The Toronto-Dominion Bank
(
TD
) reported its fiscal third quarter 2012 (ended July 31, 2012)
adjusted earnings per share of C$1.91, which compares favorably
with the prior quarter earnings of C$1.82 as well as the year-ago
earnings of C$1.75. Adjusted net income came in at C$1.82 billion
($1.79 billion) up 4.8% from the previous quarter and 11.3% year
over year.
Better-than-expected results were driven by enhanced net interest
revenue and non-interest income. The total assets and profitability
ratio also remained strong in the quarter. However, elevated
operating expenses were the primary headwinds.
On GAAP basis, net income came in at C$1.70 billion ($1.67
billion), up 0.6 sequentially and 14.3% on a year-over-year basis.
Behind the Headlines
Toronto-Dominion reported adjusted revenue of C$5.84 billion ($5.74
billion), up 1.0% from the prior quarter and 8.3% year over year.
Operating revenue came in at C$5.84 billion ($5.74 billion), up
1.6% from the last quarter and 8.5% year over year.
For the reported quarter, adjusted net interest income grew 3.1%
sequentially and 8.6% year over year to C$3.82 billion ($3.75
billion). Adjusted non-interest revenue came in at C$2.02 billion
($1.99 billion), declining 2.7% from the previous quarter but up
7.6% year over year.
Adjusted non-interest expenses were C$3.23 billion ($3.18 billion),
falling 1.4% from the prior quarter but surging 7.4% year over
year. Adjusted efficiency ratio stood at 55.4% as against 56.8% as
of April 30, 2012 and 55.8% as of July 31, 2011.
Total provision for credit losses were C$479.0 million ($471.05
million), up 2.4% from the last quarter and 26.0% from the
comparable quarter last year.
Total assets came in at C$806.28 billion ($792.62 billion) as of
July 31, 2012, jumping 4.3% from C$773.19 billion ($760.36) as of
April 30, 2012 and 13.0% from C$713.64 billion as of July 31,
2011. Return on common equity, as adjusted, was 16.4% in the
reported quarter as against 16.6% in the prior quarter and 17.7% in
the year-ago period.
Dividend
Concurrent with the earnings release, Toronto-Dominion declared
fourth-quarter dividend of C$0.77 per share. This represents a 6.9%
hike from the third quarter dividend.
Peer Performance
Bank of Montreal
(
BMO
) reported its third-quarter 2012 adjusted earnings per share of
C$1.49, which compares favorably with the previous-quarter earnings
of C$1.44 and the year-ago earnings of C$1.34. The improvement in
results came on the back of enhanced net interest revenue and
non-interest income.
The total assets and capital ratios also remained strong in the
quarter. However, increased operating expenses were the primary
headwinds.
Our Viewpoin
t
We expect Toronto-Dominion's acquisition activities to
positively impact its financials in the long run. Further,
investors' confidence is expected to be boosted since the company
has announced a dividend hike. However, a persistent low interest
rate environment, weak economic recovery and stringent regulatory
requirements will remain a drag on its financials.
Toronto-Dominion currently retains a Zacks #2 Rank, which
translates into a short-term Buy rating.
BANK MONTREAL (BMO): Free Stock Analysis Report
TORONTO DOM BNK (TD): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research