Toronto-Dominion Bank

was staring down the barrel a year ago after agencies in the United States fined Canada’s second-largest bank $3.1 billion and restricted its growth down south for failing to prevent

money laundering.

One result was that the lender began trailing its peers in terms of its stock price towards the end of 2024. Fast forward 12 months and TD is in a much better position than what many analysts expected.

Its stock price reached an all-time high this year and its 69.4 per cent growth in 2025, as of closing on Monday, is almost twice as high as its peers, most of which grew around 25 per cent to 35 per cent.

Sure enough, TD’s poor run at the end of 2024, causing its stock to drop 10.6 per cent on the year while its peers grew 10.5 per cent to 49.2 per cent, is one reason why its growth has been so high in 2025, but analysts say the bank has come a long way since the distressing times last year.

“There’s still a lot of work to be done, not just operationally, but also reputationally,” John Aiken, an analyst at Jefferies Inc. who follows the bank, said. “But TD has done a spectacular job in terms of turning things around and is way further in one year than I would have guessed.”

Shalabh Garg, an analyst at Veritas Investment Research Corp., said the negative sentiment linked to TD last year was overdone.

“It’s not as though people were going to stop banking with TD because of the anti-money laundering remediation process and penalties and so on,” he said.

In October last year, TD pleaded guilty to money laundering charges in the U.S. after its branches failed to monitor the illegal activity. That led the bank to suspend its medium-term financial targets and announce a broad review of its operations.

TD called the episode the darkest in its history and there were questions raised about its future pathway. But a lot has changed since then and analysts are now a lot more confident about its future. A key reason behind that optimism is the way TD communicated its priorities to analysts and investors.

“Raymond (Chun, TD’s chief executive) met with as many investors, as many analysts as possible,” Garg said. “And I think that kind of changed sentiment. It gave people more confidence that they now understand who is in charge, how he thinks and what their priorities are going to be in the future.”

Speeding up the CEO transition to Chun was one of the first steps TD took this year in a bid to turn around its fortunes. In January, it announced that Chun was going to succeed

Bharat Masani

in February instead of April, as previously announced.

“There was huge negativity and uncertainty,” Garg said. “People didn’t know the new CEO Raymond Chun as much and there was, in general, an anger against the board and the management team.”

But what came next was a series of good steps, he said, that helped communicate “very clearly” what TD’s priorities and plans were.

The bank sold its entire ownership stake in

Charles Schwab Corp.,

a Texas-based financial services company, which wasn’t a core holding and helped free up at least $20 billion as TD looked to reallocate its capital.

It then took steps to restructure its U.S. business and strengthen its anti-money laundering program. In February, Leo Salom, TD’s head of U.S. business, told investors the bank had been hiring anti-money laundering specialists and designing machine learning tools to help analyze customer data more effectively.

In September, he said the majority of management’s actions related to the anti-money laundering program would be completed by the end of 2025. However, there will still be “important milestones” that need to be addressed in 2026 and 2027. He also said TD had introduced new programs to better detect suspicious activity or unusual behaviour.

That same month, TD told investors that it was going to cut billions of dollars’ worth of expenses and accelerate growth while getting “back to winning.” It also reinstated its medium-term targets, which it had suspended in December 2024, and said it expected to achieve a return on equity (ROE) of 13 per cent, grow its earnings per share (EPS) by six per cent to eight per cent and reduce expense growth to three per cent to four per cent in fiscal 2026.

To accelerate its growth, TD said it wants to boost its digital sales, enhance branch network productivity, add sales capability to key segments and accelerate fee-income growth in its wealth, insurance and securities segments.

The bank said it wants to “drive almost $1 billion” in savings by 2026 and an additional $1 billion through 2027 and 2028 combined. It plans to use artificial intelligence to “simplify processes” and deliver about $500-million worth of savings.

“We are approving mortgages in hours instead of days,” Chun said of the bank’s use of AI during an investors’ day in September. “We are 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.”

Amidst all this, TD also announced a restructuring program that aims to cut about three per cent of the total workforce by the end of the first quarter of fiscal 2026.

The bank ended fiscal 2025 on a strong note as it comfortably beat analysts’ expectations due to higher profits in its U.S. retail business, wealth management and wholesale banking segments.

Chief financial officer Kelvin Tran said that outlining a “clear strategy” helped TD perform well in 2025.

“We said these are the things we’re going to do, from the balance sheet restructuring and so forth,” he said. “Knowing the colleagues I have around the table, knowing the focus that we have and with Ray at the helm, I felt very good throughout the year. I would say we are back and more.”

Aiken said TD’s management should be “very pleased” with what they have managed to accomplish in 2025, but that there’s still work to be done on its anti-money laundering remediation program.

“Probably 80 to 90 per cent of it is just time. They have to make sure that everything is running as smoothly as they can, no disruptions, and don’t give the regulator any excuse to delay lifting the restrictions,” he said. “But this is not a 2026 or even a 2027 story. The regulators in the U.S. have shown that it takes a long time to get out from underneath these restrictions.”

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With the bank relying on the U.S. for a large chunk of its earnings, Garg said it’s important for the bank to find other ways to grow in the future.

“It’s about growing their Canadian banking business, growing their wealth, capital markets and insurance, and just keep taking market share,” he said. “Those need to perform better than what the other banks have to do just to get the same result.”

• Email: nkarim@postmedia.com