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Toronto-Dominion (TD) Stock Up 1.1% as Q3 Earnings Improve
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Shares of Toronto-Dominion Bank (TD - Free Report) have rallied 1.1% since the release of its third-quarter fiscal 2022 (ended Jul 31) results last week. Adjusted net income of C$3.81 billion ($2.98 billion) increased 5.1% from the prior-year quarter.
The company recorded a rise in net interest income on the back of higher interest rates and rising loan demand. Also, the company’s balance sheet position was solid during the quarter. However, an increase in expenses, a fall in non-interest income and higher provision for credit losses were major headwinds.
After considering several non-recurring items, net income was C$3.21 billion ($2.51 billion), declining 9.3% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total adjusted revenues were C$11.6 billion ($9.06 billion), increasing 8.3% on a year-over-year basis.
NII jumped 17.3% year over year to C$7.04 billion ($5.50 billion). Non-interest income of C$3.88 billion ($3.03 billion) fell 17.6%.
Adjusted non-interest expenses rose 8.2% to C$6.03 billion ($4.71 billion).
The adjusted efficiency ratio was 52% as of Jul 31, 2022, on par with the prior-year level.
In the quarter, Toronto-Dominion recorded a provision of credit losses of C$351 million ($274.1 million) against recovery for credit losses recorded in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.84 trillion ($1.44 trillion) as of Jul 31, 2022, up almost 1% from the end of the second quarter of fiscal 2022. Net loans rose 3.4% on a sequential basis to C$790.8 billion ($617.7 billion) and deposits increased 1.5% to C$1.2 trillion ($0.94 trillion).
As of Jul 31, 2022, the common equity Tier I capital ratio was 14.9%, up from 14.5% on Jul 31, 2021. The total capital ratio was 18.8% compared with the prior year’s 18.5%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 16.3%, up from 15.9% as of Jul 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, rising interest rates will support the company’s financials.
Toronto Dominion Bank The Price, Consensus and EPS Surprise
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2022 (ended July 31) adjusted net income of C$2.61 billion ($2.04 billion), which rose 2% year over year. Results excluded certain one-time items.
Higher net interest income driven by rising rates and improving loan demand mainly supported the results. Moreover, the balance sheet position remained strong during the quarter. However, lower non-interest income and a rise in expenses were the headwinds. Further, an increase in provisions on worsening economic outlook hurt BNS’ financials.
Royal Bank of Canada’s (RY - Free Report) third-quarter fiscal 2022 (ended Jul 31) adjusted net income of C$3.56 billion ($2.78 billion) declined 16.8% from the prior-year quarter.
Results were adversely impacted by a rise in provisions, lower non-interest income on weak capital markets performance and a worsening economic backdrop. Also, RY’s capital ratios deteriorated during the quarter. However, a marginal fall in expenses, a rise in net interest income and solid loans and deposit balances acted as tailwinds.
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Toronto-Dominion (TD) Stock Up 1.1% as Q3 Earnings Improve
Shares of Toronto-Dominion Bank (TD - Free Report) have rallied 1.1% since the release of its third-quarter fiscal 2022 (ended Jul 31) results last week. Adjusted net income of C$3.81 billion ($2.98 billion) increased 5.1% from the prior-year quarter.
The company recorded a rise in net interest income on the back of higher interest rates and rising loan demand. Also, the company’s balance sheet position was solid during the quarter. However, an increase in expenses, a fall in non-interest income and higher provision for credit losses were major headwinds.
After considering several non-recurring items, net income was C$3.21 billion ($2.51 billion), declining 9.3% year over year.
Adjusted Revenues & Expenses Rise
Toronto-Dominion’s total adjusted revenues were C$11.6 billion ($9.06 billion), increasing 8.3% on a year-over-year basis.
NII jumped 17.3% year over year to C$7.04 billion ($5.50 billion). Non-interest income of C$3.88 billion ($3.03 billion) fell 17.6%.
Adjusted non-interest expenses rose 8.2% to C$6.03 billion ($4.71 billion).
The adjusted efficiency ratio was 52% as of Jul 31, 2022, on par with the prior-year level.
In the quarter, Toronto-Dominion recorded a provision of credit losses of C$351 million ($274.1 million) against recovery for credit losses recorded in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.84 trillion ($1.44 trillion) as of Jul 31, 2022, up almost 1% from the end of the second quarter of fiscal 2022. Net loans rose 3.4% on a sequential basis to C$790.8 billion ($617.7 billion) and deposits increased 1.5% to C$1.2 trillion ($0.94 trillion).
As of Jul 31, 2022, the common equity Tier I capital ratio was 14.9%, up from 14.5% on Jul 31, 2021. The total capital ratio was 18.8% compared with the prior year’s 18.5%.
Toronto-Dominion’s return on common equity (on an adjusted basis) was 16.3%, up from 15.9% as of Jul 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, rising 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 Canadian Banks
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2022 (ended July 31) adjusted net income of C$2.61 billion ($2.04 billion), which rose 2% year over year. Results excluded certain one-time items.
Higher net interest income driven by rising rates and improving loan demand mainly supported the results. Moreover, the balance sheet position remained strong during the quarter. However, lower non-interest income and a rise in expenses were the headwinds. Further, an increase in provisions on worsening economic outlook hurt BNS’ financials.
Royal Bank of Canada’s (RY - Free Report) third-quarter fiscal 2022 (ended Jul 31) adjusted net income of C$3.56 billion ($2.78 billion) declined 16.8% from the prior-year quarter.
Results were adversely impacted by a rise in provisions, lower non-interest income on weak capital markets performance and a worsening economic backdrop. Also, RY’s capital ratios deteriorated during the quarter. However, a marginal fall in expenses, a rise in net interest income and solid loans and deposit balances acted as tailwinds.