Canada’s second-largest bank is vowing to cut billions of dollars’ worth of expenses and accelerate growth while getting “back to winning.” Toronto-Dominion Bank (TD), which had suspended its medium-term targets in December, now expects 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.

By fiscal 2029, the ROE is expected to increase to 16 per cent, with an EPS growth of seven per cent to 10 per cent. These targets are similar to the ones TD had before it suspended making them last December as it undertook a “broad and detailed” review of its strategies after being fined about US$3.1 billion and ordered to cap the expansion of its

retail banking business in October by the United States Department of Justice and other regulators for failing to

monitor money laundering activities at its branches. Overall, the bank aims to deliver a run-rate expense reduction worth $2 billion to $2.5 billion.

“I’ve been looking forward to this day for a long time,” chief executive Raymond Chun said at the bank’s Investor Day event in Toronto on Monday. “We are getting back to winning. And I’m even more energized about the opportunities in front of us. We have a massive organic growth opportunity.”

He said TD “examined every part” of its business during the review and asked “tough questions” about creating opportunities to be competitive and resetting the cost base.

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

“To fund these investments and improve our efficiency ratio, we must reset our cost base and moderate expenses,” Chun said. “It’s an absolute priority.”

The bank wants to “drive almost $1 billion” in savings by 2026 and an additional $1 billion through 2027 and 2028 combined.

“These are all structural costs,” Chun said. “This isn’t about cutting your project spending or reducing your marketing spend. Those things all come back at some point over time.”

TD wants to annually save up to $450 million as it migrates transactions to digital, grows digital sales, enhances front-line productivity and optimizes branch size, hours, location and capacity, Chun said.

It plans to use artificial intelligence to “simplify processes” and deliver half-a-billion-dollars’ worth of savings.

“We are approving mortgages in hours instead of days,” he said of the bank’s use of AI. “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.”

In TD Insurance, Chun said using AI in claims management alone will save $40 million and make the process simpler and faster for clients.

“We also expect to save up to $400 million a year through the tech and data modernization initiatives,” he said.

Overall, TD is targeting an annual return value of $1 billion from AI.

Chun said a lot of organizations got on the AI “bandwagon fairly recently,” but TD was an ealy adopter.

“We have been on this journey for seven years and our learnings have been extraordinary,” he said.

With 2,500 members on its AI team and no reliance on third-party vendors, Chun said TD’s approach is different from its competitors.

The bank will also consolidate its vendors as part of its “global delivery workforce strategy” to save $200 million to $300 million.

Chun said the bank has assessed its near-term capital needs and it plans to initiate a new share buyback worth $6 billion to $7 billion in fiscal 2026, subject to regulatory approval.

As part of its growth strategy, the CEO said TD will be significantly investing in “frontline distribution” and deploying specialized talent at its branches. Its goal is to transform branches from transaction hubs to “high-value advice centres” that can lead to more deals.

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But he also reassured investors that remediating its anti-money laundering (AML) program was still its No. 1 priority.

Aside from investing in technology and redesigning its processes to build a strong AML program, he said TD is also changing “certain parts” of its culture.

“Look, I’m proud of our culture,” he said. “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 non-negotiable.”