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Toronto-Dominion Bank (TD - Free Report) released its second-quarter fiscal 2022 (ended Apr 30) results. Adjusted net income of C$3.71 billion ($2.93 billion) decreased 1.6% from the prior-year quarter.
The company recorded a rise in expenses in the reported quarter. Also, an increase in provision for credit losses was a headwind. However, a rise in revenues and higher loan balances were the positives. Probably because of this, shares of the company gained 1.9% following the release.
After considering non-recurring items, net income was C$3.81 billion ($3.01 billion), growing 3.1% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total adjusted revenues were C$11.04 billion ($8.71 billion), increasing 7.9% on a year-over-year basis.
NII increased 9.3% year over year to C$6.38 billion ($5.04 billion). Also, the non-interest income of C$4.89 billion ($3.86 billion) increased 11.2%.
Adjusted non-interest expenses rose 5.4% to C$6.00 billion ($4.74 billion).
The adjusted efficiency ratio was 54.3% as of Apr 30, 2022, down from 55.6% on Apr 30, 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$27 million ($21.3 million) against recovery for credit losses recorded in the year-ago quarter.
Balance Sheet Strong, Capital Ratios Improve & Profitability Ratios Worsen
Total assets were C$1.83 trillion ($1.42 trillion) as of Apr 30, 2022, up 2.6% from the end of the first quarter of fiscal 2022. Net loans rose 2.9% on a sequential basis to C$765 billion ($594.9 billion) and deposits rose 2.1% to C$1.18 trillion ($0.92 trillion).
As of Apr 30, 2022, the common equity Tier I capital ratio was 14.7%, up from 14.2% on Apr 30, 2021. The total capital ratio was 18.5% compared with the prior year’s 18.0%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 15.9%, down from 17.1% as of Apr 30, 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, a gradual rise in interest rates will support the company’s financials.
Toronto Dominion Bank The Price, Consensus and EPS Surprise
Deutsche Bank (DB - Free Report) reported first-quarter 2022 net income of €1.23 billion ($1.38 billion) compared with the year-ago quarter’s €1.04 billion. DB reported profit before taxes of €1.7 billion ($1.91 billion), up 4% from the year-ago quarter.
DB’s results benefited from higher net revenues and lower expenses. Strong capital deployment activities in the quarter were another positive. An increase in provision for credit losses was an offsetting factor.
HSBC Holdings (HSBC - Free Report) reported first-quarter 2022 pre-tax profit of $4.2 billion, down 27.9% from $5.8 billion recorded in the prior-year quarter.
HSBC’s results were primarily hurt by a decline in adjusted revenues, partly offset by lower expenses. The expected credit losses and other credit impairment charges (ECL) were a charge in the quarter under review against a release in the prior-year quarter, which was another headwind.
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Toronto-Dominion (TD) Q2 Earnings Dip Y/Y, Stock Rises 1.9%
Toronto-Dominion Bank (TD - Free Report) released its second-quarter fiscal 2022 (ended Apr 30) results. Adjusted net income of C$3.71 billion ($2.93 billion) decreased 1.6% from the prior-year quarter.
The company recorded a rise in expenses in the reported quarter. Also, an increase in provision for credit losses was a headwind. However, a rise in revenues and higher loan balances were the positives. Probably because of this, shares of the company gained 1.9% following the release.
After considering non-recurring items, net income was C$3.81 billion ($3.01 billion), growing 3.1% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total adjusted revenues were C$11.04 billion ($8.71 billion), increasing 7.9% on a year-over-year basis.
NII increased 9.3% year over year to C$6.38 billion ($5.04 billion). Also, the non-interest income of C$4.89 billion ($3.86 billion) increased 11.2%.
Adjusted non-interest expenses rose 5.4% to C$6.00 billion ($4.74 billion).
The adjusted efficiency ratio was 54.3% as of Apr 30, 2022, down from 55.6% on Apr 30, 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$27 million ($21.3 million) against recovery for credit losses recorded in the year-ago quarter.
Balance Sheet Strong, Capital Ratios Improve & Profitability Ratios Worsen
Total assets were C$1.83 trillion ($1.42 trillion) as of Apr 30, 2022, up 2.6% from the end of the first quarter of fiscal 2022. Net loans rose 2.9% on a sequential basis to C$765 billion ($594.9 billion) and deposits rose 2.1% to C$1.18 trillion ($0.92 trillion).
As of Apr 30, 2022, the common equity Tier I capital ratio was 14.7%, up from 14.2% on Apr 30, 2021. The total capital ratio was 18.5% compared with the prior year’s 18.0%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 15.9%, down from 17.1% as of Apr 30, 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, a gradual rise in interest rates will support the company’s financials.
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 Foreign Banks
Deutsche Bank (DB - Free Report) reported first-quarter 2022 net income of €1.23 billion ($1.38 billion) compared with the year-ago quarter’s €1.04 billion. DB reported profit before taxes of €1.7 billion ($1.91 billion), up 4% from the year-ago quarter.
DB’s results benefited from higher net revenues and lower expenses. Strong capital deployment activities in the quarter were another positive. An increase in provision for credit losses was an offsetting factor.
HSBC Holdings (HSBC - Free Report) reported first-quarter 2022 pre-tax profit of $4.2 billion, down 27.9% from $5.8 billion recorded in the prior-year quarter.
HSBC’s results were primarily hurt by a decline in adjusted revenues, partly offset by lower expenses. The expected credit losses and other credit impairment charges (ECL) were a charge in the quarter under review against a release in the prior-year quarter, which was another headwind.