Toronto-Dominion Earnings: Expense Pressure Likely to Continue Into 2024

Wide-moat-rated Toronto Dominion reported adjusted earnings per share of CAD 1.83, a 16% year-over-year decline and a sequential decrease of 8%. Beneath the messy results, outsize expense growth and the guidance for negative operating leverage in 2024 were the main negatives. Adjusted expenses came in 4% higher than a quarter ago, with additional restructuring charges of roughly CAD 363 million expected in the first quarter of 2024. It remains difficult to predict the future expense level over the short term, but as we factor in a mid-single-digit percentage core expense increase in 2024 and low-single-digit percentage increases thereafter, we don't think we're far off with our current projections. We may slightly increase our current expense projections, which may be a slight negative to our current fair value estimate of CAD 94/USD 69.