Key Takeaways
- TD Bank shares fell Thursday morning after the bank reported a surprise loss for the third quarter of fiscal 2024.
- The net loss was driven by one-time expenses, including billions of dollars set aside for expected fines over investigations into its anti-money laundering practices.
- TD’s earnings also missed estimates after adjusting for one-time expenses.
TD Bank (TD) shares lost ground in early trading Thursday after reporting a surprise third-quarter loss, thanks to billions of dollars the company set aside in anticipation of fines over investigations into its anti-money laundering practices.
The Toronto-based bank reported higher total revenue than analysts had expected at 14.18 billion Canadian dollars ($10.44 billion), while the key banking metric of net interest income came in just under estimates at C$7.58 billion.
Anti-Money Laundering Probe Charges Drive Net Loss
The company posted a net loss of C$181 million, largely because of a C$2.6 billion charge related to the anti-money laundering probes, adding to the C$615 million charge that TD took in the second quarter. Regulators have been investigating whether the money laundering prevention practices of TD and other banks adequately prevented it from happening in the U.S.
TD CEO Bharat Masrani said Thursday that the bank “continues to work constructively” with regulators and law enforcement as the probe progresses. TD said the combined second and third-quarter charges reflect the bank’s current estimate of how much it will face in fines from the investigations.
After adjusting for the charge related to the money laundering probe and other one-time costs like restructuring expenses, TD reported adjusted net income of C$3.65 billion, narrowly below analyst estimates. TD’s Canadian operations and wholesale banking saw profits grow year-over-year, while the bank’s U.S. operations saw adjusted net income fall and wealth management income was roughly flat.
TD Cuts Schwab Stake
TD also trimmed its stake in Charles Schwab (SCHW) during the quarter, selling about 40.5 million shares to reduce its stake to 10.1% from 12.3% previously. The bank said it has “no current intention” to sell more shares. Schwab shares fell close to 2% in early trading Thursday.
TD Bank shares were 4% lower at $57.31 just after the opening bell. The stock has lost more than 11% of its value so far this year.