Analyst Note| Eric Compton, CFA |
Wide-moat-rated Toronto-Dominion reported adjusted EPS of CAD 1.96 for the fiscal third quarter, solid year-over-year growth compared with CAD 1.25 in the same period a year ago. Provisioning continues to be a major driver of improved year-over-year earnings, coming in at a net benefit of CAD 37 million this quarter, materially lower than the CAD 2.2 billion million charge the bank took in the third quarter of 2020. This aligns with our view that the Canadian banks will be fine from a credit perspective and that better results should be the norm going forward. We still expect the return of fee growth and much lower provisions to drive solid earnings growth for the rest of the year. We believe the bank still has room to release more reserves. We think commercial and card growth could start to improve in 2022, while less of a boost from lower provisioning should make for tougher comparisons.