04:39 PM EDT, 05/28/2024 (MT Newswires) -- Fitch Ratings on Tuesday affirmed The Toronto-Dominion Bank's ( MLWIQXX ) (TD.TO, TD) Long-Term Issuer Default Rating (IDR) at 'AA-' and Short-Term IDR at 'F1+'. The Rating Outlook has been revised to Negative from Stable. Fitch has also affirmed the ratings of TD's subsidiaries, TD Bank US Holding Company and TD Bank, N.A.

Fitch said the ratings reflect TD's "resilient financial profile, including consistent and prudent underwriting, benign asset quality, diversified business mix, strong capitalization and robust liquidity". Under Fitch's macroeconomic base case, conditions for continued financial and credit performance at TD's current rating level are "adequate", it added.

Fitch said the Negative Outlook reflects the "uncertainty regarding the ultimate impact on the bank's franchise, earnings and risk profiles from the various investigations by regulators on the deficiencies of TD's anti-money laundering (AML) practices in the U.S."

It added the outcomes of these investigations could have both monetary and non-monetary penalties, including, in Fitch's opinion, an inability to engage in further M&A in the U.S. Furthermore, Fitch believes management's focus on remediating shortcomings in risk controls may divert from ongoing operations, and with the costs of remediation, manifest in a weaker financial profile and franchise.