TD Securities, 7 August 2009
Impact – Neutral; Target Increases on Roll forward a Quarter
EPS ex an unusual item was $0.47 vs. our $0.50 estimate and consensus of $0.49. On a normalized basis (see Exhibit 1) we derive EPS of $0.57 vs. our $0.58 estimate. The focus going into Q2/09 was twofold: (1) credit, which was slightly worse than we expected; and (2) Putnam, which had another challenging quarter, but this was expected, and management indicated it’s close to being net flow positive. Our target price increases to $28 from $26, as we roll forward one quarter. We still have concerns with its credit exposure to U.K. banks, and Putnam, but we believe both are manageable.
EPS as Reported was impacted by a few macro themes (see Exhibit 1):
• Equity: -$0.07 from lower fee income, -$0.01 from higher reserves.
• Credit: less than -$0.01 from impairments, -$0.27 from increased provisions for future credit losses in actuarial liabilities.
• Other: +$0.21 from a release of excess interest rate mismatch reserves.
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Impact – Neutral; Target Increases on Roll forward a Quarter
EPS ex an unusual item was $0.47 vs. our $0.50 estimate and consensus of $0.49. On a normalized basis (see Exhibit 1) we derive EPS of $0.57 vs. our $0.58 estimate. The focus going into Q2/09 was twofold: (1) credit, which was slightly worse than we expected; and (2) Putnam, which had another challenging quarter, but this was expected, and management indicated it’s close to being net flow positive. Our target price increases to $28 from $26, as we roll forward one quarter. We still have concerns with its credit exposure to U.K. banks, and Putnam, but we believe both are manageable.
EPS as Reported was impacted by a few macro themes (see Exhibit 1):
• Equity: -$0.07 from lower fee income, -$0.01 from higher reserves.
• Credit: less than -$0.01 from impairments, -$0.27 from increased provisions for future credit losses in actuarial liabilities.
• Other: +$0.21 from a release of excess interest rate mismatch reserves.
