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Toronto-Dominion (TD) Stock Up 4.6% on Impressive Q4 Earnings
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Shares of Toronto-Dominion Bank (TD - Free Report) have rallied 4.6% since the release of its fourth-quarter fiscal 2021 (ended Oct 31) results last week. Adjusted net income of C$3.87 billion ($3.3 billion) increased 30.2% from the prior-year quarter.
Results were aided by a rise in revenues and higher loan balance. Toronto-Dominion also recorded a recovery of credit losses during the quarter. However, higher expenses posed an undermining factor.
After considering non-recurring items, net income was C$3.78 billion ($3.23 billion), plunging 26.4% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total revenues were C$10.94 billion ($9.34 billion), rising 5% on a year-over-year basis.
NII increased 3.9% year over year to C$6.26 billion ($5.34 billion). However, non-interest income was C$4.68 billion ($4 billion), which declined 19.6%.
Non-interest expenses increased 4.5% to C$5.90 billion ($5.04 billion).
Efficiency ratio was 53.9% as of Oct 31, 2021, down from 54.2% on Jul 31, 2020. A fall in the efficiency ratio indicates an improvement in profitability.
In the quarter, Toronto-Dominion recorded a recovery of credit losses of C$123 million ($105 million) against a provision of C$917 million in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.73 trillion ($1.5 trillion) as of Oct 31, 2021, up 1.5% from the end of the third quarter of fiscal 2021. Net loans rose marginally on a sequential basis to C$722.6 billion ($624.9 billion) and deposits grew slightly to C$1.13 trillion ($0.98 trillion).
As of Oct 31, 2021, common equity Tier I capital ratio was 15.2%, up from 13.1% on Oct 31, 2020. Total capital ratio was 19.1% compared with the prior year’s 16.7%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 16.1%, up from 13.3% as of Oct 31, 2020.
Capital Deployments
Concurrent with the earnings release, Toronto-Dominion announced a 13% quarterly dividend hike. Also, the company authorized 50 million shares under its share repurchase program.
Our View
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
The Bank of Nova Scotia (BNS - Free Report) reported fourth-quarter fiscal 2021 (ended Oct 31) adjusted net income of C$2.72 billion ($2.16 billion), which rose 40.1% year over year. Results excluded certain one-time items.
A drastic decline in provisions and higher non-interest income primarily drove Bank of Nova Scotia’s results. The balance sheet position also remained strong. However, a decline in net interest income and higher expenses were headwinds.
Bank of Montreal’s (BMO - Free Report) fourth-quarter fiscal 2021 (ended Oct 31) adjusted net income of C$2.23 billion ($1.9 billion) increased 38% year over year.
Bank of Montreal recorded higher revenues and provision benefits, which supported results. Also, loans and deposit balance improved. However, the increase in expenses was a headwind.
Barclays (BCS - Free Report) reported third-quarter 2021 net income attributable to ordinary equity holders of £1.45 billion ($2 billion), up significantly from the prior-year quarter.
Barclays’ results were aided by a rise in revenues, partly offset by higher operating expenses. Also, BCS recorded a decline in credit impairment charges during the quarter.
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Toronto-Dominion (TD) Stock Up 4.6% on Impressive Q4 Earnings
Shares of Toronto-Dominion Bank (TD - Free Report) have rallied 4.6% since the release of its fourth-quarter fiscal 2021 (ended Oct 31) results last week. Adjusted net income of C$3.87 billion ($3.3 billion) increased 30.2% from the prior-year quarter.
Results were aided by a rise in revenues and higher loan balance. Toronto-Dominion also recorded a recovery of credit losses during the quarter. However, higher expenses posed an undermining factor.
After considering non-recurring items, net income was C$3.78 billion ($3.23 billion), plunging 26.4% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total revenues were C$10.94 billion ($9.34 billion), rising 5% on a year-over-year basis.
NII increased 3.9% year over year to C$6.26 billion ($5.34 billion). However, non-interest income was C$4.68 billion ($4 billion), which declined 19.6%.
Non-interest expenses increased 4.5% to C$5.90 billion ($5.04 billion).
Efficiency ratio was 53.9% as of Oct 31, 2021, down from 54.2% on Jul 31, 2020. A fall in the efficiency ratio indicates an improvement in profitability.
In the quarter, Toronto-Dominion recorded a recovery of credit losses of C$123 million ($105 million) against a provision of C$917 million in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.73 trillion ($1.5 trillion) as of Oct 31, 2021, up 1.5% from the end of the third quarter of fiscal 2021. Net loans rose marginally on a sequential basis to C$722.6 billion ($624.9 billion) and deposits grew slightly to C$1.13 trillion ($0.98 trillion).
As of Oct 31, 2021, common equity Tier I capital ratio was 15.2%, up from 13.1% on Oct 31, 2020. Total capital ratio was 19.1% compared with the prior year’s 16.7%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 16.1%, up from 13.3% as of Oct 31, 2020.
Capital Deployments
Concurrent with the earnings release, Toronto-Dominion announced a 13% quarterly dividend hike. Also, the company authorized 50 million shares under its share repurchase program.
Our View
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.
Competitive Landscape
The Bank of Nova Scotia (BNS - Free Report) reported fourth-quarter fiscal 2021 (ended Oct 31) adjusted net income of C$2.72 billion ($2.16 billion), which rose 40.1% year over year. Results excluded certain one-time items.
A drastic decline in provisions and higher non-interest income primarily drove Bank of Nova Scotia’s results. The balance sheet position also remained strong. However, a decline in net interest income and higher expenses were headwinds.
Bank of Montreal’s (BMO - Free Report) fourth-quarter fiscal 2021 (ended Oct 31) adjusted net income of C$2.23 billion ($1.9 billion) increased 38% year over year.
Bank of Montreal recorded higher revenues and provision benefits, which supported results. Also, loans and deposit balance improved. However, the increase in expenses was a headwind.
Barclays (BCS - Free Report) reported third-quarter 2021 net income attributable to ordinary equity holders of £1.45 billion ($2 billion), up significantly from the prior-year quarter.
Barclays’ results were aided by a rise in revenues, partly offset by higher operating expenses. Also, BCS recorded a decline in credit impairment charges during the quarter.