Toronto-Dominion Bank’s TD second-quarter fiscal 2021 (ended Apr 30) adjusted net income of C$3.78 billion ($3.00 billion) increased significantly from the prior-year quarter.
Results were aided by a rise in non-interest income. Also, the company recorded a recovery of credit losses in the reported quarter, which was a major positive. However, a decline in net interest income (NII) and higher expenses were the undermining factors. Probably because of the negatives, shares of the company fell 1.7% on the NYSE, following the release late last week.
After considering non-recurring items, net income was C$3.70 billion ($2.94 billion), increasing significantly year over year.
Adjusted Revenues Decline, Expenses Rise
Total revenues amounted to C$10.23 billion ($8.13 billion), down 2.8% on a year-over-year basis.
NII declined 5.9% year over year to C$5.84 billion ($4.64 billion). However, non-interest income was C$4.39 billion ($3.49 billion), up 1.5% from the prior-year quarter.
Non-interest expenses increased 12.7% year over year to C$5.69 billion ($4.52 billion).
Efficiency ratio was 55.6% as of Apr 30, 2021, up from 48.0% as of Apr 30, 2020. A rise in the efficiency ratio indicates a fall in profitability.
In the reported quarter, the company recorded a recovery of credit losses of C$377 million ($299.4 million) against a provision recorded in the year-ago quarter.
Balance Sheet Strong, Capital & Profitability Ratios Improve
Total assets were C$1.67 trillion ($1.36 trillion) as of Apr 30, 2021, down 3.8% from the end of the first quarter of fiscal 2021. Net loans increased marginally on a sequential basis to C$708.4 billion ($576.7 billion) but deposits declined 1.8% to C$1.12 trillion ($0.91 trillion).
As of Apr 30, 2021, common equity Tier I capital ratio was 14.2%, up from 11.0% on Apr 30, 2020. Total capital ratio was 18.0% compared with the prior year’s 15.3%.
Return on common equity (on an adjusted basis) was 17.1%, up from 7.3% as of Apr 30, 2020.
Our Viewpoint
Supported by a diverse geographical presence, Toronto-Dominion’s efforts toward improving revenues — both organically and inorganically — seem decent. However, rising expenses might hurt the company’s profitability to some extent.
Toronto Dominion Bank (NYSE:TD) The Price, Consensus and EPS Surprise
Toronto Dominion Bank The price-consensus-eps-surprise-chart | Toronto Dominion Bank The Quote
Toronto-Dominion currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Barclays (LON:BARC) BCS reported first-quarter 2021 (ended Mar 31) net income attributable to ordinary equity holders of £1.70 billion ($2.34 billion), up significantly from the prior-year quarter.
UBS Group AG (SIX:UBSG) UBS reported first-quarter 2021 net profit attributable to shareholders of $1.82 billion, up 14% from $1.60 million in the prior-year quarter.
HSBC Holdings (NYSE:HSBC) HSBC reported first-quarter 2021 pre-tax profit of $5.8 billion, up 79% from the prior-year quarter.
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