James Wagner
Toronto-Dominion Bank (NYSE:TD) stock rose 1.6% in Thursday premarket trading after the Canadian banks with a strong U.S. presence posted better-than-expected fiscal Q2 earnings that reflected healthy gains in its Wealth Management & Insurance and Wholesale Banking businesses.
Fiscal Q2 adjusted EPS of C$2.04 (US$1.49), topping the C$1.84 Visible Alpha consensus, increased from C$2.00 in Q1 2024 and C$1.91 in Q2 2023.
"We delivered significant positive operating leverage while continuing to invest in our business, including our risk and control infrastructure," said Bharat Masrani, group president and CEO.
The risk and control infrastructure effort is important as the company is the focus of investigations into its anti-money laundering controls, an issue that derailed its acquisition of First Horizon (FHN) a year ago. Earlier this month, TD (TD) had announced taking an initial US$450M provision related to its talks with one of its U.S. regulators concerning investigations into its U.S. Bank Secrecy Act/anti-money laundering program.
Not included in the Q2 2024 adjusted figure was C$615M, or C$0.35 per share, for money set aside for the anti-money laundering program investigations; C$274M, or C$0.11 per share, for civil matters and litigation settlement expenses; and C$103M, or C$0.04 per share, for FDIC special assessment, among other adjustments.
Total revenue of C$13.8B for the quarter ended April 30, 2024, exceeded the Visible Alpha consensus of C$13.5B and rose from C$13.7B in the previous quarter and C$12.4B in the year-ago period.
Net interest income of C$7.47B declined from C$7.49B in Q1 and increased from C$7.43B in Q2 2023.
Noninterest income of C$6.35B climbed from C$6.23B in the previous quarter and C$4.97B in the year-ago period.
TD Bank's (TD) adjusted noninterest expenses were C$7.08B compared with C$7.13B in Q1 and C$6.46B in Q2 2023.
Provision for credit losses grew to C$1.07B from C$1.00B in the prior quarter and C$599M a year ago.
Total loans, net of allowance for losses, rose to C$928.1B from C$904.3B at Jan. 31, 2024. Total deposits increased to C$1.20T at April 30, 2024, vs. C$1.18T at Jan. 31.
Adjusted return on common equity was 14.5% vs. 14.1% in Q1 and 14.0% in Q2 2023.
Canadian Personal & Commercial Banking net income of C$1.74B fell 3% Q/Q and rose 7% Y/Y. Revenue of C$4.84B slipped 1% Q/Q and increased 10% Y/Y; with Y/Y growth reflecting volume growth and higher margins.
U.S. Retail adjusted net income, including TD's investment in Charles Schwab (SCHW) was C$1.27B, rose 5% Q/Q and fell 16% Y/Y. Net interest margin of 2.99% fell 4 basis points from Q1 due to its balance sheet mix and higher funding costs.
Wealth Management & Insurance net income of C$621M climbed 12% Q/Q and 19% Y/Y; revenue of C$3.11B rose 11% Y/Y due to higher insurance premiums and fee income in wealth. AUM increased 6% Y/Y, helped by market appreciation.
Wholesale Banking, reflecting the inclusion of TD Cowen, had Q2 revenue of C$1.94B, up 9% Q/Q and 37% Y/Y, due to higher trading-related revenue, underwriting fees, and lending revenue. Adjusted net income of C$441M jumped 48% Q/Q and 107% Y/Y.
Conference call at 8:00 AM ET.
Earlier, TD Bank non-GAAP EPS of C$2.04, revenue of C$13.82B