The Toronto-Dominion Bank TD, also known as TD Bank, has gained over 3% on the NYSE since the announcement of its fiscal first-quarter 20Array6 (ended Jan 3Array) results on Thursday, before the opening bell. Adjusted earnings of C$Array.Array8 per share were up 5% year over year. Also, adjusted net income rose 6% year over year to C$2.25 billion ($Array.64 billion).
Growth in revenues was partly offset by higher operating expenses and provisions. Growth in assets was impressive, while profitability ratios showed weakness.
After considering certain non-recurring items, net income summed C$2.22 billion ($Array.62 billion), up 8% year over year.
Quarterly Details
Total revenue (on an adjusted basis) amounted to C$8.56 billion ($6.24 billion), up Array2% on a year-over-year basis. The rise was attributable to growth in net interest income as well as non-interest income.
Adjusted net interest income rose ArrayArray% year over year to C$5.05 billion ($3.68 billion). Further, adjusted non-interest income came in at C$3.52 billion ($2.57 billion), up Array5% year over year.
Adjusted non-interest expenses increased Array2% year over year to C$4.58 billion ($3.34 billion). Adjusted efficiency ratio stood at 53.5% at the quarter-end as against 53.8% on Jan 3Array, 20Array5. Fall in efficiency ratio indicates a rise in profitability.
Total provision for credit losses surged 77% year over year to C$642 million ($468 million).
Total assets grew 9% year over year to C$Array.Array7 trillion ($0.84 trillion) as of Jan 3Array, 20Array6. Return on common equity, as adjusted, came in at Array3.5% for the reported quarter, down from Array5.Array% as of Jan 3Array, 20Array5.
Dividend Increase
Concurrent with the results, TD Bank announced a quarterly dividend of 55 cents, which represented a hike of 8% from the prior payout. The dividend will be paid on and after Apr 30 to shareholders of record at the close of business on Apr 8.
Our Viewpoint
TD Bank’s efforts stay aligned with its organic and inorganic growth strategies, which will likely boost revenues going forward. Also, the company remains focused on improving its productivity, adapting and innovating with new initiatives and investments.
However, mounting expenses and a stringent regulatory environment continue to strain the company’s profitability. Moreover, volatile energy markets and a weaker Canadian dollar may further aggravate the situation.
TD Bank currently carries a Zacks Rank #3 (Hold).
Performance of Other Foreign Banks
Royal Bank of Canada RY reported fiscal first-quarter 20Array6 (ended Dec 3Array) net income of C$2.4 billion ($Array.8 billion), almost in line with the prior-year quarter.
Canadian Imperial Bank of Commerce CM reported fiscal first-quarter 20Array6 (ended Jan 3Array) adjusted earnings per share of C$2.55, up 8% year over year.
Moreover, HDFC Bank Ltd. HDB reported third-quarter fiscal 20Array6 earnings and recorded a net profit of INR33.57 billion ($0.5Array billion), up 20.Array% year over year.
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