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TD Bank (TD) Q4 Earnings Increase Despite Higher Costs
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The Toronto-Dominion Bank (TD - Free Report) announced fourth-quarter (ended Oct 31) and fiscal 2016 results on Thursday, before the opening bell. Adjusted earnings for the quarter came in at C$1.22 per share, up 7.0% year over year. Also, adjusted net income rose 7.8% year over year to C$2.35 billion ($1.79 billion).
Moreover, adjusted earnings for the fiscal year came in at C$4.87 per share, up 5.6% year over year. Also, adjusted net income increased 6.1% year over year to C$9.29 billion.
Improvement in revenues was partially offset by higher operating expenses and provisions. Also, growth in capital and profitability ratios was impressive.
After considering certain non-recurring items, net income for the fourth quarter was C$2.30 billion ($1.75 billion), up 25.2% year over year.
Revenues, Expenses & Provisions Increase
Total revenue (on an adjusted basis) for the reported quarter amounted to C$8.73 billion ($6.66 billion), up 7.8% year over year. The rise was attributable to growth in net interest income as well as non-interest income.
For the fiscal-year 2016, total revenue (on an adjusted basis) was C$34.31 billion, up 9.1% year over year.
Adjusted net interest income for the quarter rose 3.8% year over year to C$5.07 billion ($3.87 billion). Further, adjusted non-interest income came in at C$3.65 billion ($2.78 billion), up 13.9% year over year.
Adjusted non-interest expenses increased 6.8% year over year to C$4.78 billion ($3.65 billion). Adjusted efficiency ratio was 54.8% at the quarter end, down from 55.3% as of Oct 31, 2015. A decline in efficiency ratio indicates an improvement in profitability.
Total provision for credit losses rose 7.7% year over year to C$548 million ($418 million).
Profitability and Capital Ratios Improve
Return on common equity, on an adjusted basis, came in at 13.6%, slightly up from 13.5% as of Oct 31, 2015.
As of Oct 31, 2016, common equity Tier I capital ratio came in at 10.4%, up from 9.9% in the prior-year quarter. Total capital ratio came in at 15.2% for the reported quarter, up from 14.0% as of Oct 31, 2015.
Our Viewpoint
TD Bank’s mounting expenses and a stringent regulatory environment are likely to strain its profitability in the near term. However, the company’s efforts are aligned with its organic and inorganic growth strategies, which will further boost revenues in the upcoming quarters.
Royal Bank of Canada (RY - Free Report) reported fourth-quarter fiscal 2016 (ended Oct 31) net income of C$2.5 billion ($1.9 billion), down nearly 2% from the prior-year quarter.
Deutsche Bank AG (DB - Free Report) reported net income of €278 million ($310.2 million) in third-quarter 2016, as against a loss of €6 billion ($6.70 billion) in the prior-year period. Income before income taxes came in at €619 million ($690.6 million), as against a loss of €6.1 billion ($6.80 billion) in the year-ago quarter.
The Royal Bank of Scotland Group plc reported third-quarter 2016 profit attributable to shareholders of £896 million ($1.5 billion) as against loss of £828 million ($1.28 billion) in the prior-year comparable period. Notably, results included litigation and conduct costs of £780 million ($1.3 billion).
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TD Bank (TD) Q4 Earnings Increase Despite Higher Costs
The Toronto-Dominion Bank (TD - Free Report) announced fourth-quarter (ended Oct 31) and fiscal 2016 results on Thursday, before the opening bell. Adjusted earnings for the quarter came in at C$1.22 per share, up 7.0% year over year. Also, adjusted net income rose 7.8% year over year to C$2.35 billion ($1.79 billion).
Moreover, adjusted earnings for the fiscal year came in at C$4.87 per share, up 5.6% year over year. Also, adjusted net income increased 6.1% year over year to C$9.29 billion.
Improvement in revenues was partially offset by higher operating expenses and provisions. Also, growth in capital and profitability ratios was impressive.
After considering certain non-recurring items, net income for the fourth quarter was C$2.30 billion ($1.75 billion), up 25.2% year over year.
Revenues, Expenses & Provisions Increase
Total revenue (on an adjusted basis) for the reported quarter amounted to C$8.73 billion ($6.66 billion), up 7.8% year over year. The rise was attributable to growth in net interest income as well as non-interest income.
For the fiscal-year 2016, total revenue (on an adjusted basis) was C$34.31 billion, up 9.1% year over year.
Adjusted net interest income for the quarter rose 3.8% year over year to C$5.07 billion ($3.87 billion). Further, adjusted non-interest income came in at C$3.65 billion ($2.78 billion), up 13.9% year over year.
Adjusted non-interest expenses increased 6.8% year over year to C$4.78 billion ($3.65 billion). Adjusted efficiency ratio was 54.8% at the quarter end, down from 55.3% as of Oct 31, 2015. A decline in efficiency ratio indicates an improvement in profitability.
Total provision for credit losses rose 7.7% year over year to C$548 million ($418 million).
Profitability and Capital Ratios Improve
Return on common equity, on an adjusted basis, came in at 13.6%, slightly up from 13.5% as of Oct 31, 2015.
As of Oct 31, 2016, common equity Tier I capital ratio came in at 10.4%, up from 9.9% in the prior-year quarter. Total capital ratio came in at 15.2% for the reported quarter, up from 14.0% as of Oct 31, 2015.
Our Viewpoint
TD Bank’s mounting expenses and a stringent regulatory environment are likely to strain its profitability in the near term. However, the company’s efforts are aligned with its organic and inorganic growth strategies, which will further boost revenues in the upcoming quarters.
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TD Bank currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Royal Bank of Canada (RY - Free Report) reported fourth-quarter fiscal 2016 (ended Oct 31) net income of C$2.5 billion ($1.9 billion), down nearly 2% from the prior-year quarter.
Deutsche Bank AG (DB - Free Report) reported net income of €278 million ($310.2 million) in third-quarter 2016, as against a loss of €6 billion ($6.70 billion) in the prior-year period. Income before income taxes came in at €619 million ($690.6 million), as against a loss of €6.1 billion ($6.80 billion) in the year-ago quarter.
The Royal Bank of Scotland Group plc reported third-quarter 2016 profit attributable to shareholders of £896 million ($1.5 billion) as against loss of £828 million ($1.28 billion) in the prior-year comparable period. Notably, results included litigation and conduct costs of £780 million ($1.3 billion).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>.