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Toronto-Dominion (TD) Q1 Earnings Increase, Stock Down 3.6%
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Shares of Toronto-Dominion Bank (TD - Free Report) have lost 3.6% since the release of its first-quarter fiscal 2022 (ended Jan 31) results late last week. Adjusted net income of C$3.83 billion ($3.02 billion) increased 13.4% from the prior-year quarter’s tally.
Results were aided by a rise in revenues and a higher loan balance. Toronto-Dominion also recorded a lower provision for credit losses during the quarter. However, higher expenses posed an undermining factor.
After considering non-recurring items, net income was C$3.73 billion ($2.94 billion), growing 13.9% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total revenues were C$11.28 billion ($8.9 billion), increasing 4.3% on a year-over-year basis.
NII increased 4.5% year over year to C$6.30 billion ($4.97 billion). Also, the non-interest income of C$5 billion ($3.95 billion) increased 4.1%.
Non-interest expenses rose 2.7% to C$5.9 billion ($4.66 billion).
The efficiency ratio was 52.3% as of Jan 31, 2022, down from 53.1% on Jan 31, 2021. A fall in the efficiency ratio indicates an improvement in profitability.
In the quarter, Toronto-Dominion recorded a provision of credit losses of C$72 million ($56.8 million), down substantially from the year-ago quarter’s levels.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.78 trillion ($1.4 trillion) as of Jan 31, 2022, up 2.9% from the end of the fourth quarter of fiscal 2021. Net loans rose 2.9% on a sequential basis to C$743.3 billion ($583.2 billion) and deposits rose 3.1% to C$1.16 trillion ($0.91 trillion).
As of Jan 31, 2022, the common equity Tier I capital ratio was 15.2%, up from 13.6% on Jan 31, 2021. The total capital ratio was 19% compared with the prior year’s 17.4%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 15.7%, up from 14.7% as of Jan 31, 2021.
Our Take
Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues and market share — both organically and inorganically — seem impressive. Also, strong economic growth and a gradual rise in interest rates will support the company’s financials.
In sync with its efforts to further expand footprints in North America, the company inked a deal to acquireFirst Horizon Corporation (FHN - Free Report) for $13.4 billion in cash. Based on FHN’s 2021-end balance sheet, the acquisition is projected to add $55 billion of loans and $75 billion of deposits to TD's balance sheet.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Canadian Imperial Bank of Commerce’s (CM - Free Report) first-quarter fiscal 2022 (ended Jan 31) adjusted earnings per share came in at C$4.08, up 14% from the prior-year quarter’s levels.
CM’s results benefited from a rise in revenues and lower provisions. A strong balance sheet position and a rise in loan demand during the quarter supported the results. However, higher expenses posed a headwind.
Bank of Montreal’s (BMO - Free Report) first-quarter fiscal 2022 (ended Jan 31) adjusted net income of C$2.58 billion ($2.04 billion) increased 27% year over year.
BMO recorded higher revenues and a rise in loans and deposit balances, which supported results. However, an increase in expenses and provision for credit losses were the undermining factors.
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Toronto-Dominion (TD) Q1 Earnings Increase, Stock Down 3.6%
Shares of Toronto-Dominion Bank (TD - Free Report) have lost 3.6% since the release of its first-quarter fiscal 2022 (ended Jan 31) results late last week. Adjusted net income of C$3.83 billion ($3.02 billion) increased 13.4% from the prior-year quarter’s tally.
Results were aided by a rise in revenues and a higher loan balance. Toronto-Dominion also recorded a lower provision for credit losses during the quarter. However, higher expenses posed an undermining factor.
After considering non-recurring items, net income was C$3.73 billion ($2.94 billion), growing 13.9% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total revenues were C$11.28 billion ($8.9 billion), increasing 4.3% on a year-over-year basis.
NII increased 4.5% year over year to C$6.30 billion ($4.97 billion). Also, the non-interest income of C$5 billion ($3.95 billion) increased 4.1%.
Non-interest expenses rose 2.7% to C$5.9 billion ($4.66 billion).
The efficiency ratio was 52.3% as of Jan 31, 2022, down from 53.1% on Jan 31, 2021. A fall in the efficiency ratio indicates an improvement in profitability.
In the quarter, Toronto-Dominion recorded a provision of credit losses of C$72 million ($56.8 million), down substantially from the year-ago quarter’s levels.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.78 trillion ($1.4 trillion) as of Jan 31, 2022, up 2.9% from the end of the fourth quarter of fiscal 2021. Net loans rose 2.9% on a sequential basis to C$743.3 billion ($583.2 billion) and deposits rose 3.1% to C$1.16 trillion ($0.91 trillion).
As of Jan 31, 2022, the common equity Tier I capital ratio was 15.2%, up from 13.6% on Jan 31, 2021. The total capital ratio was 19% compared with the prior year’s 17.4%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 15.7%, up from 14.7% as of Jan 31, 2021.
Our Take
Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues and market share — both organically and inorganically — seem impressive. Also, strong economic growth and a gradual rise in interest rates will support the company’s financials.
In sync with its efforts to further expand footprints in North America, the company inked a deal to acquire First Horizon Corporation (FHN - Free Report) for $13.4 billion in cash. Based on FHN’s 2021-end balance sheet, the acquisition is projected to add $55 billion of loans and $75 billion of deposits to TD's balance sheet.
Canadian Imperial Bank of Commerce Price, Consensus and EPS Surprise
Canadian Imperial Bank of Commerce price-consensus-eps-surprise-chart | Canadian Imperial Bank of Commerce Quote
Toronto-Dominion currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Canadian Banks
Canadian Imperial Bank of Commerce’s (CM - Free Report) first-quarter fiscal 2022 (ended Jan 31) adjusted earnings per share came in at C$4.08, up 14% from the prior-year quarter’s levels.
CM’s results benefited from a rise in revenues and lower provisions. A strong balance sheet position and a rise in loan demand during the quarter supported the results. However, higher expenses posed a headwind.
Bank of Montreal’s (BMO - Free Report) first-quarter fiscal 2022 (ended Jan 31) adjusted net income of C$2.58 billion ($2.04 billion) increased 27% year over year.
BMO recorded higher revenues and a rise in loans and deposit balances, which supported results. However, an increase in expenses and provision for credit losses were the undermining factors.