TD Bank bemoans moves toward protectionism amid bid for NAFTA reset
The chief executive of Toronto-Dominion Bank said Thursday that recent rumblings of protectionism are “troubling ” given the need to update the North American Free Trade Agreement.
Bharat Masrani told the bank’s annual meeting that the lender’s performance in the first quarter made him feel “optimistic” about the year ahead. “But there are risks on the horizon,” Masrani said in a speech. “As just one example, trade wars are top-of-mind nowadays.”
He specifically raised the ongoing negotiations around NAFTA, a trade deal Masrani said has been “very positive.” However, he added that Canada, Mexico and the United States have undergone changes driven by technology and evolving customer preferences since the trade deal was implemented about 25 years ago.
“As a result, there is a need to modernize this trade agreement, but not eliminate it,” Masrani said. “That’s why the rhetoric and recent moves toward protectionism is so troublesome. My hope is that the merits of this partnership prevail — so we can look for ways to make NAFTA even better — even stronger — for each country.”
TD, the second-biggest Canadian bank by market cap, has a large business in the U.S. that generates more than a third of its earnings.
But negotiations around NAFTA have yet to produce a new deal, and there is still a possibility that the administration of U.S. President Donald Trump could impose steel and aluminum tariffs on Canada and Mexico from which they had previously been exempted.
Masrani told reporters after the shareholder meeting that the situation has generated “concern” among the bank’s commercial customers. “Folks are worried,” he said. “It’s critical that this gets sorted and that we move on.”
The shareholder meeting followed a long-awaited report by the Financial Consumer Agency of Canada on the sales practices of the country’s biggest banks. After months of work, the consumer watchdog found the “Big Six” lenders had a very sales-focused culture that could be increasing the risk of “mis-selling” financial products. The FCAC said they did not find any widespread abuses, but said they were investigating an undisclosed number of alleged breaches of consumer protection rules.
TD, which had been singled out in some media reports about sales practices, conducted its own review and came to the same conclusion of no widespread issues.
Masrani told reporters TD “did not come across widespread misuse or mis-selling or unethical behaviour at the bank.”
TD has got off to a hot start in 2018, reporting, arguably, the best first quarter of the big Canadian banks, with earnings of $2.4 billion despite a one-time, $453-million charge tied to tax reform in the U.S. It also reported profits last year of more than $10.5 billion, up 18 per cent over the previous year
On Wednesday, TD said that it planned to buy back and cancel up to 20 million of its shares, or about 1.1 per cent of its listed and outstanding common stock. It said it had previously repurchased 22.98 million shares under a normal course issuer bid that was announced in March 2017, at a total cost of $1.4 billion, or $60.78 per share.
Masrani weighed in on topics such as marijuana financing. Canada’s big banks have mostly stayed away from financing cannabis deals.
“We are studying the whole industry to see what are the key risks that we have to mitigate,” he said. “That’s an ongoing process, and we will look at each individual request, or any customer of ours that may be wanting to get into that business, we will look at it on its own merits.”