TD Bank (TD) — Q3 2026 Earnings Preview
Key Points
- Consensus expects continued strong growth: Q3 2026 consensus calls for revenue of $10,736M and net income of $2,841M, both up YoY. EPS consensus is $1.72.
- Guidance and management targets: Management is tracking ahead of its FY2026 guidance for 6–8% EPS growth and 13%+ ROE, with Q2 2026 ROE at 14.4%. They continue to expect 3–4% expense growth for FY2026 and PCLs in the 40–50 bps range.
- Comparables are favorable: Q3 2025 was a transition quarter with restructuring charges and elevated AML remediation costs, but underlying business momentum has accelerated since then, making for a relatively easy YoY comp.
- Key focus areas for Q3 2026: Investors will be watching for continued margin expansion (NIM), core loan growth in both Canada and the U.S., expense discipline, credit quality, and progress on AI-driven cost savings and business transformation.
- Strategic priorities: Management continues to emphasize structural cost reduction ($2–2.5B target), AI deployment ($1B annualized value target), and capital return (ongoing $7B buyback).
Most Important Factors to Watch in Q3 2026
| Factor | What to Watch For | Context/Notes |
|---|---|---|
| Revenue Growth | Continued mid-single-digit YoY growth; consensus: $10,736M | Q2 2026 revenue: $10,525M (USD consensus); Q2 actual (CAD): $15,797M |
| Net Interest Margin (NIM) | Further modest expansion in both Canada and U.S.; Q2 2026 NIM: 2.85% (Canada), 3.41% (U.S.) | Management guides for stable-to-modestly higher NIM in Q3 |
| Core Loan Growth | Acceleration in core loans, especially in U.S. Banking; Q2 2026: +3% YoY core loan growth (U.S.) | Q2 2026: Canadian loans +6% YoY; U.S. core loans +3% YoY |
| Expense Growth | Maintenance of 3–4% expense growth (ex-FX, variable comp, cards); Q2 2026: +3% YoY core expenses | Management says on track for full-year target; structural cost takeout ahead of plan |
| Credit Quality/PCLs | PCL ratio within 40–50 bps guided range; Q2 2026: 43 bps | Watch for any signs of consumer stress or migration in Canadian book |
| AI/Structural Cost Savings | Progress toward $2–2.5B cost takeout and $1B AI value targets | $900M cost takeout already achieved YTD; $145M AI value delivered in H1 2026 |
| Capital Return | Execution of $7B buyback; CET1 ratio trending toward 13% by H2 2027 | Q2 2026 CET1: 14.3%; $15B total buybacks planned (current + prior program) |
| U.S. AML Remediation | Ongoing progress, cost moderation in H2 2026, no new regulatory setbacks | $500M AML spend guided for FY2026; shift from implementation to validation/monitoring phase |
| Fee Income Momentum | Continued growth in Wealth, Insurance, Wholesale; record AUA/AUM and strong trading/advisory fees | Q2 2026: Wealth & Insurance net income +18% YoY; Wholesale net income +46% YoY |
Quarterly Financials — Actuals vs. Consensus (USD)
| Quarter | Revenue ($M) | Net Income ($M) | EPS (GAAP) | Notes |
|---|---|---|---|---|
| Q2 2026 | 10,525 | 2,727 | 1.56 | Actuals (converted from CAD) |
| Q3 2026E | 10,736 | 2,841 | 1.72 | Consensus (FactSet/Visible Alpha) |
| Q3 2025 | 9,893 | 2,538 | 1.40 | Actuals (USD consensus data) |
Note: All USD figures from consensus data; actuals in CAD per company filings.
Fiscal Year Guidance and Management Targets
| Metric | FY2026 Target/Guidance | Q2 2026 YTD Actual/Run Rate | Commentary/Progress |
|---|---|---|---|
| Adjusted EPS Growth | 6–8% | Q2 2026 YTD: +21% YoY (EPS $2.38) | Management: "on track to outperform" if macro holds |
| ROE | 13%+ | Q2 2026: 14.4% | Tracking ahead of target |
| Expense Growth | 3–4% (ex-FX, variable comp, cards) | Q2 2026: +3% YoY core expenses | "Well on our way" to target |
| PCL Ratio | 40–50 bps | Q2 2026: 43 bps | Stable, within range |
| CET1 Ratio | ~13% by H2 2027 | Q2 2026: 14.3% | Buybacks ongoing, strong organic capital generation |
| Structural Cost Takeout | $2–2.5B (medium term) | $900M achieved YTD | Ahead of pace |
| AI Value Creation | $1B annualized (medium term) | $145M delivered H1 2026 | Ahead of pace |
| U.S. AML Spend | ~$500M in FY2026 | Q2 2026: $173M in quarter | Costs to moderate in H2 2026 |
How Did They Report Last Year? (Q3 2025 Actuals)
| Metric | Q3 2025 Actual (CAD) | YoY Change vs. Q3 2024 | Notes |
|---|---|---|---|
| Revenue | $15,297M | +8% | Strong YoY growth |
| Net Income (Adj.) | $3,871M | +6% | Adjusted basis, up YoY |
| EPS (Adj.) | $2.20 | +7% | |
| ROE (Adj.) | 13.2% | -90 bps | Down YoY, but improved sequentially |
| NIM (Canada) | 2.83% | +2 bps | Stable |
| NIM (U.S.) | 3.19% | +17 bps | Up YoY |
| PCL Ratio | 0.41% | -5 bps | Lower YoY |
| Expense Growth (Adj.) | +13% | Elevated due to governance/control spend |
Context: Q3 2025 was a transition quarter with restructuring charges, elevated AML remediation costs, and the wind-down of non-core U.S. portfolios. Underlying business momentum was positive, but expense growth was high and ROE was below medium-term targets.
Are They Coming Off a Tough Comparable?
- No, comparables are not tough: Q3 2025 included significant restructuring and remediation costs, and while revenue and adjusted net income grew YoY, the base was not unusually high. The current trajectory shows accelerating momentum, making for a relatively easy YoY comp for Q3 2026.
Summary and Conclusions
- Momentum is strong: TD is executing well on its strategic priorities, with revenue, earnings, and ROE all trending above guidance. Management has repeatedly stated they are ahead of schedule on cost takeout and AI value creation.
- Q3 2026 expectations: Consensus expects continued revenue and earnings growth, margin expansion, and stable credit quality. The bank is expected to deliver another quarter of positive operating leverage and progress toward its medium-term targets.
- Key watch items: Investors should focus on NIM trends, core loan growth (especially in the U.S.), expense discipline, credit quality, and updates on AI-driven cost savings and AML remediation. Any acceleration in fee income or further improvement in ROE would be positive.
- Comparables are favorable: Q3 2025 was not a high hurdle, so YoY growth should be achievable if current trends persist.
- Risks: Macro uncertainty (rates, trade/tariffs, consumer credit), execution risk on cost takeout and AI, and any setbacks in AML remediation remain key risks.
What to Listen for on the Call
- Updated commentary on NIM outlook and loan growth in both Canada and U.S.
- Progress on expense management and structural cost reduction
- Credit quality trends, especially in Canadian consumer and U.S. commercial
- Updates on AI deployment and realized value
- Status of AML remediation, cost moderation, and regulatory milestones
- Capital return plans and CET1 trajectory
- Fee income momentum in Wealth, Insurance, and Wholesale
Bottom Line: TD enters Q3 2026 with strong momentum, favorable comps, and management confidence in exceeding its FY2026 targets if macro conditions hold. The focus will be on sustaining revenue and margin growth, delivering on cost and AI targets, and maintaining credit quality.
