And while at the time of acquisition, we said the integration would take up to 3 years, it seems to be going a little bit faster than that. So I’m particularly happy about that. And just while we’re on the call because I know our — some of our colleagues listen, I think it’s just worth calling out the big congratulations to all of them for bringing us this far. So quickly, now as far as the dividend tax matter goes, you can see from the notes in the financial statements that talk to the tax reconciliations that our annual dividend deduction has ranged from about $100 million to $125 million a year. And so 112 of that would be the impact on our Q1 for ’24.
Lemar Persaud: Okay. And then moving forward, should we just take the Q1 and just quarterize on that. So that’s a reasonable expectation?
Riaz Ahmed: Yes, I think that would be reasonable. But of course, it’s all buried in the otherwise fantastic growth we’re having elsewhere in the business across the business. So yes, I think for your modelling purposes, that makes sense to adjust it by that much.
Kelvin Tran: I think it’s important to clarify that the impact to Q1 is only one month out of three months.
Lemar Persaud: Right. Okay. And then maybe for Kelvin, just on this restructuring program. It’s obviously fairly large, and it seems like you guys have good clarity on the size of the program and cost savings. I didn’t see any changes to your 2024 and fully realized cost savings estimates. So maybe you could help me understand how much of this program is going to be used in kind of three buckets. So like growth initiatives, rectifying AML issues and then any amounts falling to the bottom line. I think those — that’s probably the right way to look at it. But any thoughts and if you could split that out between those three buckets, that would be helpful?
Kelvin Tran: Yes. So it’s — maybe the way to talk about it is through the numbers. The savings that are coming out of this restructuring program, we expect savings $400 million in 2024 and $600 million in ’25 on an annualized basis. I would say the bulk of that would be reinvested in risk and control because you would have seen in the range that the we provided for the corporate segment, the increase, and that is a big — the main contributor would be risk and control, although there are many puts and takes in corporate segment and then the residual would be in driving future growth.
Lemar Persaud: So it’s essentially just risk and control. And if you bucketed into that, is it fair then to say that this spend isn’t necessarily going to drive additional revenues or benefits to the bank outside of risk and control. Is that fair?
Kelvin Tran: I guess you can always say which one do you prioritize? Because at the end of the day, we are expecting mid-single-digit expense growth. And so you say that, that is going to drive investment and then the rest is because of the growth in risk and control or the other first. We look at it as one portfolio basis, and we continue to reprioritize given the environment.
Lemar Persaud: Okay, thanks. That’s it for me.
Operator: Thank you. The next question is from Darko Mihelic from RBC Capital Markets. Please go ahead. Your line is open.
Darko Mihelic: Hi, thank you for taking my questions. I know it’s running along. Really quickly, two questions for Leo. First one, Leo, is when I look at the U.S. business, I’m trying to understand what you’re aiming for this year in terms of loan growth and you can talk to this, whether it’s relative to industry relative to where you are now, where do you see the biggest opportunities for growth? And given that the bank clearly had lots of capital are you actually aiming for above industry average kind of growth levels on the loan side? That’s my first question.
Leo Salom: Great, Darko. Thank you very much for that question. Let me just give you a sense first at a macro level and then I’ll look at it within the bank. From a macro perspective, just to be clear, I do expect there to be moderation in the level of asset growth in the market as a whole. In fact, we saw that we were pure leading in the quarter, in the first quarter. So to the extent that rates stay longer and to the extent that there is more pressure on consumers, I do expect that there will be some moderation in consumer loan demand. And on the commercial side, we’ve seen commercial entities, pulling back a little bit, waiting to see what happens with rates. And so they’re taking a shorter view with regard to some of their decisions.
Now from our perspective, in particular, I think we find ourselves in a bit of a unique situation. As I think shared with you, we’ve got 10 million retail clients, and we’ve been historically underpenetrated in terms of our consumer lending businesses. So the ability to bring our cards, our bank cards offer to bear on that subset of consumers to the extent that we can bring mortgage products and obviously continue to grow our broader consumer lending, it’s an opportunity. So just to bring that to life a bit in our cards business, about 16% of our consumers today have a TD bank card in their wallet. Our aspiration is to double that. So that will give us to the extent that we lean into the honest opportunity, I do think that we’ll be able to outgrow the market, and that’s what we’ve done over the past three or four quarters.
So, that really goes to what we’re doing on the consumer side. Likewise, on the commercial side, you saw us post relatively strong growth. And I would say the partnership with TD Cowen and TD Securities is at the heart of that. The work that we’re doing to redefine our mid-market franchise hand-in-hand with Riaz’s team is giving us an opportunity to be able to cast a much bigger shadow in the mid-market space. And so we’re really excited about that. The fact that the market is experiencing some degree of liquidity challenges, while we are in a much stronger position is giving us an ability to be selective and able to support clients through this sort of macro environment. So long-winded way of saying, I do believe that we’ll be able to outperform from a lending perspective in the short term.
But we’re going to do going to do that prudently. We’re that. We respect our underwriting criteria. We’ll make sure that we’re putting on good effective credit. But I do think we should be able to outperform the market.
Darko Mihelic: Okay. That’s actually a very helpful answer. And my next question, and please don’t judge me — this might be a stupid question. I just don’t know how this works. So today, you announced a three-year $20 billion community impact plan, so how should I think of that? Should I think of $20 billion consumer loans sort of coming on your balance sheet over the next three years? And I don’t imagine these would be high spread, but possibly high PCL. I mean how should I think about this plan and what I should doing with my model, having heard this today?
Leo Salom: Darko, it’s a really good question. First of all, let me say that I’m exceptionally excited that TD made this announcement. So just to define what it is, first of all, because I think it would be useful. So the $20 billion is really comprised of three lending categories. That $10 billion of that is mortgage lending to LMI consumers or say, in communities. Another $3 billion is to minority-led small businesses right across our footprint. And the final piece is $7 billion to development financing to affordable housing programs. I just want to remind everyone that we are obligated based on fair lending obligations in CRA to make those investments than we have been for some time. I think what this program does is lean in a little harder in a couple of categories to make sure that we are supporting our communities.
It’s fundamental to who we are. It’s been part of our core culture. So I wouldn’t expect this to translate into any sort of deterioration in our credit performance. We’ll continue to apply rigorous underwriting standards to those — to these programs, but it is meant be even more deliberate with regards to our fair lending and our CRA obligations.
Darko Mihelic: And these are all on balance sheet, correct?
LeoSalom: Yes, they are.
DarkoMihelic: Okay. Thank you.
Operator: Thank you. There are no further questions registered at this time. I will turn the call back to Bharat Masrani.
Bharat Masrani: Yeah, thanks very much. Darko, just to clarify on this. On the mortgage side, there are times when they’re conforming mortgages, we transferred them to Fannie and Freddie, and so to try take dollar for dollar and say this is in the balance sheet, there’s probably more — we should provide you with more sort of explanation on that at a future date. But just to clarify that because it’s a particular feature of the U.S. market that sometimes is not well understood. But overall, I’m thrilled with how the team has delivered. Like I said earlier, the momentum in our business is strong. We’ve had good volume, excellent volume growth in Canada, good loan growth in the U.S TD Securities, TD Cowen coming together. And I would add my congratulations to our colleagues in the wholesale bank today is on eve of a major, major milestone.
So it’s great that we’ve come so far. And of course, I know this is Mr. Wiggan the rest us go by first name. So Tim, great to have you on this call as well. So with that, I would also take this opportunity to thank our 95,000 bankers around the world. They are the ones who deliver for all our stakeholders, including shareholders. So thank you and we will see you next quarter. Thanks very much.
Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.
