The bank’s Canadian residential mortgage portfolio was C$267.4 billion in the second quarter, down from C$270.9 billion in the first quarter. The decline reflects ongoing pressure on rising interest rates, rising inventory and cautious consumer sentiment.
“Uncertainty has brought emotional trade-offs to buyers,” Sona Mehta, head of Canadian Personal Banking Group, said during the bank’s revenue call. She noted that the bank expects a stronger spring market earlier this year, but “a lot has changed over the past four months.”
While the broker fills softer, Mehta emphasizes the power in TD’s proprietary channel.
“I’m very happy with the strength we’re seeing in proprietary channels despite the huge headwind,” she said, adding that both branches and mobile mortgage experts (MMS) origins have increased by double digits year-on-year. “The branch recommendation ecosystem has performed very well.”
TD also noted that mortgage repayment rates increased earlier this quarter, especially in January and February. “These two months are very high repayment periods,” Mehta said, attributeing the trend to the bank’s senior borrower base, many of whom use year-end bonuses or personal liquidity to lower balances.
Mehta said that even if the overall volume slows down, TD is still focusing on quality business, not just pursuing growth.
“Profitability should always be a factor,” she said. “We will compete to win profitable businesses and then leverage our strength in channels we can differentiate between speed and customer experience.”
PCL’s credit quality declines
In addition to the mortgage portfolio, TD’s second-quarter results include signs of stable credit performance. The bank reported damage to the credit loss (PCL) regulations was $946 million, down $270 million from the previous quarter.
Chief Risk Officer Ajai Bambawale attributes to the broad-based strength in the bank loan book.
“We’re seeing good credit quality,” he said. “If you put the tariff issue aside, we do see the peaks and good quality of PCL. I think the fact that interest rates have fallen helps borrowers.”
In the context of PCL damage in Canadian personal and commercial banking, all asset classes have declined, including real estate, automobiles, cards and commercial loans. The bank also saw similar improvements to its U.S. consumer and business portfolio.
Although TD increased its performance PCL by $395 million to deal with trade and policy risks, the bank’s overall credit profile remains stable.
“We are reserved,” Bambawale said, adding more than $500 million in reserves over the past two quarters.
Most of the mortgage loan will be renewed by the end of 2026
TD data shows that about $144 billion in mortgage balances (40% of the total books) are scheduled to be renewed by the end of 2026.
These include $36.2 billion in the second half of this year and $100.8 billion in 2026, most of which are fixed-rate loans, which in many cases are updated at higher rates.
TD earnings focuss
Q2 Net Income (Adjusted): $3.6 billion (-4% y/y)
Earnings per share: $1.97 (-3%y/y)
| Q2 2024 | Q1 2025 | Q2 2025 | |
|---|---|---|---|
| Residential Mortgage Portfolio | $266.4B | $270.5B | $267.4B |
| HELOC Portfolio | $119.2B | $124.2B | $128.6B |
| Percentage of uninsured mortgage portfolio | 83% | 84% | 85% |
| avg. Loan Value of Uninsured (LTV) | 53% | 53% | 54% |
| Portfolio Mixed: There are variable percentages | 34% | 36% | 38% |
| % of the mortgage renewal within the next 12 months | 9% | 59% | 59% |
| Canada’s total banking industry loans | 0.15% | 0.19% | 0.18% |
| Bank of Canada Net Interest Rate (NIM) | 2.84% | 2.81% | 2.82% |
| Total terms of credit losses | $1.07B | $1.109B | $622 million |
| CET1 ratio | 13.4% | 13.1% | 14.9% |
From the call
- In terms of softness in the housing market
“Discrimination uncertainty has increased in the Canadian housing market this quarter and we are seeing slower buying activity,” CFO Kelvin Tran said.
- In the bank real estate security loan portfolio
“We continue to increase decision-making speed and provide tailor-made customer advice by referring more complex transactions to our mobile mortgage experts,” said CEO Raymond Chun. “As you know, our greatest opportunity is to deepen our relationship with over 15 million customers in Canada.”
- About TD’s American AML Repair (From Leo Salom, President and CEO of TD Bank)
“I am very satisfied with our progress in the US AML remediation, which, as we said before, is our top priority. We are against our remedial plan for focus and purpose.”
“We implemented the final round of planning in the transaction monitoring system…While using professional AI to detect, isolate and automate our risk reduction activities are underway…”
“This quarter, we have further enhanced our cash deposit requirements for TD stores… allowing us to detect, upgrade and report potential interest activities ahead of time and more effectively.”
CFO Kelvin Tran added: “We continue to expect our BSA/AML remediation and related governance and control investments in fiscal 2025. We expect that we expect similar investments in fiscal 2026.”
Source: TD Q2 Income Phone
notes: Transcripts are provided by company and/or third-party sources and cannot 100% ensure their accuracy.
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Last modified: May 25, 2025
