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TD Bank (TD) Q1 Earnings Rise on Higher Revenues; Costs Up
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The Toronto-Dominion Bank (TD - Free Report) announced first-quarter (ended Jan 31) fiscal 2017 results on Thursday, before the opening bell. Adjusted earnings for the quarter came in at C$1.33 per share, up 12.7% year over year.
Improvement in revenues and lower provisions were 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 first quarter was C$2.53 billion ($1.90 billion), up 13.9% year over year.
Rise in Revenues Offset by Higher Expenses
Total revenue (on an adjusted basis) for the reported quarter amounted to C$9.08 billion ($6.81 billion), up 6% year over year. The rise was attributable to growth in net interest income as well as non-interest income.
Adjusted net interest income for the quarter rose 1.9% year over year to C$5.14 billion ($3.85 billion). Further, adjusted non-interest income came in at C$3.94 billion ($2.95 billion), up 12% year over year.
Adjusted non-interest expenses increased 5.5% from the prior-year quarter to C$4.83 billion ($3.62 billion).
Adjusted efficiency ratio was 53.2% at the quarter end, down from 53.5% as of Jan 31, 2016. A decline in efficiency ratio indicates an improvement in profitability.
Total provision for credit losses declined 1.4% year over year to C$633 million ($474 million).
Profitability and Capital Ratios Improve
Return on common equity, on an adjusted basis, came in at 14.5%, up from 13.5% as of Jan 31, 2016.
As of Jan 31, 2017, common equity Tier I capital ratio came in at 10.9%, up from 9.9% in the prior-year quarter. Total capital ratio came in at 15.1% for the reported quarter, up from 13.7% 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.
Toronto Dominion Bank (The) Price, Consensus and EPS Surprise
Royal Bank of Canada (RY - Free Report) reported first-quarter fiscal 2017 (ended Jan 31) adjusted earnings per share of C$1.87, up from C$1.64 in the prior-year quarter. Higher revenues and lower provision for credit losses were the primary reasons for the strong results. Also, steady growth in loan and deposits, and strong capital position acted as tailwinds.
Canadian Imperial Bank of Commerce’s (CM - Free Report) adjusted earnings per share for the quarter came in at C$2.89, up from C$2.55 in the prior-year quarter. Results improved due to growth in revenues and a fall in provision for credit losses. However, an increase in expenses was an undermining factor.
Barclays PLC’s (BCS - Free Report) fourth-quarter 2016 net income from continuing operations was £380 million ($472.3 million) against a net loss of £2.24 billion recorded in the prior-year quarter. Improved bond trading, rebound in equity trading and encouraging investment banking performance were the main reasons for the improved results. However, lower net interest income and a rise in credit impairment charges were the undermining factors.
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TD Bank (TD) Q1 Earnings Rise on Higher Revenues; Costs Up
The Toronto-Dominion Bank (TD - Free Report) announced first-quarter (ended Jan 31) fiscal 2017 results on Thursday, before the opening bell. Adjusted earnings for the quarter came in at C$1.33 per share, up 12.7% year over year.
Improvement in revenues and lower provisions were 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 first quarter was C$2.53 billion ($1.90 billion), up 13.9% year over year.
Rise in Revenues Offset by Higher Expenses
Total revenue (on an adjusted basis) for the reported quarter amounted to C$9.08 billion ($6.81 billion), up 6% year over year. The rise was attributable to growth in net interest income as well as non-interest income.
Adjusted net interest income for the quarter rose 1.9% year over year to C$5.14 billion ($3.85 billion). Further, adjusted non-interest income came in at C$3.94 billion ($2.95 billion), up 12% year over year.
Adjusted non-interest expenses increased 5.5% from the prior-year quarter to C$4.83 billion ($3.62 billion).
Adjusted efficiency ratio was 53.2% at the quarter end, down from 53.5% as of Jan 31, 2016. A decline in efficiency ratio indicates an improvement in profitability.
Total provision for credit losses declined 1.4% year over year to C$633 million ($474 million).
Profitability and Capital Ratios Improve
Return on common equity, on an adjusted basis, came in at 14.5%, up from 13.5% as of Jan 31, 2016.
As of Jan 31, 2017, common equity Tier I capital ratio came in at 10.9%, up from 9.9% in the prior-year quarter. Total capital ratio came in at 15.1% for the reported quarter, up from 13.7% 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.
Toronto Dominion Bank (The) Price, Consensus and EPS Surprise
Toronto Dominion Bank (The) Price, Consensus and EPS Surprise | Toronto Dominion Bank (The) Quote
TD Bank currently carries a Zacks Rank #3 (Hold). 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 first-quarter fiscal 2017 (ended Jan 31) adjusted earnings per share of C$1.87, up from C$1.64 in the prior-year quarter. Higher revenues and lower provision for credit losses were the primary reasons for the strong results. Also, steady growth in loan and deposits, and strong capital position acted as tailwinds.
Canadian Imperial Bank of Commerce’s (CM - Free Report) adjusted earnings per share for the quarter came in at C$2.89, up from C$2.55 in the prior-year quarter. Results improved due to growth in revenues and a fall in provision for credit losses. However, an increase in expenses was an undermining factor.
Barclays PLC’s (BCS - Free Report) fourth-quarter 2016 net income from continuing operations was £380 million ($472.3 million) against a net loss of £2.24 billion recorded in the prior-year quarter. Improved bond trading, rebound in equity trading and encouraging investment banking performance were the main reasons for the improved results. However, lower net interest income and a rise in credit impairment charges were the undermining factors.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>