Bank of Canada Leads AI Applications, Efficiency Expected to Improve — Jefferies

LootboxPhobia · 2026-03-10T18:17:52+00:00

Jefferies analysts pointed out that the Bank of Canada is a global leader in AI applications, with an expected efficiency improvement of 50 to 75 basis points in the future, driving profit growth. At the same time, Toronto-Dominion Bank and Royal Bank of Canada have also set ambitious AI goals to capture significant corporate value.

LootboxPhobia

2026-03-10 18:17:52

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Investing.com – Jefferies analysts say that Canadian banks are leading globally in AI applications and are beginning to see investment returns flow to the bottom line.

The company stated Tuesday that Canadian banks could achieve a 50 to 75 basis point efficiency improvement over the next few years, with more than 130 basis points of upside potential not yet fully reflected in market consensus expectations.

This analysis was made after the first quarter of fiscal year 2026 earnings were released, which showed significant productivity improvements across the sector. Jefferies estimates that a 50 basis point efficiency gain could increase profits by an average of 130 basis points.

Toronto-Dominion Bank (TSX: TD) aims to improve revenue and expenses by $500 million each through AI and automation, surpassing the hypothetical improvements needed for Jefferies’ target.

Canadian banks have been investing in AI technology for years. In the Evident AI 2025 ranking, five banks are among the top 30 globally. The group is now shifting toward enterprise-wide applications.

Royal Bank of Canada (TSX: RY) hopes to generate $700 million to $1 billion in enterprise value from AI benefits by 2027. Toronto-Dominion Bank aims to create $1 billion in value directly from AI, averaging cost savings and revenue growth.

Jefferies believes that Royal Bank of Canada, based on its spending and early adopter experience, could be a winner in AI implementation, despite already having a strong efficiency ratio. The firm notes that Toronto-Dominion Bank has clear AI-related goals and states that U.S. anti-money laundering reforms are driving incremental investments and innovation, which can expand across regions and sectors.

Jefferies states that Canadian Imperial Bank of Commerce (TSX: CM) has been a aggressive spender in technology over the past five years. Its strong productivity improvement in the first quarter of fiscal year 2026 indicates that it has already surpassed peers in investment returns.

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