TD Bank Sees 57% Decline In Q4 2023 Net Income, Raises Dividend To 6.3%

In the fourth quarter of 2023, TD Bank Group (TSX: TD) witnessed a decline in earnings compared to the previous year. The reported earnings saw a 57% decrease from the same period in the previous year, while adjusted earnings slipped by 14%.

“TD delivered strong revenue growth this quarter, reflecting positive underlying business momentum and the benefits of our diversified business model,” said Bharat Masrani, Group President and Chief Executive Officer, TD Bank Group.

Reported revenue ended at $13.12 billion, down from $15.56 billion while adjusted total revenue came in at $13.19 billion, up from last year’s $12.25 billion. However, TD Bank also disclosed that reported net income fell to $2.89 billion from last year’s $6.67 billion, and concurrently, adjusted net income amounted to $3.51 billion from last year’s $4.07 billion. 

This follows the falling trend in earnings with Q3 2023 seeing an 8% fall from the respective year ago period.

There was a notable decrease in reported diluting earnings per share (EPS) in Q4 2023, falling from $1.49 to $3.62. Similarly, the adjusted EPS stood at $1.83, down from the previous year’s $2.18 in Q4 2022.

Following the earnings release, TD Bank announced a quarterly dividend of $1.02 per share, reflecting a 6.3% increase from the previous dividend of $0.96. The dividend will be payable on January 31 for shareholders of record as of January 10, with an ex-dividend date of January 9.

Across the spectrum of personal and commercial banking, TD Bank experienced a 1% decline in net income in comparison to the corresponding period of the prior year. This dip in net income was attributed to increased provisions for credit losses, which saw a jump to $878 million from $617 million last year. 

In TD Bank’s US retail division, reported net income suffered a 17% decline year-over-year. This dip in income was primarily driven by the widely publicized collapse of the First Horizon Corporation merger. TD Bank’s investment in The Charles Schwab Corporation contributed $197 million in earnings, a decrease of 36% compared with the fourth quarter last year.

Notably, TD Bank observed significant growth in total average loan balances within its US retail division, with a notable increase of 10%. Within the wealth management and insurance division, the net income experienced a decline of 3% when compared to the same quarter of the previous year.

On a full year basis, total revenue came in at $50.49 billion, up from last year’s $49.03 billion. However, reported net income fell down to $10.78 billion from last year’s $17.43 billion, mainly due to jumps in provisions for credit losses and expenses.

In the fiscal year 2024, achieving the bank’s medium-term goals of a 7-10% growth range in adjusted EPS and a return on equity exceeding 16% presents challenges. Navigating a complex macroeconomic landscape, anticipated normalization in PCLs, and essential business investments contribute to the intricacies faced in meeting these targets.

“We enter 2024 from a position of strength, with proven resiliency, a powerful brand, and a strong capital position,” said Masrani. “I want to thank our more than 95,000 colleagues across the globe who bring TD’s purpose to life every day.”

And in terms of an economic outlook, TD Economics believes there is a chance for a quarter-point interest rate hike yet in early 2024, while the unemployment rate is expected to move higher in the coming months, with the risk of recession remaining elevated.

TD last traded at $83.30 on the TSX.


Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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