KBRA Affirms Ratings for The Toronto-Dominion Bank

KBRA affirms the deposit rating of AA and the short-term deposit rating of K1+ for The Toronto-Dominion Bank (NYSE: TD or “TD Group”), an international financial services group. KBRA also affirms the deposit and senior unsecured debt ratings of AA- and the short-term deposit and debt ratings of K1+ for TD Bank, N.A., the lead U.S. subsidiary. The Outlook for all long-term ratings is Stable. The ratings are in support of a KBRA public finance transaction.

Key Credit Considerations

The ratings are based on TD’s diversified business model, with extensive franchises in Canada and the U.S., combined with demonstrated through-the-cycle financial performance. TD’s anti-money laundering (AML) control deficiencies and the resulting settlements with U.S. authorities— totaling approximately US$3.1 billion, the largest AML-related penalty ever imposed on a financial institution—represent, in KBRA's opinion, a reputational and operational challenge for its business. TD had previously provisioned for the financial impact of these penalties, but the remediation process is expected to take several years, and we expect that it will weigh on performance in the interim. While the AML deficiencies represent a serious lapse, there is no public indication of broader systemic risk management failures. KBRA believes that the settlement with the U.S. authorities has negatively impacted TD’s reputation and future franchise prospects. Its U.S. operations are now subject to an asset cap and the group has paused large U.S. acquisition plans in the near term to focus on Bank Secrecy Act (BSA) / AML remediation. As a result, KBRA believes TD is heavily incentivized to resolve the regulator’s concerns as quickly as possible. TD benefits from a strong risk-adjusted capital position combined with earnings diversification and healthy asset quality. The group has a sound funding and liquidity profile, although there is a notable reliance on wholesale funding in conjunction with TD’s corporate banking and capital markets businesses. KBRA views TD as having solid financial strength, benefiting from the generally strong macro profile of the Canadian economy. That said, amid ongoing market volatility in 2025 — driven in part by rising global trade tensions and uncertainty surrounding increased tariffs—TD and its Canadian peers continue to navigate a complex and evolving operating environment. TD Bank, N.A.’s ratings reflect its strong financial profile combined with its strategic importance to the group as a core operating subsidiary of TD Group.

Rating Sensitivities

The Toronto-Dominion Bank is situated in one of KBRA’s highest rating categories, and a rating upgrade is not expected in the near term. However, a stronger financial position coupled with an unblemished reputation and an undiminished franchise following AML-related remediations could facilitate positive rating momentum over time. A rating downgrade is unlikely in the near term, although a significant deterioration in asset quality, earnings, or capital arising from a severe macroeconomic event, geopolitical turmoil, or a more pronounced impact on the group’s franchise from AML-related issues may result in negative rating action. The ratings may also be downgraded if KBRA’s expectations of systemic support is reduced.

KBRA’s Unsolicited Ratings Policy and Procedure can be found on the Canadian Disclosure page.

To access ratings and relevant documents, click here.

Methodologies