Now is not an ideal time for a North American bank to whiff on its bottom-line estimate.
What happened
Investors remain nervous about bank stocks in the wake of high-profile lender failures this year. As a result, they can take even a mild earnings miss hard when a bank reports underwhelming quarterly figures. That was the case with Canada-based lender Toronto-Dominion Bank (TD -4.39%) on Thursday. The company’s stock closed more than 4% lower, on a day when the S&P 500 enjoyed a rise of almost 1%.
So what
For its fiscal second quarter of 2023, Toronto-Dominion’s total revenue came in at 12.54 billion Canadian dollars ($9.25 billion), according to non-GAAP (adjusted) standards. That was comfortably above the CA$11.26 billion ($8.31 billion) the bank earned in the same quarter last year. It also topped the average $12.38 billion ($9.13 billion) analyst estimate.
That was on the back of notable growth in total net loans, which rose by 11% year over year to hit nearly CA$850 million ($627 million). Growth in deposits was sluggish, however; it ticked up less than 1% to almost CA$1.19 billion ($878 million).
As for Toronto-Dominion’s profitability, it too rose marginally. Adjusted net income landed at CA$3.75 billion ($2.77 billion), or CA$1.94 ($1.43) per share, up from the year-ago quarter’s CA$3.71 billion ($2.74 billion). Those prognosticators were collectively expecting the bank to do much better and post a net income of CA$2.10 ($1.55) per share.
Now what
Concurrent with the earnings announcement, Toronto-Dominion declared a fresh quarterly dividend. This is to be CA$0.96 ($0.71) per share, and it will be paid on or after July 31 to investors of record as of July 10. It also launched a new stock repurchase program, under which it will buy up to 30 million of its common shares. The program will be in force for one year.
