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The Toronto-Dominion Bank TD

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Provisioning Wanes for Toronto Dominion as the Bank Books Gain From Ameritrade Sale to Schwab

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

Wide-moat rated Toronto Dominion reported decent fiscal fourth-quarter earnings. Adjusted earnings per share were CAD 1.60, beating S&P CapIQ consensus of CAD 1.28. Adjusted EPS were up 1% year over year as adjusted revenue increased 1%, adjusted expenses increased 3%, and provisioning retreated materially. There was a significant adjusting item during the quarter, a $2.3 billion after-tax gain on the bank’s investment in TD Ameritrade, largely due to a revaluation of the holding’s value after the Schwab acquisition. As a reminder, Charles Schwab has acquired TD Ameritrade and now Toronto Dominion (the bank) will have an ownership interest in Schwab and a renegotiated deposit sharing agreement with Schwab (with lower fees earned by TD on the sweep account balances compared with what was previously in place). The bank’s adjusted return on equity of 13.3% was right in the middle of peers. We don’t plan to make any material changes to our fair value estimate of CAD 79/USD 60 as we incorporate these results.

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Company Profile

Business Description

Toronto-Dominion is one of Canada's two largest banks and operates three business segments: Canadian retail banking, U.S. retail banking, and wholesale banking. The bank’s U.S. operations span from Maine to Florida, with a strong presence in the Northeast. It also has a 42% ownership stake in TD Ameritrade, a discount brokerage.

Contact
C/o General Counsel’s Office, P.O. Box 1, Toronto-Dominion Centre
Toronto, ON, M5K 1A2, Canada
T +1 416 308-6963
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Oct 31, 2020
Fiscal Year End Oct 31, 2020
Stock Type
Employees 89,598

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