TD Bank Beats Q2 Estimates as Canadian Unit Helps Offset US Weakness

Toronto-Dominion Bank (TD) reported second-quarter fiscal 2024 results Thursday, surpassing analyst estimates as the bank kicks off a run of Canadian bank earnings over the rest of the month.

TD Bank reported revenue that exceeded expectations, but its reported net income fell short thanks to over 1 billion Canadian dollars in one-time charges like restructuring and provisions for ongoing investigations into the bank’s anti-money laundering (AML) practices.

Revenue grew by more than 11% year-over-year to C$13.82 billion ($10.11 billion), above analyst expectations of C$13.53 billion, according to estimates compiled by Visible Alpha.

However, net income of C$2.56 billion, or C$1.35 per share, came in below the C$3.02 billion and C$1.57 per share analysts were expecting. The bank missed estimates due to a number of one-time charges related to various legal and restructuring costs.

After adjusting for the costs, TD’s profit of C$3.79 billion, or C$2.04 per share, surpassed the C$3.45 billion and C$1.84 per share analysts expected.

Earnings from TD’s operations in its home country and the bank’s wealth management division grew 7% year-over-year to C$1.74 billion and 19% to C$621 million, respectively, helping offset a 59% decrease to C$580 million in earnings from its U.S. operations. The U.S. decline was largely driven by the one-time charges related to the AML investigation, but income still fell 16% to C$1.27 billion after adjusting for the charges as revenue fell and provisions for credit losses (PCL) rose.

TD also announced its quarterly dividend Thursday morning, with C$1.02 per share set to be paid on July 31 to shareholders of record at market close July 10.

Updates on US Regulators’ Probe Into AML Practices

The largest one-time charge was C$615 million related to investigations by U.S. regulators and law enforcement into whether the AML policies of TD and other banks failed to prevent money laundering in a number of instances across the U.S.

TD had previously disclosed that it was one of the banks being investigated, but a Wall Street Journal report earlier this month revealed that some of the money that may have been laundered was related to illegal drug sales in the U.S.

“The Bank has been cooperating with U.S. regulators and authorities in good faith for many months and is working diligently to bring these investigations to resolution so that investors can have more clarity,” the company said. “A comprehensive overhaul of TD’s U.S. AML program is well underway, and will strengthen our program globally.”

TD shares on the New York Stock Exchange (NYSE) rose by about 2.5% to $57.50 about an hour before the opening bell Thursday, but are still down about 11% so far this year.