TD Bank Q1 Earnings Reflect Assets Growth, ADRs Gain - Analyst Blog
ADRs of The Toronto-Dominion Bank TD, also known as TD Bank, have gained nearly 1% since the bank reported its fiscal first-quarter 2015 (ended Jan 31) earnings last Thursday before the opening bell. Adjusted earnings of C$1.12 per share compared favorably with C$1.06 earned in the prior-year quarter. Moreover, adjusted net income came in at C$2.12 billion ($1.82 billion), up 4.9% year over year.
Results benefited from steady improvement in top line and lower provisions. However, weak expense management continued to weigh on the results. Profitability ratios showed weakness. Growth in assets continued to be impressive.
After considering certain non-recurring items, net income summed C$2.06 billion ($1.77 billion), up 1% year over year.
Quarterly Highlights
Total revenue (on an adjusted basis) amounted to C$7.61 billion ($6.55 billion), up 4.1% on a year-over-year basis. The rise was driven by growth in net interest income as well as non-interest income.
Adjusted net interest income rose 6.0% year over year to C$4.56 billion ($3.92 billion). Moreover, adjusted non-interest income came in at C$3.05 billion ($2.62 billion), up 1.4% from the year-ago quarter.
Adjusted non-interest expenses climbed 6.5% year over year to C$4.09 billion ($3.52 billion). Adjusted efficiency ratio stood at 42.6% at the quarter-end compared to 41.8% as of Jan 31, 2014. Rise in efficiency ratio indicates a fall in profitability.
Total provision for credit losses fell 20.6% year over year to C$362 million ($311 million).
Total assets grew 17.4% year over year to C$1.08 trillion ($0.853 trillion) as of Jan 31, 2015. Return on common equity, as adjusted, came in at 15.1% in the reported quarter, down from 16.2% as of Jan 31, 2014.
Our Viewpoint
TD Bank’s focus and efforts stay aligned with its organic and inorganic growth strategies, which are expected to boost revenue generation going forward. Also, the bank’s steady capital deployment activities will assist it in gaining investors’ confidence.
However, mounting expenses and a stringent regulatory environment continue to strain the profitability. Moreover, the uncertain interest rate environment, volatile energy markets and the weaker Canadian dollar may further aggravate the troubles.
TD Bank currently carries a Zacks Rank #4 (Sell).
Other Foreign Banks
Among other foreign banks, Royal Bank of Canada RY reported strong fiscal first-quarter 2015 (ended Jan 31) net income of C$2.5 billion ($2.1 billion), increasing 17% year over year.
Canadian Imperial Bank of Commerce CM reported fiscal first-quarter 2015 (ended Jan 31) adjusted earnings per share of C$2.36, up 2.2% year over year.
Moreover, HDFC Bank Ltd. HDB reported third-quarter fiscal 2015 earnings and recorded a net profit of INR27.95 billion ($0.45 billion), up 20.2% year over year.
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