The Toronto-Dominion Bank
) reported its fiscal fourth quarter 2012 (ended Oct 31) adjusted
earnings per share of C$1.83, which compared favorably with the
year-ago earnings of C$1.77. Moreover, adjusted net income came
in at C$1.76 billion ($1.78 billion), up 6.1% from the year-ago
Improved results were driven by enhanced revenue as well as
strong assets and profitability ratio in the quarter. Yet,
elevated operating expenses were the primary headwinds.
On GAAP basis, net income for fiscal fourth quarter came in at
C$1.60 billion ($1.67 billion), marginally up by 0.5% on a
year-over-year basis. For fiscal 2012, net income on GAAP basis
stood at C$6.5 billion ($6.6 billion), up 7% from C$6.0 billion
($6.1 billion) in the prior-year quarter.
Behind the Headlines
In the reported quarter, Toronto-Dominion reported total revenue
of C$5.93 billion ($6.00 billion), up 5.3% year over year.
Operating revenue came in at C$5.89 billion ($5.96 billion), up
4.0% from the fiscal fourth quarter of 2011.
Adjusted net interest income grew 8.8% year over year to C$3.84
billion ($3.88 billion). While, adjusted non-interest income came
in at C$2.08 billion ($1.99 billion), dipping 0.5% year over
Adjusted non-interest expenses were C$3.49 billion ($3.18
billion), rising 4.5% year over year. Adjusted efficiency ratio
stood at 59.0% as against 55.4% as of Jul 31, 2012 and 59.4% as
of Oct 31, 2011.
Total provision for credit losses were C$511.0 million ($516.89
million), surging 50.3% from the comparable quarter last year.
Total assets came in at C$811.11 billion ($810.66 billion) as of
Oct 31, 2012, up 0.6% sequentially and 10.3% year over year.
Return on common equity, as adjusted, was 15.5% in the reported
quarter compared with16.4% in the prior quarter and 16.5% in the
Concurrent with the earnings release, Toronto-Dominion signed a
definitive agreement to acquire
Epoch Investment Partners, Inc.
), a fully owned subsidiary of Epoch Holding Corporation. The
transaction is anticipated to close in the first half of 2013.
Toronto-Dominion will pay roughly $668 million in cash for the
transaction. Further, upon closure, the acquisition is
anticipated to be accretive to the company's earnings in fiscal
2014 besides having a minimal impact on the earnings in fiscal
2013. Moreover, the company's Basel III Tier 1 common equity
ratio is expected to decline by around 24 basis points from 8.2%
as of Oct 31, 2012.
EPOCH HLDG CP (EPHC): Free Stock Analysis
ROYAL BANK CDA (RY): Free Stock Analysis
TORONTO DOM BNK (TD): Free Stock Analysis
To read this article on Zacks.com click here.
Concurrent with the earnings release, Toronto-Dominion declared
first-quarter dividend for the fiscal year 2013 of C$0.77 per
share. The dividend will be paid on January 31, 2013, to
shareholders of record at the close of business on January 4,
Royal Bank of Canada
) reported net income from continuing operations of C$1.9 billion
($1.9 billion) for fiscal fourth quarter 2012 (ended on Oct 31),
up 19% from C$1.6 billion ($1.6 billion) recorded in the year-ago
period. Results reflect a rise in revenue and improved capital
position. Moreover, lower interest expenses were a positive for
the quarter. Yet, the key negatives were deteriorating credit
quality and elevated non-interest expenses.
We expect Toronto-Dominion's acquisition activities to positively
impact its financials in the long run. Further, the company's
capital deployment activities are going to boost investors'
confidence in it. However, the persistently low interest rate
environment, weak economic recovery and stringent regulatory
requirements will remain a drag on its financials.
Toronto-Dominion currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.