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TD Bank's (TD) Q3 Earnings Improve Y/Y, Expenses Increase

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The Toronto-Dominion Bank’s (TD - Free Report) reported adjusted earnings of C$1.51 per share in third-quarter fiscal 2017 (ended Jul 31). The figure reflects an increase of 18.9% from the year-ago quarter.

Improvement in revenues and lower provisions were partially offset by higher operating expenses. Also, growth in capital and profitability ratios was impressive.

After considering certain non-recurring items, net income for the quarter was C$2.77 billion ($2.10 billion), up 17.4% year over year.

Revenues & Expenses Increase

Total revenues (on an adjusted basis) came in at C$9.33 billion ($7.07 billion), up 7.2% year over year. The rise was attributable to growth in net interest income and non-interest income.

Adjusted net interest income for the quarter increased 7% year over year to C$5.27 billion ($3.99 billion). However, adjusted non-interest income came in at C$4.06 billion ($3.08 billion), increasing 7.5% year over year.

Adjusted non-interest expenses increased 4.8% to C$4.80 billion ($3.64 billion) from the prior-year quarter.

Adjusted efficiency ratio was 51.4% at the quarter end, down from 52.6% as of Jul 31, 2016. A decrease in efficiency ratio indicates rise in profitability.

Total provision for credit losses declined 9.2% year over year to C$505 million ($383 million).

Profitability and Capital Ratios Improve

Return on common equity, on an adjusted basis, came in at 16.1%, up from 14.5% as of Jul 31, 2016.

As of Jul 31, 2017, common equity Tier I capital ratio came in at 11%, up from 10.4% in the prior-year quarter. Total capital ratio came in at 15.6% for the reported quarter, up from 14.6% as of Jul 31, 2016.

Our Viewpoint

TD Bank’s efforts toward improving revenues, both organically and inorganically is supported by its strong capital position. Though elevated expenses remain a concern, the export-driven economy of Canada is likely to benefit from gradual recovery of the U.S. economy, in turn, aiding the company’s growth over the long run.

Toronto Dominion Bank (The) Price and EPS Surprise

At present, TD Bank sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Foreign Banks

Canadian Imperial Bank of Commerce (CM - Free Report) reported third-quarter fiscal 2017 (ended Jul 31) adjusted earnings per share of C$2.77, up from C$2.67 in the prior-year quarter.

Royal Bank of Canada (RY - Free Report) reported third-quarter fiscal 2017 (ended Jul 31) net income of C$2.8 billion ($2.1 billion), down 3% from the prior-year quarter.

Bank of Montreal (BMO - Free Report) reported third-quarter fiscal 2017 (ended Jul 31) net income of C$1.4 billion ($1.1 billion), up 11.4% from the prior-year quarter.

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