TD Bank’s new CEO is ready to unveil his strategy. Bay Street is watching

Ray Chun is ready to unveil the roadmap he hopes will restore Toronto-Dominion Bank’s glory, and on Bay Street, the same question keeps coming up: How far can he push the bank’s Canadian business, which used to be a crown jewel?

Exactly one year ago, in September, 2024, Mr. Chun was named TD’s chief executive officer in a succession switch few saw coming.

His earliest days were a whirlwind. TD TD-T pleaded guilty to conspiracy to commit money laundering in the United States, revamped its board of directors, then fast-tracked his appointment because investors soured on the old regime. TD also paid US$3-billion in fines imposed by U.S. regulators and the Department of Justice.

TD Bank hires new COO from outside, revamps legal team as CEO Ray Chun puts his stamp on the lender

Through it all, investors have wondered if TD can rebuild, especially after regulators imposed an asset cap on its U.S. retail-banking franchise because of the anti-money-laundering deficiencies, effectively limiting the division’s growth.

Mr. Chun is ready to answer that, and on Monday he will do it on stage at an investor day in downtown Toronto.

Not so long ago, the task seemed daunting. The extent of TD’s corporate governance revamp is rarely seen – the bank’s board chair was replaced, and five new directors were added – and TD was put on a costly remediation plan in the U.S. to overhaul its anti-money-laundering program. Last December, the bank pulled its earnings guidance because the future was so uncertain.

But TD has surprised investors by churning out solid earnings over the past three quarters, and its stock has soared, climbing 44 per cent this year, nearly double the average return of the Big Six banks over the same period.

“The stock price performance has been nothing short of remarkable,” RBC Dominion Securities analyst Darko Mihelic said on an investor podcast this week.

TD’s shares, though, had traded poorly after the bank disclosed potential anti-money-laundering issues in 2023 – when its proposed takeover of Memphis-based First Horizon Bank was going off the rails – so some of it was catch-up.

The biggest question Bay Street wants answered is how much more juice can TD squeeze out of its Canadian operation, considering Canada is such a mature market and market share gains tend to accrue glacially. It’s also a tough time for the Canadian market amid the tariff chaos.

“Loan growth has been very hard to come by for all banks in this slow moving, uncertain economy,” Mr. Mihelic wrote in a recent note to clients.

The expectation is that TD will emphasize a few businesses, particularly Canadian commercial banking and wealth management, which have lagged peers in recent years. Wealth management is a particularly attractive business for Canadian banks of late because equity markets have been hot, which makes it easier to attract client funds.

The business is also known for providing “sticky” fees, because the banks are usually paid as a percentage of the assets they manage (not per transaction).

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TD, though, has some work to do, with its Canadian Wealth business growing at a seven-per-cent compound rate over the past five years, compared with a nine-per-cent peer average, according to National Bank Financial analyst Gabriel Dechaine.

Outside of Canada, TD’s retail business is constrained by the U.S. asset cap, but its capital-markets division is not. That offers the bank a means of growing in the U.S., and TD now has more scale there after acquiring Cowen Inc. for US$1.3-billion in 2022.

Mr. Dechaine, though, cautions that investment banks don’t have the same returns because of heavy compensation and compliance costs. Given these constraints, he wrote in a note to clients, “it is difficult to think of what kinds of efficiency-improving investments can be made.”

Mr. Chun, TD’s new CEO, is also expected to emphasize an efficiency push. On top of the money-laundering woes, TD suffered through a cultural erosion during the tenure of its previous CEO, Bharat Masrani, which stifled financial performance. Inside the bank, conservatism dominated and dense layers of bureaucracy hindered decision-making – all of which contributed to a number of respected leaders leaving.

Earlier this month, TD hired Taylan Turan as its chief operating officer, a brand-new position for the bank. Previously, Mr. Turan had been global head of retail banking at HSBC Holdings Plc.

He has been given the task of transforming key operations and reducing complexity, according to an internal memo TD sent to employees, and he will set up a transformation office that will emphasize speed, simplicity and efficiency.