The Office of the Superintendent of Financial Institutions (OSFI) has outlined a plan to unlock billions of dollars, potentially up to $1 trillion. OSFI Head Peter Routledge said Canada’s financial system is so well capitalized that banks, insurers, and pension funds can increase loan volumes or equity investments to address the current economic crisis.
“Canada’s banks have ample capacity to help fund the country’s adjustment to this new era,” Routledge added. The banking industry regulator seems to suggest that big banks must take smart risks.
Canadians and investors elsewhere regard the country’s banking sector as a bedrock of stability. It would be smart to invest in any of the Big Banks. Toronto-Dominion Bank (TSX: TD), in particular, has emerged stronger following a recent scandal. TD is slowly but surely regaining the full trust of investors. I’d recommend holding this blue-chip stock for the next 25 years.
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Turnaround
Canada’s second-largest financial institution paid a hefty fine of US$3 billion in October 2024 after pleading guilty to a money-laundering charge in the United States. Other conditions in the penalty agreement include a US$434 billion asset cap (indefinitely) and a limit on business activities.
According to Maria-Gabriella Khoury, senior director at Fitch Ratings, the impact of the monetary penalties and remediation is absorbable, given the Canadian bank’s strong capital and liquidity.
However, TD shares suffered a serious blow, falling to $70.84 in early December 2024. As of this writing, the share price is $110.35, representing a 56% increase from its lowest point. On a year-to-date basis, the gain is nearly 50%. What was the reason for the turnaround?
The $188.4 billion bank implemented a broad overhaul in February 2025. Raymond Chun, TD’s former chief operating officer, replaced Bharat Masrani as CEO effective April 10, 2025. The new CEO promptly initiated a strategic review of the bank’s strategy, operations, and investments.
TD also announced pay cuts for senior executives, including Chun. Additionally, the bank hired 700 anti-money laundering (AML) professionals to strengthen its risk and compliance capabilities.
Earnings update
Canada’s largest lenders beat expectations in Q3 fiscal 2025, including TD. In the three months ending July 31, 2025, net income reached $3.3 billion compared with the $181 million net loss in Q3 fiscal 2024. For the first three quarters, net income rose 100% year over year to $17.2 billion. The provision for credit losses (PCL) declined 9% to $971 million from a year ago.
Chun said during the earnings call, “This quarter, we made significant progress on our U.S. balance sheet restructuring. We completed the investment portfolio repositioning announced last October and achieved our targeted 10% asset reduction.” He added that TD continued to prioritize and execute its AML remediation.
Smart risk
TD is doing well, if not so far so good, considering the backlash. The big bank remains a solid choice for income-focused and long-term investors. More importantly, the money laundering issue did not disrupt the quarterly payouts. TD’s dividend track record is 168 years. If you invest today, you can partake in the 3.81% dividend and take a smart risk.
