25 May 2012

TD Q2 2012 Earnings

Scotia Capital, 25 May 2012

• TD's cash operating EPS was $1.82, a modest beat. Earnings increased 12% YOY, driven by exceptionally strong results from TDCT, strong Wealth & Insurance performance, and high security gains.

• Operating ROE: 16.6%, RRWA: 2.78%, CET1: 7.4%.


• Canadian P&C (TDCT) earnings increased 14% YOY, leading the bank group, driven by strong loan growth of 10%, with margins declining a modest 2 bps sequentially. U.S. P&C earnings were solid, up 13% YOY, with Wholesale solid, increasing 5% YOY due to strong investment banking revenues and solid trading revenue. Wealth & Insurance earnings increased 16% YOY, with Insurance strong.

• We are increasing slightly our 2012E EPS by $0.05 per share to $7.35 per share, with 2013E EPS unchanged at $8.00 per share. Our one-year target price is unchanged at $100


• Maintain 1-Sector Outperform rating based on a very high capital generation rate (RRWA), low balance sheet risk, low earnings volatility, and a strong competitive positioning.