TD’s response to questions on money laundering
Despite repeated questions from analysts, the bank didn’t provide any recent information, equivalent to timelines or expected penalties, regarding the many investigations underway against it within the US. Masrani said, nonetheless, that the bank is doing every thing it may well to assist bring the investigations to a conclusion.
TD’s earnings highlights
News from TD quarterly earnings conference call on Thursday, May twenty third.
- Toronto Dominion Bank (TD/TSX): Net income was $2.56 billion ($1.35 per diluted share), down from $3.31 billion, or $1.69 per diluted share, in the identical quarter last 12 months. Earnings per diluted share were $2.04, up from $1.91 last 12 months. Revenue was $13.82 billion, well above the typical analyst estimate of $1.85 per share.
“We have willingly shared all information available to us with the Department of Justice and other U.S. regulators, even when they identified our weaknesses,” he said.
Without the cash laundering problem, which the bank has already spent $500 million to resolve, the quarter would have been very different. The bank reported net income of $2.56 billion, or $1.35 per diluted share, for the quarter ended April 30, down from $3.31 billion, or $1.69 per diluted share, within the year-ago quarter.
Adjusted for costs and other outliers, TD earned $2.04 per diluted share. Last 12 months, adjusted earnings were $1.91 per diluted share.
The results, which were helped by a ten% increase in revenue to $13.82 billion, were well above the typical analyst estimate of $1.85 per share, in accordance with data provided by LSEG Data & Analysis.
Will it have an effect on business? Or will every thing be business as usual?
“A big hit with a big asterisk,” Scotiabank analyst Meny Grauman wrote in a note. He said the outcomes were mixed, with the success largely as a result of better-than-expected spending and lower taxes, while anti-money laundering issues proceed to loom large. While U.S. regulatory issues are a priority, the potential impact on business in its biggest growth market is a longer-term risk. Grauman said he hasn’t seen any signs of that in recent results. But the chance stays.
According to a report unchallenged by TD, the U.S. Department of Justice investigation is specializing in how Chinese drug traffickers allegedly used TD to launder a minimum of $653 million and bribed TD employees to accomplish that.
Given the severity of the allegations, total fines for the bank could easily reach $2 billion. In addition, TD may very well be subject to restrictions, including a limit on balance sheet growth, that might affect the bank’s operations for years, National Bank analyst Gabriel Dechaine said when the report emerged in early May.
The Globe and Mail reported late Wednesday that the bank also faces a request from Canadian banking regulators to repair its risk controls, leaving analysts wondering whether the bank is facing more global problems.
Masrani disagreed with the report, saying the bank is in constant dialogue with regulators. “It is unfortunate that the report contains inaccuracies and misrepresents our normal course of business and our usual interactions with Canadian regulators.”
