Investors dislike unexpected net losses, and an unforeseen quarterly shortfall caused TD Bank ‘s ( TD -2.19% ) The company’s stock took a hit on Thursday, with its share price dropping over 2% during late trading. This was a sharper decrease compared to the overall market’s 0.8% decline. S&P 500 simultaneously index.
Large reserves negatively impacted the net profit.
Toronto-Dominion released its financial results for the third quarter of the 2024 fiscal year on Thursday morning, prior to the stock market opening. During this period, the bank’s non- GAAP The adjusted revenue reached 14.2 billion Canadian dollars (equivalent to $10.4 billion), marking an increase from the 13.1 billion Canadian dollars ($9.6 billion) reported in the same quarter of 2023.
Nevertheless, there was a significant downturn in the financial results, and unfortunately, it was not positive. Toronto-Dominion reported a GAAP net loss of CA$181 million ($133 million), a sharp contrast to the previous year’s profit of CA$2.56 billion ($1.88 billion). This substantial change was primarily due to the CA$2.6 billion ($1.9 billion) the company allocated during the quarter for expected fines from the U.S. Department of Justice (DoJ). The federal body is conducting an investigation into the bank’s anti-money laundering (AML) practices.
When the Department of Justice-related provision and other one-off items are removed from the GAAP results, the adjusted net income remained profitable. It amounted to CA$3.6 billion ($2.6 billion), although this figure was essentially unchanged from the previous year.
Analysts monitoring Toronto-Dominion’s stock were generally predicting a total adjusted revenue of just over CA$13 billion (equivalent to $9.5 billion) and an adjusted net income per share of CA$2.07 ($1.52).
Top priority firmly established
The investors were taken aback by the net loss, which played a significant role in their unfavorable response. Additionally, being reminded of a high-level government inquiry into the company’s business practices is unsettling. In its earnings announcement, Toronto-Dominion emphasized that resolving this issue was a top priority and that they were allocating substantial resources to enhance the situation.
