Good morning, everyone. Our Third Canadian Bank Presentation this morning is from Toronto-Dominion Bank. Joining us today from Toronto-Dominion is Ray Chun, who's the Group Head of Canadian Personal Banking. Welcome, Ray. Thanks for having me, Brian. Thanks, Ray. So it's closing in on close to a year since you took over responsibility for the Canadian Personal Banking segment, and, having previously served as Group Head of Wealth Management and Insurance. Can you tell me how your experience in your previous role has shaped your approach to the Canadian personal banking business, of course? Oh, thanks. I mean, it is amazing. The time does fly. It is a fast approach, a year. What I would say, though, is that, you know, in the thirty years that I worked at TD, it is a bit of a homecoming for me that, I grew up mostly on the Canadian personal banking side and having led the global contact centers. I ran British Columbia and all the branches out there, and ran all of our products, both for the deposit side and the unsecured lending. So this is a familiar territory, if you want to say. And then, as you just said, previous to this role, I was the Global Head for Wealth and Insurance. And so one of the things I do think, having done both roles now, that I see as a terrific opportunity, and we did highlight this even during our investor day, about a year ago. This, the interconnected sort of relationship that we have within TD between wealth management and retail branch banking, I don't think there's anything stronger in the industry, in the sense that, our financial planners actually now all sit inside of every one of our retail branches. Our small business banking advisors all sit inside of our retail branches. One of the things that people here may not be aware of is that in Canada, the other banks, over the last two decades, bought most of their... Did acquisitions for the wealth management side. TD decided to grow our wealth management business organically. And so it's taken us a bit longer to build scale. We now have scale, and so that just presents, I think, terrific opportunities, as we move forward. And I'd sort of finish with that of the 14 million customers that we have at TD Bank. I mean, we bank one out of every three Canadians in Canada. Still, only 15% of those customers have a wealth management relationship, and so that's where I see terrific opportunities as we move forward, having done both jobs. Just as you mentioned, with one in three Canadians and one in two Torontonians banking with TD, you have a unique insight into the health of the Canadian consumer. From your perspective, how is the Canadian consumer managing against the slowing economy, rising unemployment, and the impact of higher interest rates on residential mortgage renewals? And are you seeing any differences in payments and their delinquency rates between the various consumer segments? Yeah, I'm sure you just caught the tail end of the BMO presentation. I think you, you know, I think the two big headwinds that you have in Canada for consumers is this high, you know, elevated household debt levels, probably at some of the highest that we've seen. You overlay that with housing costs today, and the price for homes have been have certainly appreciated significantly over the last few years. And then you have higher interest rates. And even with interest rates coming down in Canada, you know, three-quarters of a point, probably another 50 basis points, we think TD Economics for the balance of this year and one and a quarter next year. It is still elevated mortgage rates, if you want to say, versus the historical lows that the Canadians actually have today. As just as a reminder, in Canada, the difference between Canadian mortgages and the U.S. mortgages, I mean, our mortgages renew around every five years, some every three years. So we don't sort of have a lot of customers that are in these thirty-year mortgages, and so that plays a big factor. What I would say is this, though, that from an unemployment perspective, although unemployment is up in Canada, the reason why unemployment is up is, you know, typically when unemployment is up, you see job losses. That's actually not the case in Canada. Population growth is outpacing the labor supply, right? Or labor, the supply of jobs. What you're not seeing is, you know, big deterioration in our credit portfolios because you're not seeing job loss, right? And so when I look at our mortgage portfolio, the credit quality of the portfolios is certainly normalizing from pre-pandemic. It's still, from a PCL perspective, lower than our pre-pandemic levels, and it's totally in line with our expectations, so I would say overall, we look at sort of two customer segments from a mortgage quality delinquency perspective. One is sort of that low income, low credit bureau, and the other is those customers that are renewing, and if you look at that low income, low credit bureau cohort, that's probably less than 1% of our portfolio, and that quality hasn't changed much. If I look at our twelve-month renewing customers, because those are the ones that are renewing from very low historical rates to the rates that you see today, the quality of that cohort is, from a credit perspective, consistently in line with the broader portfolio. So overall, pleased with the credit quality of the retail portfolio. Great, thanks. Just, there's been three rate cuts from the Bank of Canada. We've got a few more likely before the end of the year. Do you think this is enough to relieve pressure on the consumer side, or do we need to see more rate cuts throughout twenty twenty-five? Yeah, like I said, I still think with the rate cuts, the rates are still elevated from what they were in the past. So I do think we'd be cautious. What you haven't seen in the Canadian marketplace is a resurgence of the mortgage industry. So on a year-on-year basis, mortgage sales would still be down, or home sales would still be down on a year-on-year basis. And so I do think there is a reflection point at some point to come, as rates continue to decline, will consumers in Canada start to then reenter? I do think there's pent-up demand, but you haven't seen that sort of reflection point where Canadians are jumping aggressively back into the home buyer's market. But I do suspect, speaking with TD Economics, that as the rates continue to decline, that reflection point or that bottle cap will pop, and we'll start to see that. But I would still say that consumers, with the indebtedness that we have in Canada, we still need to see a bit more interest rates to come down more, will be useful. Great. Maybe talk about kind of gathering and retaining personal deposits has been a cornerstone to TD's Canadian Personal Banking strategy. With the leading deposit market shares, how are you looking to continue to grow deposits and increase market share? And are you seeing the same pressure on deposit costs as in the U.S.? Yeah, for TD, you know, we are the market leader in Canada from a non-term deposits. I think our market share is about 25.56%. That's about 220 basis points higher than any of our competitors. And so, key to that, as we think about a go-forward perspective, Brian, is winning on new to Canada. So that is, if you speak with any economist in Canada, if it's not 100%, it's 98% of the growth of Canada will be based on new to Canada. And so, we have always been the choice for new to Canada. Our branch banking strategy, our footprint has been a winning strategy. We speak 80 languages in our branches. 92% of our branches are located within large urban markets, and we have a disproportionate market share of branches in the new to Canada markets across Canada, so it is an acquisition engine for us. When you win on new to Canada checking accounts, there's a downstream benefit, credit cards, mortgages, deposits, so on and so forth. That is going to be a key competitive advantage for us as we move forward. One of the pivots that we've made on the new to Canada strategy is actually pre-arrivals. Right, and so we've been historically good with arrivals. The battle for me now is, I think, pre-arrivals, and so partnerships like the one we just signed with HDFC, the largest private bank in all of India, for exclusive referrals to before they come to Canada. From a digital perspective, we've actually done with different other organizations partnerships to win on the pre-arrival, not just the arrival. So all of those types of things, Brian. I think are going to be important to win on a deposit basis. From a pricing competitiveness perspective on deposits, I think it is a competitive marketplace. But we price for long-term relationships, so it is about managing both the profitability but also from a market share perspective. Interesting. Also, aside from mortgages, card has also been a driver of growth. Can you talk about your position in the segment with rewards programs and partnerships? Where are you seeing the largest competitive threats? Yeah, credit cards is a very important business line to us. It's a high growth business for TD. We just crossed a milestone, eight million active accounts for credit cards in Canada, the largest credit card portfolio in Canada. And so I'd say, you know, one of the strengths that we have is that we have signed exclusive partnerships with terrific, iconic brands in Canada. And so think Air Canada, Amazon, Expedia, Starbucks, Uber. And so many of these are terrific partnerships, and it's a win-win for them, a win for us. We just crossed a million new cards on the Aeroplan, and that's our premium credit card. And so in the credit card portfolio, what you're actually seeing is a mix shift. If you'd sort of look at it from pre-pandemic to now, that more of our credit card book is now moving towards our premium, sort of higher classified credit cards. Our revolve rates are improving, but they'll never get back to the pre-pandemic because the quality and the mix of it, actually. The quality of the portfolio from a delinquency is better on that side of it. Overall, the thing that I do watch carefully is our acquisition on the credit card side. If I look at it over the last two years, we've had terrific acquisition momentum. On the credit card portfolio, it takes about two years for the balances to sort of build in for your loan balances. When I look at the acquisition momentum our credit card portfolio's had, the loan balance momentum will actually follow over the next year or two. I'm pleased with the portfolio overall. From a competition perspective, it is a competitive market, different than the United States. I think most Canadians would typically look to, you know, where they bank, is where they would probably first look for their credit card. And so I come back to the new to Canada. For new to Canada, all of our research would say, for most new to Canada, they look to get a credit card within the first 90 days of coming to Canada. And so winning that bank account gives you the first opportunity, and so that's why, again, winning on new to Canada is not just important from a deposit perspective, it's important for all the downstream implications for credit. Great. Now, one of the questions I get from clients a lot is regarding kind of the BSA/AML issues. And in the U.S., the TD BSA/AML compliance program has come under increased regulatory scrutiny. Can you kind of talk about the relationships with the Canadian regulators, how that may be different from, structurally from U.S. regulators? And are you seeing a corresponding increase in regulatory scrutiny on BSA/AML in Canada? Yeah, so if I talk about it from a Canadian perspective, you know, we have consistent, ongoing, open dialogue with our Canadian regulators. But I would say, you know, you do have to distinguish between both the Canada and the U.S. issue at hand. And for Canada, if you look at sort of the examination that we had with FINTRAC, and it was an industry-wide examination, but for TD, when we had that examination, you know, the penalty that came from that was CAD 9.2 million, and we paid that. That was on April the 9th. It identified five administrative findings that came out of that. And so we paid the fine. We're certainly taking it very seriously, the remediation that we need to do, but it's five findings that have been actually publicly disclosed. And so we're moving against that to remediate it, to remediate those situations, and ensure that we actually build out our controls within. But it is very different. I mean, I just wanna highlight that from a FINTRAC perspective, we've identified it, we've paid the fine, and then we're moving forward. And then the U.S. piece, as everybody knows, I can't sort of talk more than what's actually been disclosed already by Bharat. Okay. You know, one of the things that comes up a lot, too, is technology and digital offerings. How would you compare TD's technology platform to your Canadian competitors? And then, are there any specific areas, such as data analytics or AI, where you think you need to invest to remain competitive? Yeah, you know, if I go back to... Oh, sorry, before I even say that, I do think GenAI and AI, in general, is absolutely going to be transformative, not to most industries and certainly to banking. But when we think about TD, back in 2018, we made an acquisition of Layer 6. And Layer 6, back then, and still is, was a world-renowned AI company. And so to me, that gave us a competitive advantage that we actually got into the AI space much, much earlier than some of our competitors in Canada. And so we use Layer 6 for all of our research, talent. They're forward deployed into our businesses. And so from an AI perspective, and GenAI specifically, I do think it is going to transform most things. We're looking at things like, for example, pricing, fraud, leads management, customer service, and I can talk a little bit more about stuff, some of that. We've got a number of different initiatives that are on our roadmap as we move forward. From a platform perspective, what I would say is, you know, we are accelerating our investments in our mobile digital platforms, and what I'll call omni platforms, to be able to make sure that customers can start, stop, and finish, in their channel of choice as they move forward. That's probably the area that you'll see accelerated investments by TD, is in mobile digital as we move forward. Having said that, we have eight million active mobile users, the largest active users in Canada amongst any of the Canadian banks. And so we have made significant investments. I just think that the whole world is mobile, mobile, mobile, and so we just need to continue to up our game as we move forward. Yeah, and so as the world moves, like you said, mobile, mobile, mobile, do you compare how you, you're investing mobile and the need for branches and ATMs and where you're maybe- Sure. Dialing back on the branches, or how important the branches are to the Canadian customer? That's a great question, and, and it's a question that we debate inside of, the four walls. Let me just say that the branch banking is going to continue to play a critical role, so specifically in Canada. And I've said that for, you know, it from a new-to-Canada perspective, the fact that we speak 80 languages in our branches, in our contact centers, we offer more than 200 languages. Language matters, when you're new to Canada, and so that's important. You know, where our branches are open 27% longer, and so one of the core strategies that we've had at TD is longer hours, and we continue to have the longest hours in every single market that we have branches. We have, on average, 27% longer hours, and all of this matters. Where you've seen a shift is in what people want to do when they come to the branch, right? And so since the pandemic, we have seen a 50% reduction in over-the-counter transactions, right, and so what we've actually been doing over the last couple of years is shifting the complement mix, and so it used to be one service FTE for every one sales FTE. Now we're at two sales FTE for one service FTE, and you're seeing productivity levels in our branches, in every measurable productivity metric is higher than it was pre-pandemic. What we'll have to think through is how do you combine the digital and mobile world into the branch? What you're seeing globally, if you actually go to, like, Australia and Singapore and some of these other countries that are probably a bit further ahead on that journey, is that the digital journey, actually, they call it phygital, is how do you combine the physical and digital. And so what you're actually finding is more and more customers are walking into branches, and they're actually doing all their transactions on their mobile device in the branch... And so it's blurring the lines between what is mobile and what is physical. And so that's something that actually we're going to be working our way through over time. I suspect the footprint, the size of the branches over time, don't need to be as big if you're seeing transactions actually dramatically reduce. And then we'll have to think about what can we do? I think the biggest one is actually making sure that customers can start their journey in any channel, resume, and finish in any different channel if that's what they want, and that's probably what we call omni-channel. That's the space that many of the banks, certainly in Canada, probably in the United States, probably haven't figured out fully yet on that journey. But if you look at other industries, you certainly would say that omni is important. One of the things, too, you mentioned earlier that you said you believe AI is going to be transformational. How transformational do you think it will be for the banking industry? And how close do you think your TD Invent segment is to bringing some of these ideas to market? I think it is going to be incredibly transformational, not just for banking, but for all industries. If you think about... I'll give you a couple examples of where we're using it, and these are early days, but we just tested and rolled out now on scale inside of all of our contact centers. We're using GenAI to historically, if you and I ran the contact centers globally many years ago, you'd have the agents and the agents high turnover rates because they're just those types of roles, flow-through roles. But so their knowledge level would be, you know, not at the proficiency level that the experts would be at. And so you'd have a resource desk that would be staffed by more seasoned experts, and every time they had questions, they would then move it to the resource desk, and back and forth and back and forth. So from a customer experience, longer hold times, wait times, but it's also just costly to have to wait five, six, seven minutes for an answer. So we tested with GenAI, actually having our phone agents leveraging the GenAI tool that we now created to ask the questions, and the accuracy of the response rate is higher with GenAI than with humans now, right, than when we went to the resource desk. And so think about that, that what used to take five, six, seven minutes is now taking seconds. That is a significant, not only greater experience for customers and colleagues, but a significant efficiency from a cost perspective. That, then, we're taking those learnings, and we're now rolling that out into all of our branches, right? And saying, there are thousands of times during a day where a branch colleague would be looking for someone more experienced to ask questions. Now we're going to deploy GenAI into all of our branches, and again, better customer experience, better colleague experience, but the efficiency that we're going to get from that is significant. We've also, from an engineer's perspective, coding perspective, we're using Microsoft Copilot to actually help from a coding perspective. I mean, you can imagine the thousands of lines of code and leveraging GenAI now. You can actually detect errors in the codes in a significantly more efficient way as we move forward. So we've only scratched the surface. In the insurance business that I ran before, we were using AI for fraud, pricing, sophistication, you name it. I think almost every element of what we do is going to, in some way, be touched with either AI or GenAI as we move forward. Interesting. And you did talk about how some of this will improve efficiencies. Maybe we can talk a little bit more about the efficiency program. TD expects about CAD 800 million in annual savings from its recently completed restructuring program. Can you talk about maybe how much of that is coming from Canadian Personal Banking, and do you see opportunities for more efficiencies, and how much of that is being reinvested in technology initiatives versus how much you think can fall to the bottom line? Yeah. So on an annualized basis, I think, what we've said is exactly what you just said, Brian. About CAD 800 million is the restructuring benefits that we'll get, going forward, starting in 2025. And I'd say sort of that CAD 800 million is coming from three components. First, is FTE reduction, and we had said that we at an organizational level, we'd look to take FTEs down 3%. And as Bharat reported at the last quarterly analyst call, we've achieved that. The Canadian Personal Banking being the sort of the largest contributor from an FTE perspective, has delivered on our 3%, and that would be the big part of that reduction. Real estate, as can be expected, is another big cost saver, and we've actually optimized our real estate footprint. And then sort of, you know, like asset write-downs, would be the third category. I'd say within the Canadian Personal Bank, we've also gone through a significant productivity review, and just trying to review all the different levers. And I would say, you know, whether it's branch banking, whether it's our spans and layers within our various different areas of our organization, I still think there's opportunity as we move forward. And all of this is in line with us making sure that we deliver positive operating leverage on a go-forward basis. Thank you. One question, very interesting. Wanted to ask, how does, how do you view the community banking business in terms of capital? How does that fit into TD's overall capital strategy? Do you feel like you're generating more capital than you need? Where are you investing the capital, and how do you feel about the capital as being kind of and up towards the other parts of the business? Yeah, I'd say, you know, we've had, when it comes to capital, I think our philosophy at TD has been pretty consistent for a number of years, and you know, number one, you know, we value the diversified businesses that we actually have at TD Bank, and so, we look to make sure that we're investing to the initiatives that apply to the various different businesses, and by doing that, we actually think those initiatives are the ones that are going to drive the biggest franchise value long term, and so making sure that we're investing in this diversified business of TD. I'd say the second is, you know, where we have capability gaps, that's another place that we will deploy our capital to close those capability gaps, and you saw that with TD Cowen here in the U.S. You saw that with Greystone in the asset management side for the alt business, when I ran the wealth business. Where we find there's capability gaps and opportunities, that's where we'll deploy capital also. I would say overall, we feel we're very well positioned from a capital perspective, as we move forward, and I think Bharat commented that on the last quarter call. Great, thank you. Open up to see if there's any questions in the audience. Wait to see if a microphone comes around. A question up front. Thank you. Could you just give us an idea of the new-to-Canada influx and what kind of... How you see their wealth helping, as well as Canada? And how are you figuring out how much money they have and how much that they can spend and so on? How do you figure that out when they're so new? Yeah. I'd say the new to Canada, you sort of, we really do segment down to quite a micro segment. It's not sort of one big group, right? And so we've got what makes up new to Canada are sort of obviously, the permanent residents. International students is a big segment, and then sort of the temporary. And I would say for us, international students is a big one. For a lot of our international students now, their pathway to the programs here in Canada require you, or fast track you, require you to put sort of a GIC investment in advance of you coming to Canada to demonstrate you can afford all of the costs and what have you. And so that's why the pre-arrival is so important, is that you're actually having to select banks before you get to Canada. And that's a large cohort of international students. Sorry, then, and for a lot of them, they choose to then stay in Canada, get their degrees, work, and build those relationships. So winning on that side is important. What we also know for the vast majority of permanent new to Canada, is that they look to buy a house within three to five years, right? And so a lot of them are bringing assets, certainly from Asia or India. And so that's a very different cohort of new to Canada today than was fifteen, twenty years ago, right? And so, those are the two segments, in my opinion, that if you win at the beginning, you can not only grow your deposit base, because you're starting with a very different starting point, but if you don't get that first entry checking account, it's really hard to get access to the credit, down the road, right? And then, for us, we've implemented a number of different credit card strategies, mortgage strategies that are specifically geared towards new to Canada, and helping them get established here, in Canada. Critically important. Thank you very much. On the new to Canada front, with the recent political, let's call it changes- Sure -that are pulling out their support, in particular, and the possibility of upcoming elections, as well as maybe concerns about the magnitude of immigrants, in recent years, although it's been, it's underpinned a considerable strength- Sure In the economy, it's maybe also underpinned home price appreciation. Could you comment on whether or not the new-to-Canada strategy, the extent to which it faces vulnerabilities, and what you might do, if it doesn't continue in the way that it's been over the past? Yeah. What I would say is that even with the reduction in Canada, that has been stated, the number is still a big number, right? So I would just say, if you were thinking international students, as an example, before any of the reductions, it was about 500,000 international students were coming to Canada, and now it's about 350, 360,00. It's still a big number, and so, you know, I won't comment on the politics of that, but, I would say that if you don't win that segment, it is still going to have a drag on any bank in Canada as they move forward. What I would also tell you is from a credit portfolio perspective, that the quality of the new to Canada, when we give credit, that quality is better than the non-new to Canada. And so it's a win-win in many cases, but I suspect that there'll be some slowing impact because of the reduction. But I don't want to take away from the fact just how big that cohort of customers still will be on an ongoing basis. Another question on the new to Canada. How much is high home prices, like, a barrier to new to Canada, and does that impact the slowing, that would slow immigration? Listen, I think high home prices is a challenge whether you're new to Canada or have been in Canada. What you've actually seen, and I was reading some TD economic reports, is that the gifting from parents, family, has become significant over the last number of years. And so that continues to, I think, put pressure on Canadians. But with rates now coming back down, I think that's, you know, this is why I was saying at the, previously, that in Canada, you still have a lot of people sitting on the sidelines, because even with the rates coming down, it is still quite a bit higher than the record low mortgage rates that were there during over the last three, four years. And so I suspect, you know, in the next year, you're going to see that inflection point where rates will have reduced to a point where the affordability of homes actually becomes more in line. But the price of homes is still very high in Canada, and in certain markets like Toronto, Vancouver, you know, they really are quite inflated, right? And so I think it's still gonna put pressure on Canadians from the homeownership as we go forward. Great. And even another on the new to Canada, maybe talk us through, like, the life cycle of a new to Canada customer. You know, how long does it take to go from, like, that initial primary relationship, card, mortgage, wealth? And then at what point do they kind of resemble, in terms of a product relationship with TD, a non-new to Canada? And we wanna talk about how important and how you're able to retain those customers throughout that lifetime. Yeah, we follow the cohort quite closely. And I would tell you that within three years of new to Canada customers, you know, starting a relationship with it, they start to be very similar to anyone else that's actually our customer base, right? And so this is why it's critical to win the acquisition at the front end, because they are looking to build all of their other needs. And I would tell you, credit cards is within the first 30 days, they are looking to get a credit card while they're in Canada. And I would say that's quite reasonable. If any of us had moved to another country, having access to credit is critically important, right? And so, but over the first three years, we don't see a lot of difference past three years from a credit quality perspective, from a deepening relationship perspective, than the rest of the portfolio. Great. Does anyone else have any questions here? So the only other thing I would comment on the mortgage piece, Brian, is just remember I was saying that the population growth in Canada is still going to continue to put, I think, pressure on housing costs, right? Because there's the demand for housing and the supply of housing in Canada is still a bit of an imbalance. Definitely. Anyone else have any questions for Ray? All right, then please join me in thanking Ray for his presentation. Thank you very much, Ray. Thanks. Thanks for having me. Next in this room, we have Associated Banc-Corp. Other presentations are from Truist, Equifax, SLM, and Prudential PLC.