TD Bank CEO says slower revenue growth, more competition require bank to adapt

TORONTO - TD Bank's chief executive says the bank must adapt to an environment of slower revenue growth, tougher competition from new entrants and higher customer expectations.

Bharat Masrani said at TD's annual meeting that it's unlikely growth this year will come from Canadian consumer borrowing and real estate.

He said TD Bank (TSX:TD) will benefit from economic recovery south of the border, where it has a large U.S. division.

Masrani said the big decline in oil prices since last summer will continue to hurt consumer confidence and hamper Canada's economic growth.

He added that the profitability of financial services companies is also under pressure from rock-bottom interest rates and narrowed spreads between long and short term bond rates.

New entrants into the banking space are also creating heightened competition.

"Indeed, the emergence of a new class of competitors is now a reality," Masrani told shareholders in Toronto on Thursday.

"Many of them are household names — and generally they are not subject to the same regulatory rules as traditional banks. They aren't bogged down by legacy systems either. So their speed creates huge growth opportunities for them."

Masrani urged regulators to begin oversight of these non-traditional entities.

"Regulators will also need to consider if the safety and soundness of these non-traditional players matter to the overall stability of our financial system," he said.

"And, if so, whether they can deliver some financial services without adhering to the rules and regulations that protect the interests of consumers and the resiliency of the payment and financial systems."