Toronto-Dominion Bank (TSX:TD) has faced a challenging year in 2024, with its stock slipping over 10% to $76.22 per share, making it the only major Canadian bank stock to post year-to-date losses. Investor sentiment took a hit after the bank agreed to pay a hefty US$3.1 billion fine in October for U.S. anti-money laundering (AML) program failures.

Despite this setback, TD remains Canada's second-largest bank, with a market cap of $133.3 billion and a long track record of resilience. The big question for long-term investors is whether TD stock can bounce back and where it might be in five years. In this article, let's take a quick look at TD's fundamentals, growth potential, and what the future could hold for this Canadian banking giant over the next five years.

A look at TD's fundamentals

While TD's U.S. retail bank is grappling with higher provisions for credit losses and expenses related to its balance sheet restructuring, its underlying fundamentals remain stable. The bank continues to deliver loan growth and maintain stable deposit levels despite challenging economic conditions.

One of TD's main strengths is its strong performance in the Canadian market. The bank's Canadian personal and commercial banking segment is continuing to deliver robust results with the help of record revenues and growth in deposits and loans. In its fiscal year 2024 (ended in October), this segment reported a 7% year-over-year increase in revenue, primarily fueled by loan and deposit volume growth.

Meanwhile, with its focus on strategic initiatives like enhancing credit card loyalty programs and introducing e-commerce solutions for small businesses, TD is striving to expand its market share in Canada.

Where will TD stock be in five years?

As I highlighted above, one of TD Bank's challenges in 2024 came largely from its U.S. AML compliance failures, which culminated in a big penalty. Clearly, these failures represent a difficult chapter in its history. However, the bank has taken several steps to regain trust, including appointing new leadership, overhauling its AML program, and investing heavily in technology and resources to strengthen its compliance efforts.

In my opinion, TD's strong financial base and strategic focus could help it navigate its current challenges and potentially thrive over the next five years. A key growth opportunity for the bank is its potential to expand its U.S. presence after completing its AML remediation efforts. By addressing compliance issues and modernizing its risk management systems, TD is setting the foundation for long-term growth in a competitive market. At the same time, the bank's Canadian operations are likely to remain a solid growth driver, supported by increasing demand for loans and deposits amid declining interest rates.

Moreover, TD's investments in digital transformation and its strong focus on customer-centric solutions could further boost its competitive edge. While it's nearly impossible for anyone to predict where exactly TD stock will be five years from now, if these initiatives keep delivering results, TD stock could rebound and possibly hit new highs by 2030. In addition to this upside potential, its impressive 5.5% annualized dividend yield makes it even more attractive.