TD Suspends Growth Guidance in Wake of Historic US Settlement
(Bloomberg) — Toronto-Dominion Bank suspended its medium-term financial targets amid a review of company strategy as the incoming chief executive officer seeks to move the lender past a historic money-laundering settlement with US authorities.
Most Read from Bloomberg
Canada’s No. 2 bank is “is currently undertaking a strategic review of organic opportunities and priorities, productivity and efficiency initiatives, and capital allocation alternatives,” it said in a statement Thursday. During the review, Toronto-Dominion is suspending medium-term financial targets for earnings growth, return on equity and operating leverage.
The company has been operating under the overhang of sweeping US investigations for well over a year, and finally resolved those cases in October after pleading guilty to failing to prevent money laundering by drug cartels and other criminals. It also agreed to pay almost $3.1 billion in fines and other penalties and faces a cap on its American assets.
Toronto-Dominion earned C$1.72 per share on an adjusted basis in its fiscal fourth quarter, according to the statement, missing the C$1.83 average estimate of analysts in a Bloomberg survey.
Net income at the company’s US retail unit totaled C$863 million ($614 million) for the three months through October, down 32% and less than analysts expected, during what the bank called a “challenging quarter” for the business.
‘Irrelevant’ Results
“TD’s earnings in the fourth quarter were irrelevant to its outlook,” Jefferies Financial Group Inc. analyst John Aiken said in a note to clients, pointing to Toronto-Dominion comments that “it will be challenging to generate earnings growth” in fiscal 2025. “We do not believe that the fourth quarter will provide any valuation relief and investors will need to be patient for a catalyst to release the pent-up value in TD.”
The bank is in the midst of reducing its US assets by 10% to remain in compliance with the American asset cap and said reported net income in the US retail division includes the impact of that balance-sheet restructuring. Expenses in the US division were up on charges related to the money-laundering resolution.
In the firm’s capital-markets division, adjusted net income totaled C$299 million, missing the C$379 million average of analysts’ estimates. But that was up 68% from a year earlier, when it had higher expenses related to its integration of US investment bank Cowen Inc.
Source link