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Toronto-Dominion (TD) Stock Down 3% Despite Solid Q3 Earnings
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Toronto-Dominion Bank’s (TD - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income of C$3.63 billion ($2.95 billion) increased 55.9% from the prior-year quarter.
Results were aided by a rise in revenues and higher loan balance. The company also recorded a recovery of credit losses in the quarter. However, higher expenses posed an undermining factor. Probably because of this, shares of the company fell 3% on the NYSE, since the release late last week.
After considering non-recurring items, net income was C$3.55 billion ($2.89 billion), soaring 57.7% year over year.
Adjusted Revenues & Expenses Rise
Total revenues were C$10.71 billion ($8.71 billion), rising marginally on a year-over-year basis.
NII declined 1.6% year over year to C$6 billion ($4.88 billion). However, non-interest income was C$4.71 billion ($3.83 billion), up 3.2%.
Non-interest expenses increased 6.3% to C$5.58 billion ($4.54 billion).
Efficiency ratio was 52% as of Jul 31, 2021, up from 49.2% on Jul 31, 2020. A rise in the efficiency ratio indicates a fall in profitability.
In the quarter, the company recorded a recovery of credit losses of C$37 million ($30.1 million) against a provision of C$2.19 billion in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.7 trillion ($1.36 trillion) as of Jul 31, 2021, up 2% from the end of the second quarter of fiscal 2021. Net loans increased 1.5% on a sequential basis to C$719.2 billion ($576.2 billion) and deposits grew slightly to C$1.12 trillion ($0.9 trillion).
As of Jul 31, 2021, common equity Tier I capital ratio was 14.5%, up from 12.5% on Jul 31, 2020. Total capital ratio was 18.5% compared with the prior year’s 16.5%.
Return on common equity (on an adjusted basis) was 15.8%, up from 10.3% as of Jul 31, 2020.
Our Viewpoint
Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues — both organically and inorganically — seem decent. However, rising expenses might hurt the company’s profitability to some extent.
Toronto Dominion Bank The Price, Consensus and EPS Surprise
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income of C$2.29 billion ($1.86 billion) increased 82% year over year.
Royal Bank of Canada’s (RY - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income was C$4.28 billion ($3.48 billion), up 34.6% from the prior-year quarter’s figure.
Canadian Imperial Bank of Commerce’s (CM - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted earnings per share came in at C$3.93, up 45% from the prior-year quarter.
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Toronto-Dominion (TD) Stock Down 3% Despite Solid Q3 Earnings
Toronto-Dominion Bank’s (TD - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income of C$3.63 billion ($2.95 billion) increased 55.9% from the prior-year quarter.
Results were aided by a rise in revenues and higher loan balance. The company also recorded a recovery of credit losses in the quarter. However, higher expenses posed an undermining factor. Probably because of this, shares of the company fell 3% on the NYSE, since the release late last week.
After considering non-recurring items, net income was C$3.55 billion ($2.89 billion), soaring 57.7% year over year.
Adjusted Revenues & Expenses Rise
Total revenues were C$10.71 billion ($8.71 billion), rising marginally on a year-over-year basis.
NII declined 1.6% year over year to C$6 billion ($4.88 billion). However, non-interest income was C$4.71 billion ($3.83 billion), up 3.2%.
Non-interest expenses increased 6.3% to C$5.58 billion ($4.54 billion).
Efficiency ratio was 52% as of Jul 31, 2021, up from 49.2% on Jul 31, 2020. A rise in the efficiency ratio indicates a fall in profitability.
In the quarter, the company recorded a recovery of credit losses of C$37 million ($30.1 million) against a provision of C$2.19 billion in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.7 trillion ($1.36 trillion) as of Jul 31, 2021, up 2% from the end of the second quarter of fiscal 2021. Net loans increased 1.5% on a sequential basis to C$719.2 billion ($576.2 billion) and deposits grew slightly to C$1.12 trillion ($0.9 trillion).
As of Jul 31, 2021, common equity Tier I capital ratio was 14.5%, up from 12.5% on Jul 31, 2020. Total capital ratio was 18.5% compared with the prior year’s 16.5%.
Return on common equity (on an adjusted basis) was 15.8%, up from 10.3% as of Jul 31, 2020.
Our Viewpoint
Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues — both organically and inorganically — seem decent. However, rising expenses might hurt the company’s profitability to some extent.
Toronto Dominion Bank The Price, Consensus and EPS Surprise
Toronto Dominion Bank The price-consensus-eps-surprise-chart | Toronto Dominion Bank The Quote
Toronto-Dominion 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 Canadian Banks
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income of C$2.29 billion ($1.86 billion) increased 82% year over year.
Royal Bank of Canada’s (RY - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted net income was C$4.28 billion ($3.48 billion), up 34.6% from the prior-year quarter’s figure.
Canadian Imperial Bank of Commerce’s (CM - Free Report) third-quarter fiscal 2021 (ended Jul 31) adjusted earnings per share came in at C$3.93, up 45% from the prior-year quarter.