Toronto-Dominion (TD) Q2 Earnings Rise as Fee Income Jumps
Shares of Toronto-Dominion Bank TD gained 1% since the release of its second-quarter fiscal 2024 (ended Apr 30) results. Adjusted net income of C$3.79 billion ($2.79 billion) increased 2.2% from the prior-year quarter.
Results benefited from higher non-interest income and growth in loans and deposit balance. However, an increase in expenses and provision for credit losses were the undermining factors.
After considering non-recurring adjustments, net income of C$2.56 billion ($1.89 billion) declined 22.4% year over year.
Revenues Rise, Expenses Up
Adjusted revenues were C$13.88 billion ($10.23 billion), increasing 10.4% on a year-over-year basis.
Net interest income (NII) declined 1% year over year to C$7.52 billion ($5.54 billion). Non-interest income of C$6.35 billion ($4.68 billion) jumped 28.1%.
Adjusted non-interest expenses rose 9.6% to C$7.08 billion ($5.22 billion).
The adjusted efficiency ratio was 56.1% as of Apr 30, 2024, down from the 56.4% recorded in the prior-year period.
In the reported quarter, Toronto-Dominion recorded a provision for credit losses of C$1.07 billion ($0.8 billion), which surged 78.8% from the year-ago quarter.
Balance Sheet Robust
Total assets were C$1.97 trillion ($1.4 trillion) as of Apr 30, 2024, up 2.3% from the end of the first quarter of fiscal 2024.
Net loans rose 2.6% on a sequential basis to C$928.1 billion ($676.4 billion), and deposits grew 1.9% to C$1.2 trillion ($0.9 trillion).
Capital Ratios Weaken, Profitability Ratio Improves
As of Apr 30, 2024, the common equity Tier I capital ratio was 13.4%, down from 15.3% as of Apr 30, 2023. The total capital ratio was 17.1% compared with the prior-year quarter's 19.7%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 14.5%, up from 14% a year ago.
Our Viewpoint
Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues and market share, both organically and inorganically, seem impressive. High interest rates and decent loan demand will likely also support its financials.
However, concerns related to the anti-money laundering probe by the U.S. Department of Justice are expected to weigh on its financials. Further, weakening asset quality due to an uncertain macroeconomic backdrop is a headwind.
Toronto Dominion Bank (The) Price, Consensus and EPS Surprise
Toronto Dominion Bank (The) price-consensus-eps-surprise-chart | Toronto Dominion Bank (The) Quote
TD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Estimates of Other Canadian Banks
Bank of Montreal BMO is slated to release second-quarter fiscal 2024 (ended Apr 30) results on May 29.
Over the past seven days, the Zacks Consensus Estimate for BMO’s quarterly earnings has been revised 2.9% lower.
Royal Bank of Canada’s RY second-quarter fiscal 2024 (ended Apr 30) numbers are scheduled to be announced on May 30.
Over the past seven days, the Zacks Consensus Estimate for RY’s quarterly earnings has been revised almost 1% down.
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