 out of every 10 clients onboard to the Canadian personal bank with a checking or savings account these high-quality day-to-day relationships feed our preferential deposit mix. 68% of our $300 billion deposit book is in core non-term deposits.

Now finally, the [ Holy Grail ] primary banking. I know you hear lots of talk about this, and that is because primary relationships matter. When you are a client's main bank, that delivers retention, drives higher deposit leads to deeper relationships and sold the whole industry cares about primacy. We all want to lead in primacy.

So now I'll ask you to look at the third pain. As you can see, TD ranks #1 in primacy. More Canadians think of TD as their main bank. In fact, we leave the peer average by 700 basis points. This is a key differentiator. Primacy is one of our biggest competitive advantages. These relationships, their trust, this is our springboard to accelerate growth. And so the big question we asked ourselves in our strategic review is how do we take this terrific franchise to the next level.

You know what I see is this is the strongest foundation that a retail bank can have, but coupled with the headroom to grow through deeper client relationships. I'll just say that again. We have headroom to grow and the key is deepening relationships.

Now to land deepening, we have to make it simpler and faster to do business with us. Simple and fast will enable the very best client experience, more sales and greater retention.

Our second big unlock is to structurally transform our business. And we are targeting $200 million to $300 million in cost efficiency as we step up digital leadership, and we deploy AI right across our business. So by relentlessly focusing on deepening, as well as structural transformation, we are not just shaping the future. We are owning the future.

So that leads me to our strategic financial ambitions. We are setting out to drive to high single-digit PTPP over the medium term. And in tandem, deliver a 300 basis point improvement in efficiency ratio to 40%, while continuing to achieve peer-leading ROE of 40%.

So now let's talk about how we'll get there. You heard Ray set out the strategic pillars that we are focused on right across TD, deepening relationships, becoming simpler, faster, and disciplined execution. We start with our in-built superpowers. More clients, 1,500 basis points more have a day-to-day account with us. And in case you missed it, we lead in primacy. This is a great foundation for deep relationships.

As you can see on the middle graph, this has translated into above-average relationship depth, as you would expect. However, what you also see is that we are not best-in-class in deepening, not yet. We have 300 basis points of organic growth upside available via deepening and there is absolutely no reason that, that should be the ceiling.

We know our clients want to do more business with us. We see it every day in our top of funnel data. And so frankly, it's time to get at it. We have set specific targets for each of our biggest deepening opportunities. Over the medium term, we aim to increase penetration rates in personal credit cards by 700 basis points and in business credit cards by 1,500 basis points. We are setting out to capture $40 billion of RESL volume from our existing clients who hold a mortgage outside of TD. And we will be partnering with Paul's wealth team to increase referrals from the Canadian Personal Bank to wealth to $40 billion a year.

We are going to capture that headroom. And as Ray said, it will be a win for our clients and a win for TD.

Now starting with cards. We have a platform that is ready to take off. Our award-winning proprietary and co-branded credit cards along with strong partnerships like Uber and Starbucks position us at the forefront of industry loyalty and value. Across our lineup, we have 8 million active accounts, including over 1 million Aeroplan cardholders and we are not done yet. We just completed a long-term extension of our exclusive co-brand credit card with Amazon in Canada. And TD rewards cardholders are loving the ability to use their points on Amazon, redeeming 100 billion points to date. All in all, this is a winning value proposition.

So we are out to capture 700 basis points of deepening headroom on personal cards and doubled that with our small business banking clients. We have thoughtfully redesigned how we operate, policy by policy, process by process, digital funnel by digital funnel.

For example, previously, far too many TD clients had to do a full extensive application for a new credit card. Even if they were existing clients that we knew well. So fast forward, now we fully use our data to preapprove 37% more clients who don't yet have a credit card with us. That is more than 3 million clients who are now preapproved. Let's be clear, to be able to start with the yes, is game changing. And we are already on the move. We are up 300 basis points in deepening with 56% of checking clients now holding a TD credit card. So just to be clear, that was our warm up. And now we hit the ground running.

The deepening opportunity also extends to real estate secured lending. This business is undergoing such an exciting transformation, right, from home buying, all the way to renewal. As you can see on the far right of the slide, you will see that our overarching goal is to deliver disciplined share growth with strong returns.

As we do this, we will set out to bring back $40 billion of mortgages that our clients hold with other banks. So how? Through specialization, through speed and with laser-focused price discipline.

I'll start with specialization. We reintegrated our proprietary channels this year. Our mobile mortgage specialists now work hand-in-hand with in-branch bankers to assist clients on the most complex deals. Their empathy, their expertise and dedication is supporting more clients on their home buying journeys. And the results are off the charts. Our funded volumes from branch referrals are up 3x, and productivity is up more than 40%.

Speed is another critical element to how we will further deepen. As you can expect, a slow home buying process, it can create anxiety for clients. And so we are driving to speed to decision throughout the client's journey from faster pricing to structurally simplifying how we process a mortgage application. We have already increased 1-day approvals in our Mobile Mortgage Specialist Channel by almost 20%. And our focus on speed and specialized advice will drive enhanced returns. As RESL economics rebound, we have been laser-focused on improving returns and driving positive on-off spreads since fiscal '24.

And so through our end-to-end transformation, we are well poised to deliver growth with strong returns. Our digital ambition is equally important. As we have highlighted on the right, our ambition is to widen our leadership in mobile banking and to achieve 50% digital sales in the medium term. We will do this by transforming our market-leading app into an end-to-end app across shopping, buying, onboarding and engagement to drive deeper relationships. We will exceed client expectations through more intuitive, more human, more tailored experiences. You will see us stay at the forefront of digital excellence.

Now the Canadian Personal Bank has an important role to play across TD. We can deliver the whole bank to more clients. And here too, primacy has an advantage primary clients have an almost 2x better wealth penetration rate than non-primary clients. As you will hear from my colleagues, we work closely with our partners across Wealth Management, the Business Bank, and TD insurance. We are deepening across all three.

For today, I'll spotlight our work with wealth. Closed Wealth referrals are already up 23%. Over the past five years, the personal bank has referred $140 billion to wealth, and we aim to grow our referrals by another 43% to $40 billion a year over the medium term. That is the path to enduring relationships right across TD.

So now let's move to simpler and faster. This is so central to how we will achieve our medium-term targets. As I mentioned, we have high interest from clients at the top of our funnels. But over time, we have inadvertently introduced friction. I think we can all agree that no one likes waiting in line for a purchase. And every time you make a client jump through a digital hoop, they drop off. And so what we're doing is examining our key purchase moments and asking ourselves what is the simplest, fastest client experience that we can deliver. I'll share three examples: Faster Leads, Faster Onboarding and Faster Pricing.

So first, Faster Leads. In the real estate secured lending business, we launched TD Mortgage Direct. And so now when a client shows home buying interest online, a specialist is instantly alerted and calls them within minutes. This fast direct model has driven more than $4.6 billion in funded volume since inception, and is performing 4x above our traditional conversion rate.

The next example is Faster Credit Card Onboarding. We recently launched a simplified workflow. It combines checking and credit card applications into one flow and cuts the time in half. We expect a 1,000 basis point lift in new client card penetration all within our existing risk appetite and strong credit quality.

Finally, we are focused on faster RESL pricing. As we execute on this focus for speed for our clients, we are seeing that our deal funding rate is up 7% in our mobile mortgage channel. Again, simply put, when the client wins, we win.

Now making it easier to do business with us starts with how we get things done every single day here at TD. It wasn't that long ago that many of the Canadian Personal Bank's distribution channels set in different parts of the organization. Fast forward to this year, we have brought digital, phone and ATM into the Canadian Personal Bank. Now all distribution and product teams sit at the same table with end-to-end accountability for our clients' experience. And as I shared just a bit before, our branch and our mobile mortgage teams work closely together, and this integrated team is winning in the market.

One of the most transformative levers that we have to structurally get to simpler and faster is AI. We wholeheartedly believe that AI can deliver over $200 million in revenue upside and unlock another $100 million in annualized cost savings. For years, we've deployed Predictive AI everywhere from propensity modeling to adjudication. And now we are actively innovating with generative AI to empower colleagues and reduce manual work. GenAI is an action in our contact centers and soon to be in our branches.

Questions that used to have colleagues jumping through screens can now be answered in seconds. And we expect to deploy our first client-facing version of this capability in the year ahead.

And we are on the precipice of Agentic AI opening up compelling opportunities. For example, most of the RESL application reviewed to date has been quite manual. We are now working on reducing pre-adjudication processing from hours to minutes. That's just one step of many where AI can help us get decisions to clients faster. We see so much potential for AI to improve processes by 40% and enabling us to support client needs and business growth.

Now let's turn to our third pillar, Disciplined Execution. For the Canadian Personal Bank, this is all about driving growth with disciplined credit quality, cost management and driving financial performance. Our Disciplined Execution delivers growth while maintaining strong credit quality.

As you can see here, over the past five years, we have grown credit card accounts by 30%. We have not compromised on credit quality. We have been very disciplined. You'll see on the right that we continue to have peer-leading 90-day plus delinquency rates and this contributes to our strong return profile.

Now as clients' needs and expectations go up, we are reimagining our distribution model. What we see is that clients often seek us out in person in branches during new moments like when they first joined TD or in complex moments as they invest for their future or buy a home for the first time. And here delivering deep specialization matters. So leaning in on the success of this past year, we will redeploy another 500 branch colleagues into home borrowing or investing specialist roles and add to our mobile mortgage specialists. We see $200 million of top line revenue growth.

And for simpler sales and servicing, our future is in boldly extending what it means to be the mobile leader. Clients are definitively adopting digital convenience.

93% of financial transactions are already taking place in self-serve channels. But as you heard Ray say there are still millions and millions of transactions currently in the branch that will in time shift to mobile. And we see an equally important role for mobile to play in simple sales. We see 50% of digital simple sales as well in the art of the possible. This digital momentum can create a $150 million cost reduction and reinvestment opportunity.

We have long been innovators in distribution, and we will continue to be on the front foot as we drive leading distribution transformation.

I find the innovation potential opening up before us so incredibly exciting. We are fully tapping into this reimagining distribution, embedding mobile throughout and reimagining top processes with AI. As we have elevated the colleague and client experience, we can also structurally transform our cost base by $200 million to $300 million. And improve our efficiency ratio by 300 basis points to 40%. With technology, with our disciplined execution, we have high confidence in capturing this potential.

So in closing, the Canadian Personal Bank is the premier retail franchise. We have unmatched scale and leading primacy, a track record of growth, and the runway to reach new heights. I'd like to thank our colleagues. We have the best bankers from coast to coast for all that you have done to build this formidable bank and for your deep conviction in the path ahead.

Our ambitions are bold, our strategy is sharp. We have momentum. We will leverage our leading primacy to drive deeper relationships we will boldly extend our leadership in mobile, and we will unleash the full power of AI. As we do this, we will deliver PTPP growth, enhance our efficiency ratio and to continue our industry-leading ROEs. The future of the Canadian Personal Bank is bright. Thank you.

[Presentation]

Good afternoon, everyone. I'm Barbara Hooper, and I lead the Canadian Business Bank. Over the past 20 years, the Business Bank has grown from #5 in the market to #2. How did we do that? We've built a model and a culture that our clients and colleagues value. It's a successful model and it's prime to grow. So I'm thrilled to talk to you today about the strength of our current business and the tremendous opportunity we have to supercharge our growth through accelerated investments in people, processes, technology and AI. And as you're about to see, this growth is on top of our already strong performance.

We are a leading Canadian franchise with top two market share across most products in commercial banking, small business banking and auto finance. Our three lines of business represent 1 million business clients and 1 million retail auto clients with over $120 billion in business loans and $30 billion in retail auto loans. Our $160 billion in deposits provides a stable source of funding. And as Ray mentioned, puts us in a strong position.

The business bank is an important part of TD, contributing 15% of adjusted earnings and 21% of pre-provision pretax earnings in 2024 with an ROE in excess of 20%, but more than that. The Business Bank plays a key role in TD's overall ecosystem through our trusted client relationships and collaborative partnerships across the organization, we can connect our commercial and small business clients to partners in wealth, TD Securities and the personal bank. These partnerships help us unlock greater value for our clients and gain share of wallet.

We have a history of growing our business, steadily gaining 700 basis points of share over the last 20 years to become #2. As you can see, we've grown our business loan volumes from $16 billion to over $120 billion during this time. That's an 11% CAGR.

Our strong client relationships have been critical to our success. In fact, 70% of our 5-year loan growth has been from existing clients. And we're proud that over 50% of our commercial clients have banked with TD for over 10 years, with nearly 1,000 of those having been with us for more than five decades.

So what's our secret? It's our bankers. Our business bankers are trusted advisers for their clients, and I firmly believe that they are the best in the country. Much of our growth has been achieved because of the quality of our bankers and the advice they provide.

You might be wondering what enables our bankers to be so successful? Well, it starts with coverage. The business bank has strong national scale across all of Canada, but local coverage is really at the heart of our strategy. Being local matters to our clients. They consistently tell us that having their bankers close by allows for a richer understanding of their businesses, markets and needs, all key factors for giving great advice and developing deep relationships.

I hear it all the time. Business owners in Quebec City, want a banker who's there, not in Montreal, and if you live on Vancouver Island, you'd prefer your banker be there, too. And our commercial bankers are empowered with local decision-making. 80% of commercial credit decisions are made in market. This means faster decisions, better advice and stronger risk adjudication. And our local teams include customer support officers and cash management teams. Clients have told us, they appreciate knowing their service officers and dealing with them regularly instead of speaking to someone new every time they call. And it's not just our clients who love that our bankers are local, empowered and dedicated, our bankers do, too. And that's a big part of why we're able to bring in new talent and retain experienced bankers.

In fact, as you can see, the average tenure of our bankers is 11.5 years. That says a lot. It speaks to the culture here at TD. We genuinely care about our clients, our people and doing right by our communities all across Canada. And specialization is another important element of our strategy that's driven significant gains for our business. Many of our bankers are specialists in key industries. Their deep segment expertise means better advice, better risk adjudication and more value for clients, which contributes to the market share growth I mentioned earlier. For example, we began specializing in commercial auto in 2019 with the creation of our National Auto Group.

We brought together industry experts in everything from sales to credit who were completely focused on the auto sector. The result? Since the launch of this team, we've been able to take share every year for the last five years, as you can see on the right. Clients truly appreciate that our specialized bankers are immersed in their field. And while we have national teams that specialize in sectors like real estate, agriculture and automotive, for sectors like transportation and food and beverage, we've established local specialized teams to meet their clients' unique needs. Going forward, where we see opportunity and scale we will continue to specialize in new industries and segments to enhance the value we're delivering to clients and grow the business.

For instance, in 2023, we jumped at the opportunity to add bankers specializing in the tech and innovation space to establish our TD Innovation Partners team. This group is better equipped to work with and advise entrepreneurs and founders within the innovation economy from the startup stage to IPO.

And the success of our bankers goes hand-in-hand with our long history of disciplined risk management. We have a diverse portfolio with a stable mix of commercial and industrial and commercial real estate that reflects both the Canadian economy and our risk appetite.

But our approach to risk goes beyond diversification. At TD, we've embedded a strong credit culture throughout the organization and within the business bank. Our consistent and disciplined underwriting and through-the-cycle approach results in favorable PCL performance. It also means we can continue to have a growth mindset during periods of economic uncertainty.

In fact, it's not uncommon for us to gain share faster during economic downturns. As I've mentioned, we've grown this business 700 basis points over the last 20 years. That's a huge accomplishment, but it was achieved without compromising on our risk appetite, a strategy that won't be changing going forward. So it's our winning model and culture that's been behind the business bank's growth to become the #2 player in the market. With our strong efficiency ratio and consistent focus on returns, we are a significant contributor to TD overall.

But this is just the beginning. By accelerating our investment in new bankers, processes technology and AI will fuel growth in 2026 and beyond. Ray and my colleagues have already shared some of the outcomes and opportunities that have come out of the strategic review.

For Business Banking, it's reinforced that we're focused on the right areas strategically, operationally and financially. We are committed to growing the business and increasing our PTPP.

As we enhance our technology and increase automation, we will further improve our efficiency ratio while continuing to focus on profitability and ROE. It's this combined focus that drives our goal to grow PTPP at a high single-digit CAGR over the medium term.

So how are we going to do that? By expanding our client base, deepening our share of wallet and becoming more efficient. To drive substantial growth over the medium term, our plans are anchored in the enterprise pillars that you're now familiar with.

Let's start what we're going to do differently to build deeper relationships. We're going to invest in more revenue-generating frontline bankers, as I'll explain in a moment, and increase our focus on relationship banking across the enterprise. Earlier, I said that our bankers are the best in the business, and I really believe it. When you look at the past 10 years, a big part of our success in growing the book and taking share is directly tied to increasing the number of bankers we have. At the same time, we've increased the amount of revenue per banker. As you can see here on the left-hand side of the slide, we know that when we add more bankers, we win more business. It's a proven low-risk strategy.

With more revenue-generating frontline colleagues will increase the number of new clients and accelerate growth, growth in our loan book, growth in deposits and growth in other fee-generating products and services. That's why we're aiming to accelerate our investment in people, increasing our team of frontline bankers by 28% over the medium term.

Of course, we'll continue to develop all of our colleagues to ensure we maintain that high standard of client advice and service that's driven our success to date. With our deep client relationships and strong collaboration with other TD businesses, we are able to bring the whole bank to every client to meet more of their needs. Our ambition is to accelerate investment to increase relationship banking across TD.

Our large client base of 1 million businesses across Canada presents a significant deepening opportunity. How will we do it? First, will improve the client experience by making investments to leverage AI and scale self-serve and digital capabilities, which will also increase our share of wallet across all segments. In Small Business Banking, improvements to self-serve in digital will boost client acquisition, strengthen new relationships and reduce attrition within the first year. While investments in platforms like Global Transaction Banking will help us better serve our commercial clients, all of which creates capacity for relationship building.

What does this look like in action? In 2025, we implemented a new AI model to predict which small business customers might have a particular product need within the next three months. Our account managers take this information together with the product pre-approval and reach out to clients. Early results are terrific with a 26% increase in pre-approval take-up rates. But as importantly, clients appreciate that we've offered them what they want, when they want it and have made the process fast and easy. It's deepening and strengthening relationships.

The second way we're going to deepen relationships is by unlocking growth opportunities across the enterprise. Our partnership with Wealth is an excellent example. Business owners are busy. So by co-locating private bankers in our commercial banking centers, we are making clients' lives easier by collaborating to meet more of their needs, including wealth solutions in a way that's convenient for them.

Similarly, our wealth partners are introducing their clients with business banking needs back to us. The increase in wealth referrals you see here on the screen is significant, both because we're generating more leads and increasing the quality of leads, which is driving a better close rate for our wealth partners.

Beyond referrals, this is a testament to the trust that TD is built with our clients to take care of all of their needs across the bank. And a little -- in a few minutes, Paul will share with you a great example of how we are working together with Wealth and Winning.

Now let's look at our next pillar, simpler and faster. We have been on a journey to increase our speed and efficiency, making it easier for clients to work with us and for colleagues to get work done. While we've made strides in this area, there's a lot of opportunity to make even more progress.

Now business banking is always going to be a people business where relationships matter. Our relationships are strengthened when we can streamline administrative activities and make transactions easier for clients. It also frees up capacity.

For instance, this year, we streamlined the process to enroll new clients in our commercial banking web portal. It now takes just minutes. Not only does this improve the client experience, it frees up time for our bankers and clients to get to know each other better and discuss how we can meet their full set of financial needs. And now with new advances in AI, we're able to simplify processes like never before. Building on the simplification we've already achieved, the business bank is now accelerating our investment in technology and reimagining processes, which will make us faster and more cost efficient.

As you can see on this slide, over the medium term, we aim to onboard half of new small business clients digitally, significantly boost digital adoption and cut 1/3 of manual work in our operations group. This is going to provide a better client experience make us more cost efficient and free up more capacity for our bankers.

Let's look at an AI use case in our auto finance business. Imagine you're a finance manager at a car dealership. The customer in front of you has found the perfect car and they want to buy it. You filled out the paperwork for their loan and submitted it to TD. And now with the work we've done to enhance our credit auto adjudication for our prime customers, instead of sitting there and waiting for up to 25 minutes, that review takes just seconds for the large majority of applicants.

That's a huge time savings. It's made possible by our new proprietary automated decision platform that uses real-time machine learning for credit adjudication, the first AI model of its kind at TD. Dealers love it. It saves them time and helps them close deals faster. Clients love it. They find out instantly whether they've been approved, no wasted time, and we love it because we review 1.5 million credit applications every year.

But this time savings is not at the expense of credit quality. In fact, this process improves our portfolio credit quality since it drives a greater share of higher quality deals to TD.

To be clear, we've been using auto adjudication in our auto business for years, allowing us to process roughly 55% of prime applications automatically. Now with the AI enhancements I mentioned, we're auto adjudicating nearly 70% of prime applications, and we see a clear path in the medium term to auto adjudicate over 85% of all applications.

And in our commercial business, we're building automation tools for our more complex commercial deals including an AI-based tool to assist our bankers in assessing borrower and industry risk. This will support our goal of automating up to 70% of Commercial credit processes and reducing the time it takes us to do credit analysis and underwriting by 25%. Our goals are ambitious. But with a focus on disciplined execution, we are confident in our success.

The outcome of these technology investments over the medium term is twofold. First, a significant reduction in the manual work inherent in our processes, speeding up service levels and improving the client and colleague experience. And second, we'll drive run rate cost savings of $150 million to $200 million a year, improving our efficiency ratio.

Earlier, I spoke about adding new frontline bankers at an increased rate. And yes, there will be a cost to this. But history has proven that new bankers pay for themselves quickly and are accretive to the business.

Now how does all this translate to the bottom line? We expect to achieve a high single-digit PTPP growth CAGR in the medium term. As you can see on the left, our business as usual baseline has momentum thanks to our scale, local and specialized bankers and through the cycle approach. Additional growth will come from deepening relationships and becoming simpler and faster while reducing run rate costs. I'm confident the combination of investments and strategies I covered will drive earnings growth and attractive returns.

So to wrap up, the Canadian Business Bank is strong. We've built a model and a culture that our client and colleagues value. It's profitable. It's proven to drive growth, and we're positioned to capture even more by putting more bankers in more markets, meeting more of our clients' needs within business banking and across the bank and leveraging new technology to improve the client experience and be more efficient. We have a tremendous opportunity to supercharge our earnings growth and drive attractive returns. We're focused on the future, and I couldn't be more proud to lead TD's amazing business banking team in this exciting next chapter of our growth. Thank you.

[Presentation]

Good afternoon, everyone. It's a real pleasure to be here with all of you today. My name is Leo Salom and I'm the President and CEO of TD Bank in the U.S. And I joined TD about 14 years ago where I served as the Head of the Wealth and Insurance business before transferring to the U.S.

As I reflect on the last couple of years, it has certainly been a very challenging period for our U.S. business. But as we look forward, I believe that our U.S. business has been and will continue to be an important contributor to TD's growth aspirations and an integral part of the shareholder value story. So thanks again for joining us today.

Now let me just begin by describing our presence in the U.S. Today, TD is a top 10 retail and Commercial Banking franchise by total assets and the largest FBO in the U.S. a milestone achieved in just 20 years, unmatched by any other U.S. or global peer. We serve over 10 million retail clients and nearly 700,000 Small Business and Commercial clients. We operate a leading retail distribution network with 1,100 stores and approximately 29,000 colleagues who deliver a differentiated level of client service and advice each and every day.

We are deeply embedded in our communities we serve up and down the East Coast, from Maine to Florida. And across that footprint, TD enjoys a top 3 deposit market share position and we hold top 10 market share rankings across cards, consumer real estate lending, C&I and Commercial real estate lending. We have been the #1 SBA lender in our footprint for 8 consecutive years, providing critical capital and financing support to small businesses. And above all, our success has been built on an unwavering commitment to our clients.

In 2025, we earned the #1 ranking in dealer satisfaction in the J.D. Power U.S. Dealer Financial Satisfaction Survey for the sixth consecutive year and we regained the #1 ranking in Florida in the J.D. Power U.S. Retail Banking Satisfaction Survey.

And over the past two years, our U.S. franchise has delivered sustained growth marked by three distinct phases of expansion. First, through acquisition. We entered the U.S. by acquiring Banknorth in 2004, followed by the acquisitions of Commerce Bank and the South Financial Group. Together, these banks form the foundation of our U.S. bank.

Second, consumer asset build-out. We acquired the Chrysler Financial auto financing portfolio and launched our co-branded card partnerships with Nordstrom and Target.

And third, sustained Organic Growth. Over the last 10 years, we opened 250 de novo stores, expanded our small business and commercial banking segments and launched our national specialty banking franchise.

Now we certainly have come a long way in the last 20 years, but I would argue that we're still a young franchise with tremendous potential. And as I will highlight, we have an unparalleled opportunity to become a more efficient more profitable and more formidable competitor in the U.S.

Now the flagship of our U.S. bank is our deposit franchise. We enjoy strongholds in Greater Philadelphia, New York and New England, where our product deposit share well exceeds our brand share. We've made inroads in Florida and the Carolina's, our fastest-growing markets. And our consumer and commercial deposits have grown at a CAGR of 6% since 2019. And a stat that really speaks to the power of our deposit gathering capabilities, 76% of our deposits are held in markets where we hold a top 3 market position. And that includes Greater Philadelphia, where we enjoy a #1 position.

We're #2 in New York, #3 in Boston. And in Florida, we have now achieved a top 5 position. Essentially, where we decide to play, we win. This is a distinct competitive advantage providing us with significantly higher liquidity levels and lower cost of funding versus our end-market peers.

Now turning to our loan portfolio. Since 2019, our Core Loan book has grown at a CAGR of 4%, a direct result of a number of new product launches, new more sophisticated underwriting models, enhanced third-party partnerships and our proven One TD referral model.

But even with this resilient performance, though, we still have significant opportunity to accelerate loan growth within risk appetite while remaining compliant with the asset cap. It is important to point out that our loan-to-deposit ratio is just 56% overall, which represents a clear advantage versus our peers. And through our balance sheet restructuring program, which I'll cover in a moment, we've created significant capacity to continue serving the lending needs of our existing clients as well as new prospects in our communities.

Now before highlighting the opportunities ahead, I want to take a moment to reflect on the global AML settlement. October 10, 2024 was one of the most difficult days for anyone who has ever worn the TD Shield. Reflecting back, I take comfort in how we prepared for and weathered the days and weeks following the settlement announcement. And now almost a year later, we have made significant progress against our AML remediation. We've maintained stable deposit levels with minimal customer attrition. We've executed our balance sheet restructuring program, creating nearly $50 billion of headroom, we've completed our investment portfolio repositioning, contributing approximately $500 million in additional NII this year.

We've improved earnings sequentially throughout 2025, and our return on equity has improved by 140 basis points year-to-date. And finally, a particular point of pride for me is that our colleagues have been there every step of the way with employee attrition at its lowest level in over 7 years.

While there is more work to do, I do want to take a moment to thank the 29,000 U.S. colleagues for their resilience and dedication. And moreover, I want to sincerely thank our clients for their continued loyalty to TD Bank, we remain committed to earning their trust each and every day.

As Ray and I have previously shared with you, AML remediation is the bank's #1 priority with our full focus and commitment. We've completed a number of critical milestones. We have onboarded an outstanding AML leadership team. We've elevated our investigative capabilities, we've launched our next-generation transaction monitoring system, and we've implemented the first phase of our AI and machine learning solutions.

We expect to complete the majority of our management remediation actions by the end of this year with significant work and important milestones to come in 2026 and 2027. From a cost standpoint, we are tracking towards $500 million of spend this year and similar levels of spend in 2026. And as we complete our management remediation actions and make progress on the validation work, we expect that costs will begin to moderate accordingly.

Now as Ray outlined on many occasions, we embarked on a comprehensive strategic review process earlier this year. And as part of this review, we asked ourselves a lot of tough questions and identified a number of areas where we could accelerate growth and improve returns.

First, despite having created one of the most significant client franchises on the East Coast, we lack relationship depth with many of our clients. Second, today, we operate an overly complex legacy operating infrastructure, a carryover from some of our past acquisitions. And third, we had trapped capital in a few businesses where we lack scale and do not meet our hurdle rates.

So we're taking action. We have defined a series of strategic priorities to strengthen our franchise by deepening client relationships with our core retail and commercial clients, rationalizing and building an infrastructure commensurate with the size and scale of a top 10 U.S. bank, a precondition for long-term sustainable growth. And we're adopting a relentless focus on capital returns and shareholder value. So to that end, we have set ambitious targets for the years ahead.

In 2026, we are targeting $2.9 billion in NIAT which reflects double-digit earnings growth and a return on equity of 9.5%, up 100 basis points year-on-year. Our outlook reflects the benefits of our balance sheet restructuring activities and is an early indication of the earnings potential of the U.S. franchise.

Now looking ahead to the medium-term projections, we aim to deliver high single-digit PTPP growth an efficiency ratio in the mid- to high 50s, enabling a return on equity of 13%. And I do want to underscore that we expect to deliver these financial results while executing on 2 very important funded priorities.

First, we will continue to relentlessly prioritize our AML remediation efforts and our broader governance and control program. And second, we will purposely invest in digital, data, AI and technology infrastructure to position TD Bank as a leader in the U.S. banking industry.

Now let me tell you how we're going to deliver these targets. As I mentioned earlier, our deposit franchise is our key differentiator anchored by long-standing client banking relationships up and down the East Coast, a leading omni channel deposit acquisition model and a brand that is known and trusted in our footprint and gives us a distinct competitive advantage. Combined with our efforts to foster greater engagement and deliver innovative solutions, this provides a platform to drive greater relationship depth and accelerated revenue growth.

Now what does this mean for our revenue profile? We expect to deliver mid- to high single-digit annual revenue growth through the medium term. To achieve these results, we will execute against 4 core business priorities. First, we're Reimagining our Retail Distribution model with a focus on digital delivery. Second, we are scaling our consumer asset portfolio with a focus on growing our credit card franchise. Third, we're deepening our U.S. wealth business with a focus on our mass affluent segment. And finally, as you'll hear from Tim later this afternoon, we'll accelerate our commercial banking franchise in partnership with TD Securities.

Now beyond these powerful drivers, our revenue performance will also be impacted by higher tractor rates, higher investment portfolio returns and higher revenue share from the recent expansion of our Nordstrom strategic cards partnership. These tailwinds will be partially offset by non-core loan and Schwab deposit runoff.

Now let me discuss each opportunity in detail. Similar to the distribution changes that Sona referenced, our first deepening objective in the U.S. is reimagining our retail distribution model. Today, we have an exceptionally strong store network with a proven track record of deposit client acquisition. But increasingly, clients expect greater personalization and an elevated more seamless omni channel experience. And to that end, we are accelerating investments in digital & mobile capabilities across sales, onboarding and servicing.

Through these investments, we expect to increase digital acquisition to 50% of total sales, enhanced digital adoption to 70% and drive digital self-serve above 90%. This will create greater capacity for our store colleagues to provide advice to our customers on a broader suite of products and services, enabling a deeper relationship.

Now to facilitate the pivot to this advice-based model, we're retooling stores to our next-generation store design concept, which includes enhancing our self-service capabilities, creating private spaces for those advisory conversations, increasing specialists to deliver more lending, wealth and small business services and deploying digital merchandising and marketing to provide real-time customized promotional capabilities in our stores. To date, we have upgraded 175 stores or 16% of the total network, and we expect to have half of our network transitioned over the medium term.

In addition, we will continue our optimization efforts. Since 2020, we have closed 174 stores across the network while opening or relocating 62 stores. Looking forward, we expect to optimize a further 10% of our network by closing or relocating existing stores to high-opportunity areas within our existing MSAs.

Now turning to deepening opportunities. One of the most significant opportunities is our bank cards business. We've made significant investments in cards since 2022, including expanding our product offering, particularly our cash-back products with market-leading value propositions, enhancing underwriting capabilities using AI-enabled models, allowing us to extend credit to more clients than traditional underwriting methods. And extending and expanding our co-branded partnerships beyond 2030.

From 2022 to 2024, average bankcard volumes increased by 30%, a direct result of these foundational investments. And going forward, we look to accelerate the growth of our cards portfolio via our existing deposit clients which should reduce the cost per acquisition while mitigating our credit risk. To that end, we are targeting to increase overall bank card penetration to 30% of our deposit base up from 18% today. Coupled with our expanded Nordstrom partnership, this will generate approximately $700 million in incremental revenue through the medium term, a significant acceleration of the financial profile of our cards franchise.

Another significant opportunity to deepen relationships is the expansion of our Wealth franchise. With the sale of TD Ameritrade to Schwab, we are no longer bound by a shareholders agreement, restricting brokerage and Wealth Management activities in the U.S. We've already made some initial investments in the franchise, but we're doubling down on the strategic priority to expand wealth distribution focused on this mass affluent segment.

Just to give you a sense of the opportunity in front of us, approximately 30% of our existing 10 million client base qualifies as mass affluent. And they have over $600 billion in net investable assets at other institutions.

So how are we going to capture this opportunity? First, we're going to scale our adviser force by hiring 500 financial advisers incremental to the 220 that we have today. Second, we're going to capture our mature -- continue to mature our One TD model driving high-quality referrals to those advisers. And finally, we're going to tailor our investment products and services to meet the needs of this particular segment. Taken together, these activities should enable us to triple mass affluent assets and increase revenues by approximately $300 million through the medium term.

Now turning now to our commercial bank, we have built a scaled franchise with strong client relationships that have endured over decades. Our bankers aim to be our clients' most trusted advisers, working with them side-by-side through all economic cycles, and evolving stages of their businesses. These clients stood by us during our difficult time because as many of them shared with me, we stood by them during theirs.

And we're seeing the tangible impact of these relationships. We accelerated growth in our middle market and specialty banking areas and posted record levels of relationship banking fees over the past year. And looking forward, this targeted strategy will enhance cash management capabilities to capture greater deposit and fee opportunities, deepen relationships through greater specialization in our One TD model with a particular focus on the Middle Market and Specialty banking segments, leveraging our unique partnership with TD Securities.

And third, we'll expand lead agent positions driving higher fee income and enhancing overall returns. We will do this as we continue to execute on our balance sheet optimization efforts, recycling runoff capital into profitable loan growth. Collectively, our efforts should increase return on equity in our commercial bank by 500 basis points and increased core revenues by $700 million through the medium term. Now while delivering on these 4 core business priorities, certainly important, we must also evolve as a simpler and faster organization.

Turning to our balance sheet restructuring efforts, we have made significant progress simplifying the U.S. franchise in the past year. As you can see on the left side of the page, we have sold portfolios and initiated the wind down of businesses that were either not profitable or did not contribute to deepening relationships with core clients.

Now let me just give you one example. We are exiting the retail card services business. This is a business that we acquired as part of one of our past acquisitions. It has roughly 40 merchant counterparties, $3 billion in loan balances, a complex fulfillment model and simply put, wasn't delivering an adequate return on capital. Winding down retail card services allows us to redeploy capital to our bank card franchise, where we can deliver above average return on equity. And that's just one example.

When you consider all the actions that we've already taken, we've created roughly $50 billion of capacity versus the asset cap, and we will reduce nearly $20 billion of RWA, a 10% reduction from our 2024 levels.

Now our focus isn't just on simplifying our business mix. We're also simplifying our operating infrastructure. We are transforming our data and technology architecture to deliver a scalable, cloud-native modular environment, enabling us to better support colleagues and serve clients. This change will modernize our core architecture and apply end-to-end process transformation, including AI, to our most critical operations. And we're prioritizing several areas for AI deployment.

First, we're automating operational processes to significantly improve our cost to serve. Second, we're transforming our knowledge management solutions for stores and call centers, creating significant productivity for our frontline colleagues. And finally, we're enabling real-time data insights across all sales and servicing channels to deliver greater client personalization and greater client penetration across our suite of products and services. These are a small subset of what we're discussing as we begin to embrace AI across the bank at scale.

Now not only will these initiatives simplify our operating processes, but conservatively speaking, we estimate that these activities will reduce our operating cost base by $200 million through the medium term.

Now achieving the aspirational targets that we've outlined will require ruthless discipline and execution across the franchise. I've talked at length about our AML remediation efforts, but it's important to reiterate that we are uplifting our overall governance and control framework as well with a focus on key prudential risk like capital, liquidity and credit and integrated control and compliance program across all three lines of defense and robust leading fraud data and cyber platforms.

Now let me take a moment to elaborate on credit risk. We are very pleased with both the quality of our credit portfolio and our allowance coverage. In fact, we enjoy an allowance coverage ratio above both regional peers at money centers, a reflection of our prudent credit risk management practices. But finally, effective risk management is more than just strong policies and practices. It is all about culture. And as you've heard in Ray's remarks, we will continue to elevate our risk culture by investing in top talent across all lines of defense and promoting a culture of curiosity, accountability and ownership. In summary, we are building a strong foundation that will allow us to continue to consolidate our position in the U.S. market for years to come.

Now turning to a topic that I know is top of mind to all of you in the room, Strategic Cost Management. Historically, our U.S. franchise has been a top performer in efficiency versus peers. More recently, however, we've been impacted by elevated governance and control spend, but we remain dedicated to recapturing our top quartile efficiency ranking. Through the medium term, we will relentlessly [Audio Gap] focus on optimizing the store network, driving unit cost improvement through process reengineering and AI, reducing third-party spend. And finally, making investments to reduce the cost of running and operating our core infrastructure.

These actions, coupled with the moderation of our overall governance and control spend are expected to deliver approximately $750 million of cost takeout and an efficiency ratio in the mid- to high 50s through the medium term.

Now finally, over the past year, you've heard me talk at length about our focus on return on equity. We've seen those actions take shape in the third quarter, with return on equity of 8.9%, increasing 140 basis points versus the fourth quarter of 2024. I would note these figures include roughly 60 basis points related to the operational risk capital hit associated with the global AML settlement. We remain confident that we can return profitability to historical levels by sustaining momentum in core deposit and lending businesses, deepening relationship by executing on the core business priorities that I outlined earlier, completing the balance sheet restructuring program and delivering $750 million in structural expense savings.

Taken together, these actions should enable us to deliver 13% return on equity through the medium term.

Now in closing, TD is a top 10 retail and commercial banking franchise in the U.S. We have an enviable footprint in the U.S. in markets that have a collective population of over 100 million residents with a GDP in excess of $10 trillion. In fact, we operate in 5 of the top 10 MSAs in the country, and we serve these markets from a position of strength. We have one of the strongest capital and liquidity positions amongst U.S. peers with the financial wherewithal to invest and transform our U.S. franchise. And to that end, we have demonstrated our commitment to build a leading BSA/AML program in North America. And we have taken steps via our balance sheet restructuring to allow TD to continue to serve our clients and communities.

Looking forward, we believe in the U.S. market and the tremendous opportunity we have in front of us to continue to press our deposit advantage to accelerate the growth of our consumer and commercial lending franchises to build a wealth franchise serving the retirement needs of millions of Americans to transform our distribution model to better serve our clients' evolving expectations and to strengthen and optimize our governance and operating infrastructure, all of which will position TD as a stronger, more scalable franchise.

I want to thank you all for your time today and more importantly, for your support during this phase of our journey as we emerge as an even more formidable competitor in the U.S. Thank you.

Thank you, Sona, Barb and Leo. We'll now move into our first Q&A session. We'll begin by taking questions from those in the room. If you'd like to ask a question, please raise your hand and we'll bring you a mic. And please remember to introduce yourself. If you're watching on the webcast and would like to ask a question, please click the Ask button at the bottom of the page.

I would now like to welcome Ray, Kelvin, Sona, Barb and Leo back to the stage.

Matt Lee, Canaccord Genuity. Just wanted to know your 2026 guidance and medium-term targets, do they assume a status quo USMCA outcome at the review next year? And if not, do you have any concerns around potential for trade conflicts to escalate and maybe slow down the growth that you're expecting over the near term?

So maybe I'll start, Matt. Just if you look at 2026 or the medium term, what I would tell you is this, that we have already -- we have factored into our provisions as we shared through our quarterly updates about $600 million in reserves and allowances. And so from an uncertainty perspective, I think we factored that in.

As we look forward into our 2026 numbers and longer, now what we've shown consistently is that TD Bank is well positioned regardless of the uncertain environment, and we've shown we can manage that through the cycles. And then certainly, that holds true for the underwriting standards that we have. So when we say we're a through the cycle lender, we factor in that there are ebbs and flows on that side.

Now I will say, I mean, that is considering sort of the base case scenario that I think we've factored into what we think will be potential tariffs but let's see how the USMCA plays out on that side, but we are optimistic, as I said in my comments, that we do see -- at some point, I don't think it's going to get resolved in the short term. But I do think as the USMCA plays itself through, we'll continue to monitor, but we are well provisioned for that.

Just a quick follow-up. If the review doesn't confirm an extension in 2026, does that change your views around capital or CET1 comfort ratio?

Sorry, can you just repeat that question?

Yes, like your comfort around your CET1 ratio, does it change if you don't get an extension in 2026 for [indiscernible]?

Yes. So we will have to look at it. If you look at our medium-term outlook, our assumption in our model is -- CET1 ratio would be around 13%. And so we'll just manage that given the environment.

And again, I mean, I think the one advantage I'll add, Matt, and I think we pointed it out to everybody is the organic capital accretion that we expect to achieve sort of starting in 2027 getting back to a normalized rate. Which is considerably higher than any of our peers, allows us to weather different uncertainties, but also gives us quite a bit of flexibility on the CET1.

Mike Rizvanovic at Scotiabank. Maybe one for Sona. Just wanted to go back to the 700 basis point advantage that you noted on the customer primacy. And I'm wondering how that's trended over time? And then secondly, given that you're peer leading, does it become progressively harder to move the needle or even to maintain that? Because we are hearing all the banks talk about very similar things when it comes to the dynamic of customer primacy and getting that customer relationship deeper.

Yes. Great questions, Mike. So let me start at the top. From a primacy perspective, that level of primacy has been quite consistent for us. So we have a steady track record of performing at that level.

As you talk about do we have upside, can we hold the fortress and maybe even widen the gap? I'm actually quite optimistic on that front. So if I go back to our thesis, we've said we have these leading advantages. We lead in core banking, we lead in primacy, we lead in distribution advantage. And yet, we haven't yet achieved peer best-in-class on deepening. And I think I hinted to it, the operative word there is yet. And absolutely, I see that as well within the art of us achieving that. And so that -- as we do that, that's actually a positive force to reinforce the flywheel of primacy. So that's the first point.

The second one we've noticed is as clients go digital, when you think about active mobile clients where we today have an advantage, they're interacting with us 22 times a month. On a physical bricks-and-mortar context maybe decades ago, you wouldn't have seen that level of traffic from an individual client. So that actually gives us opportunity to continually reinforce that connection and relationship and as we onboard new clients in digital, if anything, we see the same or better primacy. So like all of these winds I see blowing in our favor. So we expect to continue to hold and widen our primacy advantage.

And -- can I -- just one quick one for Leo, not to sound facetious, but one of the priorities that you mentioned was the technology capabilities and your -- I guess, your tech infrastructure in the U.S. And you mentioned it was acquisition-related, but these deals go back to 2004, 2008. So what has precluded the bank from integrating tech in previous years? Has there been any hindrance that now maybe isn't holding you back?

Yes, Mike, I don't know if I want to revisit the past, but let me talk a little bit about the future. So we're doing a number of things from a technology standpoint. Well, first, we're rationalizing the overall technical and data architecture. We're looking at opportunities, whether it's in data to be able to consolidate onto our cloud-based infrastructure whether it's on the systems side, we're in the cards business, we're consolidating onto our single center of excellence platform.

In the commercial banking areas, we're taking processing, dual processing environments and converging them onto a single environment. And we're also modernizing. So we've embarked on a core modernization initiative to take our core back-end system and rewrite it to be able to reduce our run costs as well as reduce the cost of change, future innovation that will allow us to be much more innovative in terms of new product capabilities.

And then finally, I'd say where I think a lot of the opportunity is to be able to transform our businesses, it's to apply AI at scale in terms of end-to-end process engineering. And there, I think we've got the biggest opportunity because it's where you can really shave significant amounts of cost from our unit cost structure, which is going to be critical for us.

Because we're large enough right now that we have a degree of scale being a top 10 bank, but scale is being redefined in the U.S. continuously. And so for us to be focused on AI, focused on some of these process reengineering work will allow us to continue to become even more cost competitive in the future.

So those are the things that we're doing now, Mike, and I'm very confident that we'll be able to make progress on all those items.

Ebrahim Poonawala, Bank of America. Maybe just sticking on the cost topic. And Ray, I think you said you're going to reset the cost base fundamentally. Just talk to us, I get AI-led productivity, but beyond that, were the aspects of TD in terms of how expenses were managed and which probably was not the most efficient way. Like how is that changing on an operational standpoint? Because you all the time we hear about productivity improvement from all the banks. Just what should give us confidence in the way you look at the medium-term targets that you can actually achieve this operationally?

It's a very important question, Ebrahim. So thanks for asking that. Maybe I'll break it down into three parts.

Number one, we have outlined in your presentations sort of six very strategically important initiatives or buckets. And these are all structural costs. I mean this isn't about cutting your project spending or reducing your marketing spend. Those things all come back at some point over time. And I deliberately used the word structural cost reduction. And so if you think about the vast majority of those savings, the $2 billion to $2.5 billion are going to come from process reengineering, right? And so think about your top 20 processes.

I'll give you an example. If you're onboarding clients, whether it's credit cards, checking accounts, savings accounts, direct investing accounts, that onboarding process has a unit cost. And so one of the big, big shifts that you will see at TD Bank, and I don't think a lot of banks have gone down this journey. They're in industries manufacturing, that's very common. We are moving to a unit cost based model. And so every product leader will understand the end-to-end unit cost of look, for example, opening an account. And if it's just for round numbers, if that's $100, I would tell you that the vast majority of people would say, in the banking industry, especially as we automate and introduce AI and redesign and reengineer, you can reduce your structural costs in those top 20 processes between 20% to 30% at a minimum. Those top 20 processes account for about 60% of processing costs. That is a massive structural reduction.

Let me give you an example. I think TD Insurance, to me, is the terrific example of when I say structural cost reduction, what am I talking about? Go back 5 years in TD Insurance, we were a direct insurer, but we were a phone-based organization, which meant that every time we scale the organization, more people in the contact center, more people in our back office is processing the manual processing of the operations, we've made significant investments, and you're going to hear that from James over the last number of years to digitize and be the most modern digital platform in the insurance industry.

So what have we done? We've taken what would have been a very variable based -- variable expense based organization and made it flat fixed. The marginal cost of the next policy for TD Insurance is in the pennies. And when you're at 50% now digital sales end-to-end, no human intervention, that gives us a massive cost advantage, that is structurally reducing the cost of running the TD Insurance business, and you saw the numbers on efficiency for TD insurance. And that's why I've said -- that is the winning model going forward. I just wanted to give you a real example. We will replicate that across many, many areas of the organization. Procurement is another area.

When you're a company the size of TD with $6 billion in procurement on an annual basis, we have a significant opportunity to be much, much more disciplined. And so think about that program as the first -- this is probably, in my 30 years of being at TD everyone, the most focused, the most disciplined, the most comprehensive enterprise-wide structural cost reduction program that we're putting in place, and it's exactly why one of the big reasons that I've introduced a COO role and brought in Taylan Turan, who has run massive transformation programs to make sure that we don't lose focus on this. Then you overlay that with a change in the tone.

Make no mistake, everybody, we will get this work done and every leader in this organization is accountable, there's a different expectation around accountability. And I said that was one of the changes that we were making to our culture is accountability, courage and curiosity, right? And so I hope that helps you capture, Ebrahim, that we're serious about the cost reductions. I'm confident we're going to get it done. And we're already down the road. I hope you saw in my slide, $500 million already will be captured from our restructuring that we do this year that comes into next year, $400 million more in 2026. So $1 billion of the $2 billion, $2.5 billion, we will capture in the first year in 2026 as we move forward.

That was pretty comprehensive. I guess maybe for Kelvin, just around capital targets you put out, I think, 13% CET1 next year with the $6 billion to $7 billion in incremental buybacks, I'm not sure if you're doing the math incorrectly, but it implies either significant RWA growth. Just give us a sense, given the earnings accretion through now, through the end of '26 net of dividends, feels like you would have another $5 billion to $8 billion of excess capital. Are we missing something?

Yes. So let me clarify that. When we say 13%, really exactly what you're saying, there's going to be so much capital. We're not going to be able to grind it down to 13% in 2026. And so we just -- for this slide, we just basically expected it to be stable from -- throughout the MTO period as opposed to giving you a higher level and then grinding it down. But we're not expecting '26 to be getting to 13% levels yet, right? And then that's over time, we're going to grind down and then given the significant organic capital that we'll continue to generate, then we'll self-fund the business growth and also future NCIB as well.

And I think the important message that I want all of you to take away is the discipline that we will manage capital going forward is different, right? And so I think we've been clear the organic opportunities that you would have heard already this afternoon, and you're going to hear from the rest of the speakers is significant. So that is priority one. But we have to be more disciplined, Ebrahim, on how we manage capital even within our businesses, and you heard from Leo, some of the decisions that we've made in the first year to exit non-core businesses. And so I do think the bar, we will hold ourselves high on making sure that all the businesses that we invest in are accretive from an ROE perspective. So that's one.

The second is if there is excess capital above and beyond the dividends that we return that we will consistently return that excess capital back to our shareholders to create long-term value if we don't see an opportunity from an M&A perspective. And we do think that there will be selective opportunities, and I use that word very intentionally selective M&A opportunities and we look at those and where we've seen success is where they add capability or allow us to scale an existing area, right? And so I think -- and when Tim comes up, he'll talk about the acquisition of Cowen. That is a perfect example where we are selectively using our capital to accelerate the growth but there will be much, much more disciplined around capital management as we move forward at TD Bank.

Sohrab Movahedi, BMO Capital Markets. A quick question for Ray first. Ray, you said there are no change in risk-appetite. And presumably, in the first instance, we all think of that as credit quality, but you've also said I'm going to move faster and I'm going to deploy AI at scale. The cynic in me says you've changed your risk-appetite. So tell me what can't go wrong if you're moving quickly and deploying stuff that may be unproven?

Sohrab, thanks for the question. Let me just start by saying, first and foremost, everybody, our colleagues are excited about the changes that we're proposing. And why do I say that? I mean this theme of simplicity and speed, I would tell you that there is risk, Sohrab, when you're slow. There's risk from a response to customers. There's risk in real-time data to make faster decisions around fraud and so when we talk about speed and simplification and speeding up our organization, in many ways, we're going to reduce our risk.

We're going to reduce the cost to run our organization and be more efficient and you've seen our efficiency go the wrong way over the last number of years. And so the introduction of AI, automation, all of that takes out also manual work. And when you have complex organizations like a TD Bank or any big bank, having manual operations and where there's lots and lots of manual work creates potential for errors, creates potential for risk. And so I see this, Sohrab, as not only speeding up and making our organization more efficient but reducing the risk for the organization.

And I can tell you, as I go across our entire organization and I speak to our clients -- our colleagues and tell them, our strategic focus is about deepening our relationships, speeding up and simplifying our organization so they can do the jobs that they've been hired to do, and our clients can engage with us regardless of business line simpler. My goodness, the excitement is contagious across the order. So I hope that answers your question, Sohrab, but I actually do think we're going to reduce our risk, not increase our risk.

That's helpful. Just the $1 billion or so of benefit from AI, I think 50-50 between revenue and expenses, just curious as to how you arrived that billion -- at that $1 billion. Is that just the plug to get you to the 16% medium term? Or is that...

I knew this question would come at some point, right? But Sohrab...

And then more importantly, how do we -- like how do we track of what you have to invest to get that benefit? I mean is it a good trade-off if you have to spend $2 billion to get $1 billion.

It's a good question. And I do want to dial the clock back a little bit in what I said in my speech. We have been on this AI journey since 2018 when we purchased Layer 6. And so I know a lot of organizations are on the bandwagon fairly recently and all excited. We've been at this journey for 7 years, right? And so our -- we have the learnings that we've had has been extraordinary, 2,500 colleagues at a minimum that are dedicated in our own house, I just can't emphasize to everybody how important that is, first of all, right, that we are not relying on third-party vendors for everything that we do. Our talent is in our own house and is proprietary and we're investing and growing, and we've been doing that for 7 years.

And if you speak to any of the leading AI experts in the world, they will tell you that is a massive differentiator for TD Bank that we have the scale within our business within the AI field. So I just wanted to emphasize that. So when you sort of say like how did we get to the $1 billion, it has been, first of all, a comprehensive bottoms-up exercise. So we went out to every single business area across the entire organization in both Canada and the United States and in TD Securities globally to look at from a bottoms-up what are all the real practical examples of where we are applying AI right now or very near future?

And what will the cost savings and revenue opportunities be? And so it's been actually a very bottoms-up and you'll hear throughout the course of today, and I'll hand it over to my colleagues to talk about real practical moments that we're implying right now. And so this is not about savings that are coming, these are some of these stuff, Sohrab, is things that we're recognizing and realizing as we speak. So maybe I'll pass it over to some of my colleagues.

Maybe I can start adding on there, Ray. Sohrab, so one of the things that I really like and the approach that we've taken is the discipline that Ray talks about is what we're applying as we grow the deployment of AI. What we're doing is looking at specific cases, patterns, if you will, and perfecting them, like really perfecting them and then using that and scaling across the organization. So if I look at Knowledge Management solutions. So we talked about we first put it into play in NACO, our contact center.

And it took us a certain amount of time to actually come through the curve of learning, getting to the accuracy and the intuitiveness that our colleagues need, we've really perfected that. And then what we do as we're building it for my branch teams now, we took that same learning, and we actually delivered the tool for branches in 1/3 of the time that it took us for our contact center deployment with 20x the scope. So it's really a case of pattern recognition. And now we're doing this next thing in the Canadian personal bank is now moving on to Agentic AI.

And so our operations teams have really owned that hand in hand with the Layer 6 team. They are coming up with incredible ideas by taking a part that full process and saying, which are the parts that are incredibly manually intensive, that slow down, speed to decision. And as they do that block by block, it's the same idea. Let's perfect the first case with Agentic and then scale from there. So what you will not see us do is it's not like 1,000 trees or flowers that we're planting and hoping many of them bloom. We're actually taking specific use cases, honing them and then scaling them.

I could give you one good example, everybody. And just Sona triggered me, Sohrab, just to make it real for everybody. When we did this Knowledge Management system in the contact center, for those of you that cover contact centers, you know how precious 1 second of average handle time. I mean that is a critical metric in the contact center, how long does a colleague spend on the phone. And so 1 second, an incremental 1 second of handle time in the contact center is equal to $100,000 in cost. Just absorb that, right?

And so when we have colleagues that have to then call into a resource desk because there's a lot of churn in a contact center, right? They have to call into the resource desk where the experts sit to get an answer, that wait time that they have is very, very expensive potentially, right? And so now we've introduced a knowledge management system through AI, GenAI that they can, at their desktop, get the answers that they've been historically going to the resource desk and figure out from there how much average handle time in seconds we are saving.

And what does that translate to as a bottoms-up cost exercise as per Sohrab your question. I just wanted to give you one real example of what's been implemented, now overlay that into the thousands of colleagues that Sona is talking about in our branch network that will be implementing the exact same GenAI capability across the entire branch network as we move forward.

John, did you have a question?

John Aiken with Jefferies. Leo, in your commentary, one thing that stood out to me that was interesting was the low attrition rate that you're currently seeing with your employee base. Can you talk to your employee engagement measurements, however, you do that surveys, whatever, in terms of where it stood in the dark days of the AML, where you stand today and where that actually sits relative to where employee engagement was prior to all the AML issues bubbling up?

John, maybe I can take you back. We held a meeting, in fact, a live broadcast with 29,000 employees the day of the actual [indiscernible] or I should say, the day after. And in that day, we had a very frank conversation about what had happened, what was the path forward, what I needed from every employee in the organization.

And I promised them that we would engage them fully on a monthly basis in terms of giving them a sense of our journey forward. And that's exactly what we've done. We have kept doing live broadcast communicating in terms of the changes we've made to our AML infrastructure, the changes we've made in core processes, the investments that we're making, and I cannot tell you, John, how proud and humbled I am by the response of TD.

I think the organization felt itself in a place that it was -- it had never been, we had historically held ourselves out as leaders in risk and governance and finally, finding themselves in debt with a tremendous task ahead of us. Some organizations might have turtled, in our organization, I could not be more proud of the way people stood up and said, no, no, we've got to defend the shield. We've got to move forward. And a year into this, I think you can look to what's been accomplished and say that's a terrific set of deliverables.

But what I'm most proud of is the fact that to a person, the organization has expressed a commitment to trying to build the organization we need to be for the next 10 years as opposed to focusing on what might have happened or might not have happened in the past. And so once again, John, long-winded way of saying, I couldn't be more proud of the -- my TD colleagues in the U.S. Thank you.

Paul Holden, CIBC, question for Sona and maybe for Leo as well. Just thinking about the themes you're talking about today, digitization, speed, efficiency, those things don't make me think of the traditional bank branch. So just wondering how you're sort of balancing the push for efficiency versus maintaining the branch network. And maybe really the question is like, why not accelerate the pace of shrinking that branch footprint?

I can start. Thanks very much. It's a very fair and good question and one that we should talk about. As I look at our branch network, we've led both in our branch network and in our mobile network. I think what is really important, especially here in Canada, and TD is no different. We generate incredible growth through our branch network. So even today, 70% of new client acquisition and complex sales happens through our branch network and so this is a real balancing act, I would say.

As we think about it, there are both revenue upside opportunities as well as cost transformation opportunities. Both are important. It's not a one-way direction of travel. And so one of the things that we've done in our branch network is we've actually upped our game in specialization. We've seen that as clients increasingly come to the branch. They're coming in their complex moments, and so we've redeployed colleagues already, and we're actually planning to double down on that redeployment to catch that specialized need that clients are manifesting.

There are absolutely opportunities as we see digitization happening and clients are definitively moving that way. When I think about that in the context of TD, we have above average -- peer average foot traffic in our branches. It's 30% more, it amounts to 30 million transactions, definitely over time, that will migrate to mobile, but it doesn't lessen the in-moment benefit that branches generate. So for me, it's really about sequencing.

As that activity migrates, our colleagues can focus more on complex advice moments and then when there's capacity, as we've done over the last 10 years, we adjust staffing mix, we adjust hours, we adjust footprint. That's a well-tread combination. It's not entirely new. It's well-tread and it's something that with the right team, we can actually get that revenue cost trade-off, but sequencing is incredibly important. So I don't see pacing ahead of that, that would be impairing our revenue growth.

Yes. Maybe I can add, Paul. Just to build on Sona's point, first thing I would say is our store network is a differentiator. So I think it's an incredible valuable source of both net new deposit-gathering activities as well as increasingly, it's going to be the source of the sale of more complex products and services. As we try to pivot and become a deeper organization with our clients, I think the store network -- the character of the store network will change. Maybe the positioning of that store network might change and evolve over time.

But I still think stores are going to be an invaluable part of the overall distribution mix. What we do have to do though, is continuing to invest deliberately in the digital channels so we can provide a much more fulsome servicing platform. So we can take those less or more basic transactions out of the stores to permit that pivot to take place towards advice. But I do think that's a revenue lift play for us as well.

We'll certainly look to consolidate some stores. I gave you some stats in terms of what we've done since 2020. We'll continue to do that as a matter of course. But what I really care about is how quickly can I get that pivot? Because with that will come higher lending volumes that will come greater wealth relationships and hopefully, greater small business partnerships as well. So that pivot, I think, is critically important for us.

The only thing I'll add, though, Paul, is that historically, and even today, I mean, you heard from Sona, that our model attracts in many ways because we win new to Canada in many ways, but it does attract a higher propensity for branch, right? And so you've got clients today, and I think that's where we have an outsized opportunity from a cost management as we move forward while delivering the experience that clients want. So we are very conscious, Paul, that we have 30% more foot traffic in our branches for a very specific reason. Our client base starts there, right? And that's why we won from a new to Canada. And we've been very strategic in where we place our branches across both Canada and the United States to take advantage of that.

So as we transition to digital, you want to make sure, and we want to make sure that we're providing from a sales perspective, service perspective, I think we're well positioned on sales, that we remove all the friction, and so that clients can actually go end-to-end, and that's where you're seeing acceleration of our spend and our focus, but it is providing us, over time, a greater opportunity on cost management than any of our competitors because the structure of our client base and our transactions in our branches, and we've got longer hours and the density with our branches being in more urban markets, will provide more opportunities as we get better from a digital perspective.

And then, Ray, one question for you. As I think about your messaging regarding capital allocation, you've obviously gone through a very deep and long strategic review of the business, arrived at the decision to return most of the rest of the capital from Schwab through buyback and then you talked about M&A would come if there were product or capability gaps. So I guess my assumption would be you don't see any product or capability gaps today that need to be filled. Is that a correct assumption? Or is it there might be some, but you just have other priorities today where you just don't see timing of M&A is appropriate?

Thanks for the question, Paul. I'd say the -- it will be very clear as we go through the rest of the afternoon, the priority for TD is organic growth. We think there is considerable outsized opportunity inside of our organization when it comes to that. And I do think you have to prioritize. You can't be great at everything. And so we have prioritized through the strategic review organic growth as the priority. The benefit that we have, even after we returned $6 billion to $7 billion of capital to our shareholders next year, that because of our both organic capital accretion and our strong capital position, we will have the flexibility if selective opportunities do occur, it's not a priority for us.

As we've come through the strategic review, Paul, and M&A right now is not a priority, you heard from Leo, getting the remediation done in the United States, the AML is the #1 priority there. And then you overlay organic growth as from a growth perspective, our greatest opportunity on that side. And then the focus and discipline that we will have around cost management as we execute the six strategic -- sort of the six pillars of our structural cost reduction across our organization. Look at those three as sort of the key priorities for this organization over the next 12 months.

The first question I've got is on buyback here. Is it plausible that this is more of a permanent feature of your capital deployment plan than it has been in the past? Maybe there's a shift in priorities, it sounds like, a desire to give capital back, but also to hit the 7% plus or almost kind of have to from an earnings per share growth standpoint.

So Gabe, maybe I'll take it. I mean I've been -- as I said in the commentary, Gabe, I mean, it is what we are going to do on a go-forward basis is part of the discipline around capital management and because of the fact that we have an outsized organic capital accretion, we think we have the ability to invest in organic the way I just talked about, look at sort of opportunistic moments for acquisition, but consistently return back majority of our excess capital back to our shareholders. We think that's the right thing to do from a shareholder value long term. But we have the flexibility as we sort of play out our strategy. But it is a fundamental change in how we will manage our capital going forward.

Maybe I can add to that. So if you look at our MTO, we're not relying only on share buyback to drive the EPS growth. You look at our PTPP growth, we expect to be mid- to high-single-digit. So that's the biggest driver of EPS growth and then the consistent return of capital is also the need to manage the denominator because we generate so much capital and earnings are so strong if you don't buy back shares, your denominator will continue to balloon and you're not going to be able to hit the 16%. So it's really a balancing act of managing ROE, EPS and growth at the same time.

Yes. I concur with that. Other one, just in case I missed it, the $2.5 billion of cost savings down the road, is there any -- I know we wrapped up or just about wrapped up a restructuring program. Are we going to see more of those to get to the next level? Or is this built into your kind of run rate already?

No. From a restructuring perspective, we don't believe we'll need to do a restructuring to get into the $2 billion, $2.5 billion. Now inside of that $2 billion, $2.5 billion is the half -- $500 million in 2026. That will be the carryover from the restructuring in 2025. But then the balance of it, we see it as structural cost reductions without requiring a restructuring charge.

Okay. And that number just conceptually, is this -- I think it was asked on the earnings call earlier this year, like most of that stuff gets reinvested. So the cost savings are something that you view as facilitating internal investment?

That's a good question, Gabe. The majority of that $2 billion, $2.5 billion, we see -- would see it flowing through to the bottom line.

Shalabh Garg from Veritas. So I see you've identified $20 billion of loan within the non-core portfolio in the U.S. retail, so a couple of questions there. Do you expect the core loan growth portfolio to outpace the non-core portfolio runoff? And then, b, do you see this as an opportunity to grow your core loan portfolio above the market rates over the next 3 to 5 years?

Yes. Thank you for the question. So just to answer the core growth, we do expect core growth to be at or above overall market growth rate. So we think we've got the flexibility, the capacity to be able to do that. With regards to core, non-core, I think last time we were together, I did mention that we were looking at a portfolio that we would either reprice or and/or exit. That will take place over the next 3 years. You could see the overall level of loan growth still contract in the first and second quarter of next year, but we would expect thereafter core loan growth to be able to overcome and for us to be able to post overall loan growth in the portfolio.

And if I could just add one additional because I think we've made the point, but if I could ask everyone to take away one point is with the actions that we've taken thus far, we've executed the balance sheet restructuring and the point that Kelvin raised in his presentation around the non-HQLA exposure, we do have $90 billion of headroom on a pro forma essentially $180 billion, just under $180 billion loan book. So to the point of can we grow, I just want to make sure that everyone is clear, we can absolutely grow our core loan growth. And certainly, through the MTO period, we would not have any restrictions or obstacles to be able to put on high-quality in risk-appetite, loan exposures on the book.

And then I see there's an expectation for lower sweep deposit balances, and I get it's part of the agreement and its 8 years from now in terms of the life of that agreement. So do you expect this agreement to carry forward now that you are expanding your wealth through adviser acquisition. Is there any risk over there?

Which agreement, I'm sorry.

The IDA agreement.

So we did, as you know, we did renegotiate that IDA agreement. It now is extended through 2034. I don't necessarily want to speculate on what's going to happen post 2034. But we do have -- the agreement provides for a floor at $60 billion. I would expect them to operate to a buffer off that floor. And so within the next few quarters, I would expect them to start to stabilize what their overall balance level is. And barring any major changes in the markets, I would expect them to keep that relatively constant over the life of the agreement.

It's Darko from RBC. A question for Kelvin on your Slide 44, where you present sort of path to the higher ROE? I'm wondering if you could just unpack the 300 basis points of reduction. How much of that is PCL taxes? And then the other one is 50 basis points, which is the one that's sort of confusing to me is sort of RWA growth net of buybacks. I view both of those as actually positive to ROE, like RWA growth is organic deployment and a buyback would help with the denominator of the ROE. So maybe you can just unpack these two. And if it's too complicated, happy to talk about this mathematically outside if you...

I'm glad you described the slide because Slide 44, I have to think about it. Sure. So on the first one, the 300 basis points, I would say that first look at it on the headwinds, we have Schwab equity pickup that is going to go away. That's an important component. And then another component then is that we currently have a bunch of cash sitting on our balance sheet that is earning. We call it earnings on excess capital. And as you buy back shares, that earning is going to go away. So those two components alone, it's about 100 basis points of that. So whether you put it in that column or put as part of the RWA column, you can think about it that way. And then the rest of it, the 200 basis points, the biggest component is really taxes. And then you have the other items, which are much smaller.

And then I would say on the RWA and NCIB, one way to look at it is you need to grow RWA in order to generate the PTPP that you see on the left-hand side of the graph. And so RWA consumes capital. And one way to look at it is you actually have to issue capital to support that. And so the NCIB is effectively our way to self-fund the RWA growth through our organic earnings. And so you basically see here is that we can generate organic earnings and that will self-fund any capital increases that we need on the denominator. So it's almost like flat there. But if we need more detail, we'll go through it. There are various ways of presenting that, but that's how we're thinking about it.

I'll do a slightly different attribution analysis later and my question for both Barbara and Leo. In your presentations, you're essentially going through what's going to be a process of some significant hiring activity, commercial bankers in both cases and then also Leo, a lot of advisers. Why is now the time to increase and go above past levels of hiring growth? And who are you hiring these people from? Are these experienced commercial bankers, experienced wealth advisers. And maybe you can just speak to why now in the middle of all this uncertainty is the time that we could grow the commercial business by simply hiring people, possibly hiring people away from others.

Darko, the response might be a little different depending on the geographies. So let me talk about it in the U.S. In the U.S., there's two areas that I think we are under scale in terms of our coverage model. First is the small business coverage. Despite the fact that we have an incredibly strong small business franchise, #1 SBA lender in the U.S. for 8 consecutive years. We still don't have the sort of coverage across the footprint that I think is required to be able to be at scale.

So I would expect just growing into our natural small business coverage, more akin to the coverage profile that we've achieved in Canada would be something that we would want to do in the U.S. And we already have a great brand in that space. We've got great followership. We've got an installed base. We have 700,000 clients. We're a little underrepresented on lending on non-SBA lending. So I think that just lends itself to be able to shore up what is already a very strong part of the overall commercial bank. The other area, which is where we're less developed. We did embark on a national mid-market strategy like some of our competitors did.

And I do believe that we have an opportunity to be able to selectively and prudently continue to build out our mid-market capabilities, continue to invest in our specialty national capabilities, potentially specialized with greater precision. And ultimately partner really effectively, and I'm sure Tim will talk about this a little bit more, but leverage TD Cowen's strong mid-market client base and mid-market sponsor base to be able to power accelerated referrals and accelerated growth in that space.

Just to give you a sense, we've already hired three senior executives from TD Cowen, moved them over into the commercial bank to be able to create that stitching between the two groups. And you can point -- you can look at the results that we've achieved thus far. We're seeing near-double-digit growth rate in mid-market in a market that's somewhat muted. And that's directly as a result of the partnership that's still developing. So I do think, to your point, maybe it's a little idiosyncratic to what we're living right now with the marriage of TD Securities and TD Cowen and the bank. But I'm really optimistic about what we're going to be able to do in that space.

So maybe quickly in Canada, Darko, it's a little bit different when you look at small business banking advisers versus commercial. So I'll start with small business banking. But really in both sides, we are a little bit under-clubbed from a frontline banker perspective versus some of our key competitors. So we've been able to grow the business nicely and take share despite not having as many feet on the street, if you will. So we see a lot of opportunity to accelerate growth even in this environment by closing that gap a little bit. On the small business banker side, where do we get them from?

It's a combination of experienced folks from outside, but really a lot of our hiring into the small business is really from other parts of the bank from Sona's business. Thank you, Sona. So we'll see people progress in their career from being a branch-based adviser, maybe a branch manager, moving into small business banking to expand on their experience. We find it's a very effective way to staff small business banking. These are people who know TD, know the culture. They have serviced small business banking clients in the branches.

They know what good customer service looks like. And we can get those folks trained up pretty quickly. So in kind of 6 to 12 months, they're fully productive on the small business banking side. In Commercial Banking, it's a little bit more balanced between internal hires and external. We hire a lot of early talent into the commercial bank. We train them up. We've got a fair number of folks who are sort of promotion ready, they're ready to step up. And by opening up new roles that we're looking to fill, we can give those folks the opportunity. But we do also hire a fair bit from outside of TD from other financial institutions, so experienced bankers.

The other thing I would say is that in both small business banking and commercial, we don't sort of hire a new banker and give them an empty book and ask them to go out and bring on board their first new client. We do rebalance of the portfolio. And so the new bankers are they're starting with the portfolio and with a portfolio of clients that they're going to start to look after. And then both the new bankers and the existing experienced bankers have more capacity to go out and generate new business.

I know we're at time. But maybe, Darko, just if I sort of take all of this and say that across the enterprise, we have put a singular focus around deepening relationships, which will then carry through to the prioritization of our investment dollars. And so where will we invest our dollars as we go forward. And in the past, you might have had different business lines sort of prioritizing different things, and that becomes challenging, right? And so when you have the acquisition engine that we have, when you have the scale of TD Bank in both Canada and the United States, and we're serious about this deepening organic opportunity.

One of the big restrictions as to getting to that is actually having enough people to catch the business, and you're going to see the referral flow that Sona talked about to the wealth management business or Barbara is putting to the wealth, but you're going to have people to catch this, right? And so we have prioritized deepening across the entire organization and that is why we're making these substantial investments.

And you're going to hear from Paul Clark and the investments that we're making in the Canadian wealth business because we have the clients, but we need to make sure that we are creating the capacity and have the people feet-on-the-ground, local talent matters, both in Canada and United States. So I just wanted to add that, Darko, that when we say this is a priority, it also means that it lines up against all of our investment spending going forward.

Thanks, Ray. That was a great discussion. Thank you all so much for your questions. We'll now take a longer 20-minute break. Refreshments are available on the south side of the conference center where lunch was served. Thank you.

[Break]

Welcome back, everyone. Next up, we'll see presentations by Paul Clark, Senior Executive Vice President, Wealth Management; and then James Russell, Executive Vice President and President and CEO, TD Insurance; and finally, Tim Wiggan, Group Head, Wholesale Banking and President and CEO, TD Securities. After the presentations, we'll move into our second Q&A session.

[Presentation]

Good afternoon, everyone. My name is Paul Clark, and I lead Wealth Management in Canada and TD Asset Management globally. I've been with TD for over 30 years and part of the wealth team for the past 10, and I'm really excited to share our story and the long-term value this business is creating by deepening existing relationships, unlocking new opportunities in personal and commercial banking and continuing our long history of driving efficient and high-return growth to our shareholders.

Ours is a unique story grounded in 3 essential elements. We have the largest in-house pipeline of any wealth management firm in Canada. We're uniquely positioned to monetize this pipeline given our leadership in direct investing, our investment excellence in TD Asset Management and our scaled advice offering. And we'll continue to leverage the value of our business mix and focus on efficient and accretive growth to take market share while strengthening our industry-leading ROE.

Let me ground you in who we are today. We're a scaled and innovative leader with $1.2 trillion in assets and 2.6 million clients. And as you can see, we have a franchise that's benefited from 40 years of organic growth and a history of innovation centered around direct investing. We've continually reinvented our business to meet our clients where they need us most. And as a result, we're #1 in direct investing, #1 in institutional asset management and #1 in private trust. Let's transition to our acquisition pipeline.

Look, if there is one slide you take away from today's presentation, it's this one. It starts with 1 million affluent clients in direct investing without a private wealth management relationship, and it extends to the 11.5 million personal banking clients without a wealth relationship or product. Together, they represent the largest in-house opportunity of any wealth firm in Canada. And when you combine this with the industry-wide $1.2 trillion in assets crossing generations that are 4x more likely to switch firms, our leadership in direct investing, along with the fact that TD Bank's 1 in 3 Canadians positions us to capture an outsized share of this growth and these flows.

Now what gives me confidence that we can execute? Look, it starts with Easy Trade. It's built to attract the next generation of investors. It extends to financial planning and private banking direct which allow us to reach into every market in Canada at scale virtually. And it now expands to private bankers co-located in retail branches together with those already located in our commercial banking centers and leverages our new family office to serve ultra-high net worth clients. In aggregate, our expanded offering and our approach to distribution now positions TD Wealth to cover every segment and every market in Canada. In fact, as part of the strategic review, Ray challenged us to strengthen our alignment across the bank.

For wealth, this is essential. And why? Because the bulk of our growth has and will continue to come from our Canadian banking partners. It's our secret sauce. The review confirmed the opportunity and our approach to deliver this growth. Together, this will increase our mix of fee-based assets as we grow to $1.6 trillion, accelerate our revenue CAGR to high single digits, sharpen our efficiency ratio, all while extending our industry-leading ROE. And look, it all starts with deepening relationships. And this isn't new to us. This is how we've grown our business from the ground up. And today, it's more important than ever.

Accumulated wealth in Canada is at record levels. The intergenerational transfer of wealth has begun, and clients are looking for advice and digital tools that meet the challenges of the moment, and we've got them. Let me walk you through how we've uniquely positioned ourselves to win with both human advice and digital experiences. Canadian Personal Banking is at the core of this opportunity. We have an established track record of deepening relationships and consolidating assets from our competitors. For every dollar referred by personal banking to wealth, we consolidate $4 in direct investing, $3 in financial planning and $3 in private wealth management.

Let me be clear. This incremental growth, it's at the cost of our competitors, and it drives market share. In aggregate, we're targeting $40 billion in new assets annually just from this one opportunity, and we're already at $27 billion year-to-date. This represents a significant portion of our asset growth in the medium term. And as you can see, as importantly, it improves client retention in retail by 4x and allows additional opportunities to deepen these relationships right across TD. Every single number on this page tells our story. Every day, some of these branches work closely with our advisers to build relationships and address our clients' long-term investing needs. This partnership is grounded in understanding our clients personally and professionally.

The combination of a personal banker and a wealth adviser enables us to support their everyday banking needs and is the catalyst to understanding their long-term investing goals. When you combine the bank's leadership in primacy and layer in a wealth professional, TD is perfectly positioned to win, and the results confirm it. Closed referrals to private wealth management this year alone are up 20%. I want to highlight another hidden gem. You heard from Barb about our co-location of private bankers and commercial and the impact it's having on new business for both of us.

As a matter of fact, just last month, Commercial Banking introduced a client to our family office, and we landed that deal worth several hundred million dollars. And we landed that deal because we had a private banker on the ground because of a seamless relationship with commercial and because our family office was ready to win. None of this was in place a couple of years ago, and all of it represents new opportunity for TD Wealth. This is just one of many examples where Barb's team and my team operate as one and closed referrals from the commercial bank, they're up an unbelievable 45% alone this year.

The opportunity inside wealth is equally impressive, and this is a story we've never shared with you before. No other bank has a direct investing business like ours, 1 million affluent clients, 75,000 high net worth clients and $275 billion in high net worth and mass affluent assets, all without the benefit of our advice. They've already chosen TD. The opportunity in front of us is to deepen these relationships, and we already have a head start. Every day, our direct investing high-value client team provides them with exceptional service grounded in deep personal connections. As a result, the average tenure of these clients, 20 years, truly incredible. These relationships extend through generations and position the team to introduce our DI clients to private wealth management at the right moment, at the moment that matters to them. It's the epitome of delivering relationship banking in a digital business, and I've seen it firsthand.

We have a high net worth family who are DI clients across generations. I've known them for over 10 years. I've watched our team introduce these clients and their children to our advice professionals in the moment that mattered most. And for them, it made all the difference. No other firm in Canada brings these businesses together quite like we do. And I'm proud to say that private wealth management and direct investing already share 100,000 clients. This integrated approach is clearly meeting their needs, combining the best of DIY digital tools alongside professional portfolio management, tax and estate planning and private banking. Flows between direct investing and private wealth management, where they used to be measured in the hundreds of millions of dollars. This year, we've already crossed $3 billion.

By the end of the medium term, we anticipate annual flows to advice will exceed $5 billion in assets. Only TD has the team, the platform and the population of high net worth direct investing clients to bring this opportunity to life. To take advantage of all the opportunities internally and externally, we have to accelerate the growth of our adviser base. Over the next 4 years, we'll expand this team by 1,200. We have a long history of growing our talent pool organically. In fact, many of our most successful advisers began their careers in personal and commercial banking. They're culturally aligned, understand how to navigate our branch network and most importantly, how to unleash the power of relationship banking.

Over 50% of this expansion has come from colleagues within TD and the remainder from our competitors. Both groups see the value of our pipeline, the integration of our businesses and the tremendous TD opportunity in front of them. They chose financial planning as former personal bankers, they witnessed firsthand the power of our in-branch integrated approach. In fact, just last month, I met with our newest group of financial planners. As former personal bankers, they told me they chose financial planning because they witnessed firsthand while they were working in the branches, the power of our integrated approach. In fact, planners hired in the last 3 years are driving more than 75% of our net asset growth in that business. They're building their client book of business quickly at a lower cost and with greater certainty.

Their success demonstrates our strategy is winning. And as importantly, it's attracting new investment professionals to TD from our competitors. While our advisers excel at deepening relationships, direct investing is the acquisition engine within wealth. And through the medium term, our intention is to grow our client base by 40% over 1 million accounts. Let's talk about how. Three years ago, we introduced Easy Trade, surrounded it with our best-in-class learning platform and more recently, augmented it with our real-time partial share capability. Our growth of new investors is directly tied to each one of these innovations. Our opportunity now is to reimagine that offering. And I'm excited to say we'll be launching a new app early next year.

We've been working with our high net worth -- sorry, our next-gen clients, leveraging our strengths in building the new mobile trading experience they now demand. These investors include second and third-generation TD Wealth clients who are just beginning their digital investing journey. This is the generation that will inherit the $1.2 trillion in assets I was referring to. They're the real disruptive force reshaping our industry. And we're reinventing our model with a marriage of unique digital experiences and human advice grounded in a deep personal understanding of these clients in a way that no one else can.

Most of these clients will evolve into either long-term investors or active traders. And for the active traders, our new platform is resonating and our users are growing. We anticipate usage will increase by 45% and will be instrumental in strengthening our #1 market share. Now let's talk about a business I've admired for a long time, TD Asset Management, the #1 institutional asset manager in Canada with over $270 billion in AUM, that when combined with our retail portfolio represents more than $0.5 trillion, $0.5 trillion in Canadian client assets. While we largely grew this business organically, and I'm really proud to say we did, this is a space where we've made strategic acquisitions grounded in capability enhancement.

Greystone is a terrific example of this. The acquisition provided us immediate leadership position in private market alternatives in Canada. This capability, combined with our track record of investment excellence has deepened our Canadian leadership position and is now unlocking opportunities globally. Today, we're just going to talk about a couple of opportunities. In private market alternatives, we're targeting $65 billion in AUM over the medium term. Our ability to drive our leadership position stems from 80 private market professionals, 35 years in real estate and the most robust in-house alternatives capability of any Canadian bank-owned firm. And its roots, they go right back to Greystone.

And with our history of leveraging institutional capability to drive innovative retail products, we've become the fastest-growing ETF franchise in Canada. We plan to triple ETF AUM in the medium term with a continued focus on both passive and active opportunities. Our investment excellence and acumen, combined with our distribution and brand are driving synergies right across TD Asset Management. I'm excited for what the future holds for this business and as importantly, its contribution to wealth's overall success.

To grow efficiently, we must continually simplify our business model, drive process improvement and make it easier to be a client and colleague of TD Wealth. It starts with the client experience. Our investments in digital onboarding are having a huge impact. Today, almost all our direct investing accounts can be opened online same day with no human intervention, making it easier for our clients to make that all important first trade. We now have the capability and are aiming to open 80% of our accounts digitally. We've also reduced the need for our clients to visit a branch to perform administrative tasks by over 99% just in the last quarter. This means that branch visits are now at the client's option where the opportunity to provide deeper advice and human interaction will always be the differentiator at TD.

In a digital era, our clients expect immediacy and we're delivering. In a moment, I'll also share the impact this is having on our efficiency. At the same time, we're investing in our advisers to enhance capacity and free up time to drive new business. Investments in process improvement, digital and generative AI capabilities will reduce the time it takes to complete a plan by 50% next year. This, along with investments in data modernization and workflow integration will improve adviser capacity by 25% over the medium term. Next year, we'll leverage AI to streamline client annual reviews, freeing up 3x per adviser per month. Capacity, they will reinvest into business development, including leads from our retail partners.

Capacity here is a force multiplier. And why do I say that? When you combine 1,200 new advisers, 25% new capacity in that team with the richness of the referrals we're receiving from Canadian banking, it's a recipe for outsized growth. Speed and ease are often measured in singles and doubles. But every so often, every once in a while, you get that opportunity to hit a home run to knock it out of the park, to reinvent your business model and reshape the industry. Combining our discretionary businesses and private wealth management is just that. While we could have continued to operate our investment counsel and our investment advisory businesses separately, they're both doing incredibly well. We've reimagined their potential and are combining them into one business.

Today, as 2 businesses, they compete for investment dollars and referrals inside the house. Tomorrow as 1 business, they'll only compete with the [ Street ]. This first-of-its-kind move in Canada positions us for outsized growth, as importantly, drives $40 million in efficiency and is a best of approach, benefiting our clients day 1. This new combined operating model will attract seasoned professionals and their portfolios to TD as we move towards those 1,200 advisers. Look, this was and is incredibly complicated work, but the investment translates into real value to our clients, our colleagues and the firm. Best of all, subject to regulatory approval, we'll be up and down in a matter of months and in market early in 2026.

As you can see, disciplined execution isn't just how we operate, it's how we win. Refining our business models, leveraging AI and our focus on process improvement will continue to drive our efficiency ratio. Over the medium term, work already underway will capture $75 million of annual savings. First, savings will come from structural simplicity, productivity initiatives and vendor optimization. All of that work completed this quarter. Second, savings from digitization of the onboarding experience will be fully realized next year. And finally, in our back office, where additional investments in process improvement and AI will reduce complexity, drive straight-through processing and deliver additional savings over the medium term.

Before I close, I really want to bring this point home. Our industry-leading efficiency ratio matters. Building on it, it's critical. It's our source of funding to invest in our business and platforms. And as you can see, we'll continue to balance efficiency with investment for the future. It's also our means to grow through volatility, and it drives our industry-leading ROE. Relative to our peers, we're in an exceptional place. In fact, our lead over the next closest competitor remains considerable. Our profitable and efficient organic growth has been supported by 2 mature businesses at scale, direct investing and TD Asset Management. Now scaling our advice model will augment this performance over the medium term and drive the best return on the street.

Let me close where I started. We have a pipeline like no other, 12.5 million clients right across the bank that will fuel our growth over the medium term and beyond. The expansion of our adviser base by over 45%, together with our virtual scaled models now unlocks this full potential. And when combined with our innovations in direct investing, will accelerate our acquisition of new clients and cement the relationships we have today. We're targeting revenue and asset growth in the high single digits through the medium term. And our proven track record of driving efficiency will strengthen that industry-leading ROE. The opportunity in front of us is not only significant, it's uniquely ours. Thank you.

[Presentation]

Well, thank you, and good afternoon. My name is James Russell, and I have the pleasure of sharing our TD Insurance strategy with all of you here today. Insurance has always been part of every Canadian's life. You can't own a vehicle, finance a home or run a business without insurance. We have a rich history. Over the past 75 years, TD Insurance has earned our place in the Canadian market. We're the largest direct-to-consumer home and auto insurer and one of the top 3 personal home and auto insurance groups in the country. We have an impressive business with strong fundamentals and significant runway for growth.

Today, I'm going to highlight how we have built the most successful direct insurance business in Canada with a scalable digital-first model, how we'll leverage new technologies, including artificial intelligence to reshape how we operate, interact with our clients and manage risk and how we will accelerate our growth to become the second largest personal lines insurer in Canada. Over our 75-year history, TD Insurance has always had a strong record as a disruptor within the industry. Disruption is in our DNA. Throughout our journey, we have reinvented ourselves time and time again from being a pioneer in recognizing the transformative potential of digital to building a leading end-to-end turnkey auto claims center network, while establishing AI and analytics centers of excellence across the organization.

Fast forward to today, we now have a strong portfolio of products that provide protection and peace of mind for more than 4 million Canadians and their families. We're the #1 brand in home and auto insurance and lead across multiple categories, including the highly profitable direct-to-consumer channel and affinity market segments. We've stood by Canadians during their moments of need. And in turn, we've earned consistent organic and profitable growth. This is the significant franchise value that TD Insurance provides. Since joining TD 3 decades ago, insurance has grown substantially, proving that good things come from combining the most trusted brand in Canada with a leading direct-to-consumer organization.

You heard earlier today about our leadership in primacy and retail banking. Well, at TD Insurance, of our 4 million clients, 75% are also TD Bank clients. That bears repeating. 75% of TD Insurance clients are also TD Bank clients, an incredible opportunity that is ours to own. Our diversified portfolio includes both life and health and general insurance products, allowing us to meet our clients' insurance needs, generate strong returns and consistently return capital to the bank. Life and Health is primarily geared towards providing TD clients with products that are authorized by the Bank Act. While working closely with Sona and the Canadian Personal Banking team, we protect clients' financial security and deepen overall relationships.

And because we distribute at scale through TD's channels, we can operate at substantially lower costs than other life and health insurers. And our General Insurance business provides coverage that enhances the financial security of both bank and nonbank clients. At the core of General Insurance are the relationships we have with more than 750 alumni professional and employer groups, what we call the affinity market. Our affinity network broadens the reach of TD and TD Insurance to over 10 million group members throughout Canada. These clients also tend to be more profitable. Many of these households are mass affluent and potentially also own a business. We also have a unique direct-to-consumer private client advice group that provides white glove services to high net worth clients.

In a short period of time, we've grown to become the second largest high net worth insurance provider in the market. And as General Insurance makes up more than 85% of the TD Insurance businesses and is a powerful growth engine, I'll focus on this area of the business for the remainder of our time. We have a scaled direct business model with distinct advantages that our peers simply cannot replicate. First, operating under TD, the most valuable brand in Canada, makes our marketing more efficient and effective. Second, I mentioned that affinity clients are more profitable, have more assets to insure and generate higher premiums. Third, we have a direct relationship with our clients.

While most insurers outsource distribution and client servicing to brokers, we own the end-to-end client relationship, generating proprietary data and unparalleled insights into client shopping, servicing and claims behavior. And finally, our direct model has inherently lower distribution costs, almost as much as 10 points against our key competitors. These advantages fuel what we call our growth flywheel. Better distribution margins allow investments into new capabilities such as digital, lowering distribution cost per unit and enabling more competitive pricing. Better pricing means more growth, which generates more data. Just think about it. Today, we have 10 million client interactions each year. Those millions of interactions enable smarter targeting and risk selection. And the more we grow, the better we become at generating new data and insights, scaling faster and responding to trends. All of this together helps drive our business and our powerful flywheel. Our peers recognize these advantages, but they can't replicate them.

I've taken you through our history as a disruptor, our unique suite of products and our competitive advantages. Now it's all about our growth story. The strategic review reaffirmed that we are well positioned to support the bank's objectives. Our goal is to double our general insurance premiums to more than $13 billion over the medium term. So how are we going to get there? We have strong strategic levers in place to accomplish this. First, we excel at client acquisition and deepening relationships through targeted marketing and making it easier for clients to do business with us. Second, we are well positioned to unlock the potential of AI and drive the next transformation of the business end-to-end from providing highly intuitive experiences to making interactions and decisions seamless and easy.

And third, we continue to excel in the fundamentals through disciplined execution and sophisticated pricing capabilities that strengthen profitability and market competitiveness. Let me emphasize that the growth we will deliver will be profitable because while we build for the future, we will maintain focus on analytics, risk selection and catastrophe risk management. Through this focus and by containing expense growth, we'll ensure that we deliver industry-leading performance. Our medium-term objectives are to drive rapid growth and scale the business while managing expenses by leveraging AI to rewire our organization as well as strengthen risk selection and profitability to protect margins.

Our focus on profitable growth will result in an ROE of 28% even as we self-fund investments. So let's talk about how we'll do it. Ray spoke earlier about accelerating growth through deeper relationships. Let me bring this to life within TD Insurance. The strategic imperative of TD Insurance is to provide the bank with the ability to deepen fee income with a goal to double the General Insurance business and reach #2 in market share, driving growth in the high teens over the medium term. We want to be the first stop for every Canadian who is shopping for home and auto insurance, and we're heading in the right direction. In fact, we expect to generate more than 4 million quotes this coming year. This illustrates our commitment to sustainable growth, driving more quotes into our systems to acquire clients efficiently.

By partnering with experts like Google, we refine our targeting and power our AI with proprietary data to pinpoint the most profitable client segments. Leveraging advanced analytics, we continually improve our marketing ROI even as we expand advertising efforts. So what has this approach gained us? In the last 5 years, we've doubled the number of home and auto quotes while doubling our marketing ROI. And as you can see on the right-hand side of this slide, over the past 5 years, TD Insurance premiums have grown at a CAGR of 10%, 5 points higher than our top peers.

Over the past few years, we further strengthened our direct model advantage by transforming our technology stack end-to-end. We invested early and consistently in digital distribution, lowering acquisition costs, personalizing client experiences and maintaining direct relationships across the policy life cycle. At Investor Day in 2023, we shared that we are generating about $300 million in new policy premiums from the digital channel. We've now doubled this to $600 million over the past 2 years, and expect to end the year with $800 million of web-driven new policy premiums. And in a few years, we're aiming for that number to grow to $2 billion. We also built a world-class integrated operational backbone from digital quoting tools and extensive self-serve capabilities to a scalable policy administration system and advanced claims platform.

This foundation has enabled rapid modernization and continuous improvements to the quality of service and our cost efficiency. And the result, our mobile app has been recognized by both Apple and Google as the #1 app for home and auto insurance in Canada. As the bank focuses on becoming simpler and faster, TD Insurance will do the same. At the beginning of this presentation, I said disruption is in our DNA. That inherent drive to disrupt, coupled with advancements in artificial intelligence means that TD Insurance is poised to harness its full potential today and into the future.

Today, we have succeeded in combining the advantages of our direct model with a modern digital-first platform. And to evolve our cost structure and strengthen economies of scale, we built up client self-serve capabilities, deflecting phone channel costs. And we will continue to reinvent our model, building AI on top of our digital-first business. In fact, we've already started. We've beta launched a Gen AI chatbot, which will provide quick and easy support to our clients. We also rolled out AI productivity tools for our colleagues. Our skilled teams won't have to spend time managing processes, but instead we'll focus on complex case management and client interaction.

And through AI, we'll reimagine our entire organization while enabling a human-first digital always approach at scale, starting with our claims practice. Imagine fully automated end-to-end claims with AI guidance and coverage determination, all settled in minutes. This is what we call touchless claims. Let me show you what our vision for the future of claims looks like for our clients.

[Presentation]

As you saw from that video, touchless claims are the future for insurance. When the unthinkable happens, that is when clients need us the most. And we will continue to deliver on our promise to be there for them in those difficult times. But along with our commitment to our clients, there's the reality that almost $0.70 of every dollar that we collect is paid out in claims and related expenses. This is the biggest item in our P&L. Claims management is an area where we know we can excel by leveraging new and innovative technologies. In the specific example on this slide, we would reduce handoffs, increase consistency across files and improve overall client satisfaction. Agentic AI will make touches claims a reality and help settle auto claims in 15 minutes or less. The key is not to simply make existing processes better with AI, but to reimagine them from the ground up.

By the end of this journey, we aim to be Canada's leading insurer in claims management and consistently impress our clients at the key moment of truth. The only way we can deliver on this strategy is through disciplined execution. It underpins everything that we do. I've mentioned this a few times, but it's an important point to reinforce. Analytics and risk selection are the foundation of any successful insurance company. And with over 75 years in the business, we know how to do this extremely well. But analytics today go far beyond underwriting. They drive acquisition and targeting, enable next best action recommendations to boost client loyalty, predict emerging claims trends and trigger proactive preventative measures. That's why, as you can see on this slide, we've made significant investments in analytics, where we aim to generate more than $200 million in AI-driven benefits over the medium term.

This investment is central to sustaining our performance, and we have the benefit of having in-house AI and analytics experts and a world-class team in Layer 6. One example of this is our usage-based insurance app, TD My Insurance. We've collected billions of driving data points, offering discounts to good drivers while also predicting broader trends. During the pandemic, we collected client movement to Apple's -- or we compared client movement to Apple's open source mobility data to guide pricing decisions. Since premium growth affects profitability, analytics are vital. And we continue to refine our modeling to drive disciplined growth and lasting profitability.

And of course, we can't talk about profitability without talking about how we'll manage catastrophic risk. Natural disasters can be devastating to Canadians, their families and entire communities. Protecting our clients in their moments of need is a responsibility that we take very seriously. 2024 was the worst year for catastrophic loss in Canadian history with industry-wide insured damages from severe weather events surpassing $8.8 billion. To address this, over the past 12 months, we've made hundreds of changes to our pricing and product design while strengthening reinsurance coverage. Earlier this year, in collaboration with TD Securities, we made history as the first insurer in Canada to issue a Canadian dollar-denominated cat bond to further diversify our sources of protection.

Our disciplined approach keeps us resilient, ready to handle major volatility, address climate change risk and drive growth in our General Insurance business. And we continue to support and protect our clients by providing them with proactive prevention advice. For example, we send weather alerts directly to clients through our My Insurance app, and we offer complementary services for wildfire protection. Today's consumers expect digital-first, on-demand and highly personalized experiences. This is where our cost-effective digital direct model sets us apart from the market. It's built for the modern consumer and the modern economy.

By continuing to shift variable expenses to fixed, deepening automation and shifting the majority of transactions to digital, we'll avoid more than $200 million in run rate costs over the medium term. This is our key to deliver ambitious and profitable growth. I'll end by saying this, we built this insurance -- this business to win in the market, and we are winning. Our strategy is focused. We're well positioned to continue our role as a disruptor, delivering fee income growth for TD. We're a trusted brand. We have a scalable direct model, modern infrastructure and millions of client relationships that we intend to deepen. We're executing with discipline, and we're doing it while remaining laser-focused on risk management. This is what makes TD Insurance unique. We have a rich history steeped in innovation and disruption. And I look forward to sharing more with you in the years ahead as we continue to excel and drive value for TD. Thank you.

[Presentation]

Thank you very much, and good afternoon, everyone.

I'm Tim Wiggan, President and CEO of TD Securities and Group Head of Wholesale Banking. As someone who spent their entire career in capital markets and 25 years at TD, I feel particularly privileged to share our story with you today. As you've heard from Ray and my peers, there is real change happening across the bank, and TD Securities is a critical part of this change. Our time is now. We have a generational opportunity in front of us. The TD Securities strategy is all about building on the successful TD Cowen acquisition and continuing our journey to become a top 10 North American investment bank with global reach and the results speak for themselves.

Let me start by sharing a snapshot of where we are today. TD Securities is a fast-growing client-centric investment bank with global exposure. With over 10,000 clients, we have a presence in 15 countries with 32 offices around the world. Across both corporate and Investment Banking and Global Markets, we hold leading positions in Canada across our core products. In fact, just last Friday, TD won Canada's Best FX Bank in the Euromoney Foreign Exchange Awards for 2025, a notable achievement. In the U.S., we are building on the strong presence we've established, and we are now achieving top 10 rankings in several of our strategic growth areas. We have a leading research and strategy team with over 100 analysts covering over 65% of the S&P 500 and over 1,300 stocks, ranking us sixth in North America for total stocks under coverage.

Our Washington research and strategy teams offer unique and proprietary macro perspectives, and we occupy top spots in industry rankings, both for research and corporate access in the U.S. and Canada. We generated $7.3 billion in revenue in fiscal '24. And year-to-date, we have generated 3 consecutive quarters of $2 billion in revenue. In short, we are seeing terrific momentum. Now let's take a step back and talk about how we got here. The TD Cowen integration by all measures has been incredibly successful. It's been a little over 2 years since we joined forces, and we are fully harnessing the power of our talent, product depth and geographic mix to serve our clients.

On a personal note, as someone who joined TD through an acquisition, TD Securities has a proven track record of integrating firms while maintaining the core entrepreneurial spirit that made them successful in the first place. As this slide shows, our business mix is more diversified and balanced from a product perspective. And as you can see in the right-hand graph, we have further -- we have gained further exposure in the U.S. market, the largest global fee pool, 20x the size of Canada's. The U.S. market now makes up nearly half of our revenue. Digging deeper, we are unlocking the power of our franchise. We have a client base encompassing the top fee pairs across our businesses. And now it's about deepening those relationships and delivering the whole firm. This is how we will continue to win. The momentum is tangible.

Let me highlight 2 examples on this slide. On convertibles, we are #6 in league tables in the U.S., and we were the sole bookrunner on a $2.25 billion convertible bond deal. This was the largest sole-led deal in the U.S. since 2016. And our leadership extends to global markets, where TD held the #1 spot in Q2 market share for both high-touch and low-touch Canadian equity trading. As a result, we are seeing a step change in our quarterly revenue. In fact, our quarterly average revenue in fiscal '25 is $2 billion or almost 2x higher than fiscal '22, which was the last full year prior to the Cowen acquisition.

It is important to note, we have achieved this growth and momentum while maintaining our disciplined risk culture on both credit and market risk. This is core to how we are consistently there for our clients through volatility and uncertainty. Our risk discipline will not change as we execute on our growth strategy. Our corporate loan book is diversified across industries and backed by consistent underwriting discipline. We will also continue to manage our market risk carefully as we intend to grow our trading revenues significantly higher than our value at risk.

As we grow, our clients are trusting us with larger and more complex transactions, and we will execute on these without shifting our risk appetite. As I said off the top, we have a generational opportunity in front of us. The strategic review was a terrific exercise that has sharpened our focus on where we need to be investing. It also reinforced our strategies to drive growth by deepening relationships with our clients, investing in our capabilities and modernizing our platforms as we scale. And we will continue to do this with a focus on improving frontline productivity, efficiency and optimizing capital.

As you can see from this slide, we have historically operated a highly profitable wholesale bank with a low 60s efficiency ratio and a 14% ROE. This is in our DNA. We aim to return to these levels as we grow -- as the top line growth accelerates, expenses normalize and our actions to optimize capital and balance sheet materialize. We are in the investment stage of our J-curve, building out capabilities for future growth. As we scale and drive operating leverage, we will restore our ROE to historic levels. We aim to deliver on our medium-term targets, including high single-digit revenue growth and efficiency ratio in the low 60s and a 13% ROE.

With our strategy, disciplined execution and a clear commitment to our clients, I am confident in our ability to deliver accelerated growth and enhanced returns for investors. And why am I so confident in our plan? It's about how we execute. As Ray has outlined, TD is focused on 3 enterprise themes. The first area of focus is deepening relationships. We see an opportunity to add $3 billion in revenue over the medium term by deepening client relationships. Let me walk you through a few examples in Corporate and Investment Banking and Global Markets that will illustrate how we're capturing aspects of this broader revenue opportunity.

In Corporate and Investment Banking, we have a formidable client franchise and top talent. We have scale across M&A, capital markets, lending and global transaction banking. What has this resulted in? In 2024 alone, Corporate and Investment Banking generated $3.1 billion in revenue, with more than half coming from the U.S. This is a significant shift in our geographic footprint. While we will continue to grow our client base, we have a large opportunity ahead of us simply by going deeper with the clients we already serve. And our client connectivity is strong. We generate fees with 80% of Canada's top 100 fee payers and 70% of the top 100 fee payers in the U.S. And while we are on par with our peers from a client connectivity perspective, our share of wallet lags, and this is our opportunity.

We are showing momentum and are in the right sectors and industries. We're already a top 10 player in key sectors like biotech and real estate, and we're on the verge of breaking into the top 10 in other sectors as well. Take the financial institutions group, for example. We've quickly climbed the rankings as we've added proven talent and deep expertise, and we see a clear runway to breaking into the top 10 in one of the largest fee pools in the market. What we are now working towards is deepening those relationships and winning transactions across the breadth of our products. By aligning our balance sheet and talent to priority sectors, we see up to a $1 billion in incremental annual opportunity from investment banking fees with existing clients alone.

So how will we further capitalize on this opportunity? As Ray mentioned earlier, Global Transaction Banking is a clear example of how we are simplifying the bank and going deeper with clients. We are building a world-class transaction bank for our commercial and corporate clients and investing in next-generation capabilities such as real-time payments and automated clearing. With a unified product road map and centralized investment, we are efficiently building our capabilities and driving meaningful value for TD and TD Securities. We see the opportunity to scale this business, increase deposits and secure a cost-efficient source of funding for all of TD, driving growth in overall transaction banking revenue.

In TD Securities over the medium term, we expect to double our product penetration with our clients from 20% to 40%. Pivoting to Global Markets, we have broad trading capabilities and deep client relationships across our geographies. A key catalyst for this geographic expansion was hearing from our Canadian clients that they wanted greater access to the U.S. market. Our expanded U.S. presence means we can now serve our clients cross-border. As you can see on this slide, we also have an enhanced and diversified product mix. This breadth and scale is critical to meeting the needs of our most sophisticated clients.

In 2024, Global Markets generated $4.2 billion in revenue, with approximately half coming from the U.S., again, underscoring our scale in the world's largest fee pool. The foundation is built. Our active clients encompass 90% of the global fee pool. In fixed income, we are starting from a position of strength. We are #1 in Canadian investment-grade credit, #1 in Canadian provincial bonds with more than 5,000 active trading relationships. Accelerating fixed income growth will come from enhancing our product suite, deepening our share of wallet in underpenetrated core products and growing the mortgage-backed securities platform. This is a $750 million annual revenue opportunity for us.

Switching now to an area in which TD Securities has led with distinction, I'd like to highlight our e-trading platform, TD Securities Automated Trading. Today, TD SAT is the #1 trader in the U.S. municipal bond market and one of the largest participants in the investment-grade credit market. We are extending this innovation and cutting-edge technology into other asset classes, including ETFs and high-yield credit. This business has grown 35% since fiscal '22 while delivering impressive frontline productivity and efficiency. This platform is a critical part of our value proposition and is one of the fastest-growing areas of our capital markets business.

TD SAT is just one part of our leadership in e-trading. We are also a market leader in FX and equities, underscoring our commitment to innovation. In Global Markets, we will accelerate growth and deepen client relationships through scaling prime services. This is a true relationship business that extends beyond leverage and securities lending and creates a halo effect that drives trading revenues across equities, FICC and global markets more broadly. We know that a strong prime offering drives deeper client relationships. We have a 25-year history of prime brokerage in Canada. We are now expanding our U.S. offering, in particular, with synthetic and arranged financing.

Our clients have told us that they want to diversify their prime providers and our robust balance sheet positions us well for this opportunity. Our expansion plans are solidly underway, and we see a $500 million annual revenue opportunity in U.S. prime. The second area of focus is about simplifying how we operate to move faster. Strengthening the investment banking culture at TD Securities means having the right subject matter experts in our front office and control functions working together with speed to deliver for our clients. Within TD Securities, initiatives are already underway to become simpler and faster by increasing the metabolic rate of our organization to respond to our clients' needs.

To facilitate the execution of our strategy, we've recently streamlined leadership structures across corporate and Investment Banking and Global Markets. We've also enhanced frontline risk, compliance and legal subject matter expertise to enable faster decision-making. And finally, we've moved to an agile product-led delivery model to build smarter tools that streamline workflows and improve the client experience. All of these actions on the slide were designed to accelerate revenue growth, reduce complexity and drive faster client outcomes. The hard work, dedication and focus of our teams is evident in our results and how we deliver for our clients.

Our platforms and technologies are also critical to delivering for our clients. To this end, we are leveraging technology and AI to augment and simplify the client experience and increase our productivity and efficiency while protecting the bank. We recently launched our TD Securities AI virtual assistant to enable our front office sales, trading and research colleagues with smarter, faster ways to deliver market insights to our clients in 1/10 of the time. With over 300,000 pages of research published last year alone, the TD Securities AI virtual assistant allows us to harness our considerable intellectual capital to deliver value for our clients. And as our colleagues have put it to me, they feel like they have our research analysts on call 24/7.

This investment in AI and automation reflects a meaningful step forward towards the future of how we work, a combination of our deep bench of intellectual expertise and powerful technology working in tandem. Simply put, we have made and will continue to make investments in our platforms as we grow the business. This takes us to our third area of focus, disciplined execution, which is critical to achieving our goals. We are strengthening our governance and control functions to set us up for long-term success. We are more than halfway through a foundational investment in a multiyear initiative to improve regulatory responsiveness, increase automation, simplify processes and better manage risk.

These are part of our efforts to enhance the risk and control frameworks and modernize our core business processes as we scale. Expense discipline is also critical during a period of substantial investment. To deliver on our profitability goals, we are focused on targeted expense discipline initiatives that will flow through by fiscal '29.

This should look familiar as it was consistent with what Ray and Kelvin outlined earlier, scaling AI and automation to reduce costs, modernizing our tech platform and simplifying processes, optimizing our vendor and workforce strategies as well as improving frontline productivity and moderating expense growth from reduced discrete investments as we move into the flatter part of the J curve. We anticipate these initiatives will deliver approximately $500 million to $600 million in savings over the medium term and help us achieve our efficiency target in the low 60s.

In terms of pacing of these savings, our path will look very similar to TD overall as the business scales and the bank executes on enterprise-wide initiatives. We see expense growth in line to slightly above the bank excluding variable expenses and other expenses that are commensurate with revenues for fiscal '26. Then we will accelerate efficiency from there in fiscal '27 and '28.

As we look to deepen our client relationships, deploying our capital in a disciplined manner will be critically important. Approximately 40% of our capital comes from our corporate loan book, where we have undergone a rigorous exercise to identify core profitable relationships where we can deepen share of wallet. We see an $800 million revenue upside from meeting client level ROE hurdles and reallocating resources towards more accretive relationships. Tying all this together, we are confident in our ability to accelerate growth and enhance returns for our investors.

Looking at this slide, we are showing the ROE bridge from 9% in fiscal '24 to our medium-term target of 13%. The biggest driver of this movement -- improvement should come from profitable growth in Global Markets and Corporate Investment Banking that I just walked you through. The growth will be further enhanced by cost efficiencies and higher front-office productivity, which together brings our efficiency ratio down from the low 70s you see today to our medium-term target in the low 60s.

What I want to underscore is this. This isn't just an aspiration. We are already delivering the growth. We have the demonstrated track record and disciplined focus required to drive this level of profitability again, and I am confident we will deliver. In closing, we have a generational opportunity in front of us. The integration has been a success. Our platform is delivering. We have the right client base. We have leading products and platforms. And we also have top talent. We are growing key businesses and equipping our bankers with a full product suite to capture more client opportunities. At the same time, we are building a culture defined by discipline, speed and an unwavering client focus, all of which are required to compete and win as a top-tier investment bank. And I could say with confidence, we are just getting started. Our time is now. Thank you.

Thank you, Paul, James and Tim. It's now time for our second Q&A session. Once again, for those in the room who would like to ask a question, please raise your hand and we'll bring you a mic. And please remember to introduce yourself.

[Operator Instructions]

I'd now like to invite Ray, Kelvin, Paul, James and Tim to join me on stage. [indiscernible] come on.

Yes, I must have been a buy-rated analyst or something. But it's good to see all of you. For Tim, historically, your business has done nearly 14% to 15% ROE. And from a mix perspective, it would seem your business now leans more towards high return and high-margin businesses. Can you maybe talk about what structurally has changed that prevent you from getting to back to that level?

Yes. Thanks very much for the question. I would say as it relates to ROE, obviously, a few things factor in the equation. The first off is just the breadth of products that we have. And so hopefully, from the presentation, you got a sense for the amount of investment that's happened both on the Corporate and Investment Banking front as well as the Global Markets front.

The second point is our focus on the U.S. So the U.S. is about 70% of global capitalization and about 20x the size of the Canadian market. So what we are essentially seeing today is that the clients that we have historically had that was augmented through the acquisition of TD Cowen have a much broader suite of products that they can interact with us on. I would also say, historically, we have benefited from financial strength. And so we've had a strong credit rating, loan book and balance sheet. And so it's really around better utilizing those financial resources.

Maybe just add two things. One is -- I think it's a great question that the medium-term target for the Investment Bank considering that not a destination but a journey, right? This is part of the journey as we get to the 2029, the destination continues. And so I think it's a good call out. But we are, as we've said, investing and then as you'll see the investments play through and then the growth starts to move through. So think of that more of a journey perspective.

The other piece is that from a portfolio perspective, when I look at it across all of our businesses that you heard about from this morning, I love the portfolio of businesses that we have at TD. And not every one of those businesses has to return 16% for the enterprise ROE of 16%, they all need to be accretive, though, as we move forward, and that's what you're hearing from each one of them. And as they continue their journey, it's the enterprise ROE of 16%, but my expectation is not that every business in the medium term will need to get there, but every business will be accretive and add to it. I hope that helps.

Sohrab?

Sohrab Movahedi, BMO Capital Markets. Just staying with Tim for a second. Tim, if you succeed on your plan and understanding that it's a diversified business. What percentage of the total bank will you be in the medium term?

So we're currently 8% to 10% of the bank's net income after tax. I would submit to you that our peers would be more like 15% to 20%. So I think we would see our way through to being roughly double where we are from a bottom line perspective.

So you hope -- just to clarify, you hope to grow faster than the rest of the bank with a lower ROE?

Yes, we do.

Okay. The second thing, just to clarify, while we have Kelvin. Kelvin, I know earlier in the first Q&A session, I think you clarified that CET1 for 2026. I just wanted to be crystal clear you are targeting a -- or you're expecting, I shouldn't say targeting, you're anticipating a 13% ROE in 2026 on a 13%, is the math on a 13% CET1? Or are those two numbers completely unrelated to each other?

Yes. I would say they are unrelated to each other, the 13% ROE would be based on a higher CET1 than 13%.