TD Bank Q1 Earnings Preview: What to Expect

Toronto-Dominion Bank (TSE: TD)(NYSE: TD), Canada’s largest bank by assets, will report Q1 2022 earnings on March 3 before the opening bell.

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Stock Performance

Year-to-date, the bank stock has jumped by nearly 9% and is currently trading close to C$102.

Analyst Estimates

Analysts on average expect TD to post adjusted earnings of C$2.04 per share in Q1 2022, representing a growth of 11.5% from the prior-year quarter (C$1.83 per share).

The estimated revenue is C$10.84 billion, slightly higher than the revenue reported in the first quarter of 2021 (C$10.81 billion).

Points to Watch

Canadian banks posted record profits throughout the pandemic as strong mortgage, trading and transaction activity helped offset an evaporation in demand for other types of credit.

With the end of restrictions and accommodative government and central bank policies, earnings drivers are also starting to change.

“Mortgage growth will continue to be strong, it’s no surprise,” said Rob Colangelo, vice president and senior credit manager at Moody’s Investors Service. “But other types of loans, credit cards, auto loans, there’s a return to growth there.”

Colangelo added that provisions for credit losses are also expected to continue to decline as banks continue to release capital they had set aside in anticipation of bad loans that failed to materialize.

Soaring inflation and planned business investment could also exacerbate cost pressures for TD.

Wall Street’s Take

Last week, National Bank Financial analyst Gabriel Dechaine maintained a Buy rating on TD and raised its price target to C$108 (from C$106). This implies 6.1% upside potential.

Overall, TD scores a Moderate Buy rating among Wall Street analysts based on five Buys, six Holds and one Sell. The average Toronto-Dominion Bank price target of C$109.65 implies 7.7% upside potential to current levels.

TipRanks’ Smart Score

TD scores a 5 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns should be in line with the overall market.

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