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Toronto-Dominion to Record C$1.1B Provision in U.S. Retail Unit

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Considering the economic impact of the coronavirus pandemic, The Toronto-Dominion Bank (TD - Free Report) jumped on the bandwagon of major U.S. banks, including JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) , for building up reserves. The Canadian lender anticipates to record provision for credit losses (PCL) of C$1.1 billion ($0.8 million) in its U.S. retail banking unit for the second quarter of fiscal 2020 (ended Apr 30).

Notably, the building up of reserves by banks is to grasp defaults by customers, after the pandemic caused curtailment of businesses and consumer activities, to contain the spread of COVID-19.

Per the company’s report, the Corporate segment is expected to record PCL of C$0.6 billion ($0.4 billion) for the fiscal second quarter. The Corporate segment’s PCL comprises mainly the retailer partners’ share of PCL for the bank's U.S. strategic card portfolio. Notably, for this portfolio, the retailer partners’ share of revenues and PCLs recorded in the Corporate segment are fully mitigated by Corporate non-interest expenses. Therefore, this will not impact Corporate or total bank earnings in the fiscal second quarter.

These are just estimates and we will have to wait till May 28 for the exact figures, when the company releases its fiscal second-quarter results.

Shares of Toronto-Dominion have lost 29.2% in the past six months compared with the 37.8% decline recorded by the industry.

Currently, Toronto-Dominion carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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