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Toronto-Dominion (TD) Stock Up 1.9% on Q2 Earnings Growth
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Shares of The Toronto-Dominion Bank’s (TD - Free Report) gained 1.9% following the release of its second-quarter fiscal 2019 (ended Apr 30) results. Adjusted earnings came in at C$1.75 per share, up 8% year over year. Also, adjusted net income rose 7% from the prior-year quarter to C$3.27 billion ($2.45 billion).
Results reflected a rise in revenues on the back of higher interest rates and improvement in loan and deposit balance, coupled with growth in the bank’s retail segment in both the United States and Canada. The company’s Wholesale Banking segment’s performance was decent too. However, higher provisions and a rise in operating expenses were the offsetting factors.
After considering certain non-recurring items, net income was C$3.17 billion ($2.38 billion), up 9% from the prior-year quarter.
Revenues, Expenses & Provisions Rise
Total revenues (on an adjusted basis) came in at C$10.2 billion ($7.66 billion), up 8% year over year. The rise was attributable to growth in net interest income and non-interest income.
Adjusted net interest income grew 9% year over year to C$5.87 billion ($4.41 billion). Also, adjusted non-interest income came in at C$4.36 billion ($3.27 billion), increasing 7%.
Adjusted non-interest expenses rose 8% year over year to C$5.16 billion ($3.87 billion).
Adjusted efficiency ratio was 50.5% at the end of the quarter, up from 50.2% as of Apr 30, 2018. A rise in efficiency ratio indicates a decline in profitability.
Total provision for credit losses increased 14% year over year to C$633 million ($475.2 million).
Balance Sheet & Capital Ratios Strong, Profitability Ratios Weaken
Total assets came in at C$1.36 trillion ($1.02 trillion) as of Apr 30, 2019, up 3% from the prior quarter. Net loans grew 2% on a sequential basis to C$663.6 billion ($495.6 billion) while deposits increased 3% to C$875.3 billion ($653.7 billion).
As of Apr 30, 2019, common equity Tier I capital ratio was 12.0%, up from 11.8% in the prior-year quarter. Total capital ratio came in at 15.8% in the reported quarter, on par with the Apr 30, 2018 level.
Return on common equity, on an adjusted basis, came in at 17%, down from 17.6% as of Apr 30, 2018.
Our Viewpoint
While TD Bank’s efforts toward improving revenues, both organically and inorganically, are supported by its diverse geographical presence, rising operating expenses deter bottom-line growth to some extent. Further, increasing provisions for credit losses is a near-term concern.
Toronto Dominion Bank (The) Price, Consensus and EPS Surprise
Performance & Earnings Release Dates of Other Canadian Banks
Canadian Imperial Bank of Commerce (CM - Free Report) reported strong second-quarter fiscal 2019 (ended Apr 30) results. Adjusted earnings per share were C$2.97, up 1% from the prior-year quarter.
Bank of Montreal (BMO - Free Report) and The Bank of Nova Scotia (BNS - Free Report) are scheduled to announce results of May 28 and May 29, respectively.
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Toronto-Dominion (TD) Stock Up 1.9% on Q2 Earnings Growth
Shares of The Toronto-Dominion Bank’s (TD - Free Report) gained 1.9% following the release of its second-quarter fiscal 2019 (ended Apr 30) results. Adjusted earnings came in at C$1.75 per share, up 8% year over year. Also, adjusted net income rose 7% from the prior-year quarter to C$3.27 billion ($2.45 billion).
Results reflected a rise in revenues on the back of higher interest rates and improvement in loan and deposit balance, coupled with growth in the bank’s retail segment in both the United States and Canada. The company’s Wholesale Banking segment’s performance was decent too. However, higher provisions and a rise in operating expenses were the offsetting factors.
After considering certain non-recurring items, net income was C$3.17 billion ($2.38 billion), up 9% from the prior-year quarter.
Revenues, Expenses & Provisions Rise
Total revenues (on an adjusted basis) came in at C$10.2 billion ($7.66 billion), up 8% year over year. The rise was attributable to growth in net interest income and non-interest income.
Adjusted net interest income grew 9% year over year to C$5.87 billion ($4.41 billion). Also, adjusted non-interest income came in at C$4.36 billion ($3.27 billion), increasing 7%.
Adjusted non-interest expenses rose 8% year over year to C$5.16 billion ($3.87 billion).
Adjusted efficiency ratio was 50.5% at the end of the quarter, up from 50.2% as of Apr 30, 2018. A rise in efficiency ratio indicates a decline in profitability.
Total provision for credit losses increased 14% year over year to C$633 million ($475.2 million).
Balance Sheet & Capital Ratios Strong, Profitability Ratios Weaken
Total assets came in at C$1.36 trillion ($1.02 trillion) as of Apr 30, 2019, up 3% from the prior quarter. Net loans grew 2% on a sequential basis to C$663.6 billion ($495.6 billion) while deposits increased 3% to C$875.3 billion ($653.7 billion).
As of Apr 30, 2019, common equity Tier I capital ratio was 12.0%, up from 11.8% in the prior-year quarter. Total capital ratio came in at 15.8% in the reported quarter, on par with the Apr 30, 2018 level.
Return on common equity, on an adjusted basis, came in at 17%, down from 17.6% as of Apr 30, 2018.
Our Viewpoint
While TD Bank’s efforts toward improving revenues, both organically and inorganically, are supported by its diverse geographical presence, rising operating expenses deter bottom-line growth to some extent. Further, increasing provisions for credit losses is a near-term concern.
Toronto Dominion Bank (The) Price, Consensus and EPS Surprise
Toronto Dominion Bank (The) price-consensus-eps-surprise-chart | Toronto Dominion Bank (The) Quote
The stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Release Dates of Other Canadian Banks
Canadian Imperial Bank of Commerce (CM - Free Report) reported strong second-quarter fiscal 2019 (ended Apr 30) results. Adjusted earnings per share were C$2.97, up 1% from the prior-year quarter.
Bank of Montreal (BMO - Free Report) and The Bank of Nova Scotia (BNS - Free Report) are scheduled to announce results of May 28 and May 29, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>