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File photo of a TD Canada Trust location in Toronto.Deborah Baic/The Globe and Mail

Toronto-Dominion Bank became the second of the big banks to report a large restructuring charge in its quarterly results, related to streamlining its operations amid a fast-shifting regulatory and competitive environment for banking.

TD took a $337-million charge in its fiscal second quarter, lowering its reported earnings to $1.68-billion or 97 cents a share, down nearly 7 per cent from last year.

Without the charge, the lender's adjusted earnings were $2.2-billion or $1.14 a share, up nearly 5 per cent over last year and beating the $1.11 average estimate among analysts.

TD did not announce a dividend increase from 51 cents a share, after raising the payout last quarter from 47 cents.

Colleen Johnston, TD's chief financial officer, explained that the restructuring charge represented about 2 per cent of the bank's expense base and addressed the fact that TD needs to adapt to change at a time of slowing revenue growth.

Overall revenues rose 4 per cent in the quarter, over last year, with help from the stronger U.S. dollar driving gains from TD's substantial U.S. operations.

"The restructuring is really about controlling our rate of expense growth to help us become fitter and faster, but also make it easier for our customers to do business with us and easier for our employees to get things done," Ms. Johnston said in an interview.

She added that the charge stems from three initiatives: business restructuring, branch optimization and organizational review.

The number of branches held steady in Canada, but fell by 16 in the United States since the fourth quarter. TD also cancelled a number of commitments to open new branches (or "stores," as TD calls them in the U.S.).

In terms of full-time employees, TD reduced its workforce by nearly 750 positions overall since the fourth quarter, and nearly 300 job cuts in Canada in the second quarter alone.

Ms. Johnston did not rule out the need for ongoing cost-cutting ahead.

"In terms of our expense base, we've been at this for a number of years," she said. "The themes I'm talking about today are not new. In terms of needing to invest for the medium-to-longer term – around technology, digital, mobile, regulatory – that's been happening for a while."

Bank of Montreal took a similar restructuring charge when it reported its fiscal second quarter results on Wednesday.

TD's shares rose 7 cents to $56.05 in early trading in Toronto.

John Aiken, an analyst at Barclays Capital, noted that TD's results showed similar themes to other Canadian banks that have reported their second quarter results so far, namely strong capital markets offsetting the challenges facing retail banking.

Earnings from TD's wholesale banking, which includes capital markets activity, rose 19 per cent over last year.

U.S. retail earnings, however, rose just 1 per cent in U.S. dollar terms, with strong loan and deposit growth offset by factors such as lower net interest income from credit card loans and lower loan margins.

In Canada, retail earnings rose 6 per cent.

"At the half-year mark, we are confident in the strength of our diverse business model," said Bharat Masrani, TD's chief executive, in a statement.

"The organizational and productivity changes we are making will enable us to become fitter and faster, to better meet our customers' expectations, and adapt to the low-growth economic environment. We will continue to drive organic growth, invest in the future, and leverage the power of the TD shield across all of our channels."

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
BMO-N
Bank of Montreal
+0.07%93.92
BMO-T
Bank of Montreal
+0.05%127.17
CM-N
Canadian Imperial Bank of Commerce
+0.73%49.6
CM-T
Canadian Imperial Bank of Commerce
+0.72%67.17
NA-T
National Bank of Canada
+1.06%111.39
TD-N
Toronto Dominion Bank
-1.33%59.26
TD-T
Toronto-Dominion Bank
-1.4%80.23

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