Toronto-Dominion Bank T.TD

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Toronto Dominion(TD-T)

13/02/2024

 

They face regulatory challenges in the U.S. over money-laundering allegations. TD is spending on compliance and regulatory in response. A year from now, these expenses will be behind them and the stock will catch up to its peers.

(Analysts’ price target is $88.30)

banks

 

$78.770

Owned

TD BANK (TD TSX)

The fundamentals of the Canadian banking sector are finally starting to look a bit better. Based on their latest quarter, margins are stabilizing and modest expansion is anticipated this year as the banks are expected to achieve higher reinvestment yields on securities investments that are maturing or rolling off at previously lower rates. Their funding mix is starting to stabilize as the fleeing of deposits from low-interest rate accounts is abating, and they're originating new business taking into consideration today's higher rates, while giving themselves increased profit margins. Also, every bank has recorded restructuring charges in the last quarter, which for the banks, is their last quarter of the fiscal year. So they like to write off whatever they can in the last quarter to set the stage for a better new fiscal year, but the only bank that didn't do this is TD Bank. They recorded charges, but they're the only bank that also said they expect to record charges in the current year to beef up their risk management and AML controls in their U.S. operations. So TD didn't enjoy a pop in share price like the other banks following their results, but by 12 months from now, these additional charges ought to be in the rearview mirror allowing TD's stock to rise more like its peers.