CashNews.co
TORONTO — TD was an outlier during the banks’ fourth-quarter earnings season as other lenders released cautiously encouraging outlooks for the year ahead while the beleaguered bank suspended its guidance.
The bank said it was suspending financial targets for earnings, return on equity and positive leverage as it works through a wide-ranging strategic review ahead of leadership change next year.
“In my role as incoming CEO, we are undertaking a broad and detailed review of the bank strategies and investment priorities,” said chief operating officer Raymond Chun, who is set to replace Bharat Masrani in the top job in April.
“It’s my opportunity to dive deep and make sure that we’re putting TD in the best position possible,” Chun said on an earnings call Thursday.
The review comes as TD continues to grapple with the fallout from anti-money laundering deficiencies that saw it agree in October to pay fines totalling more than $4.23 billion to U.S. regulators, who also imposed an asset growth cap on its U.S. retail banking operations.
The bank said it will be challenging to generate earnings growth as it navigates its transition.
For TD’s peers, the tone was more upbeat but still cautious as CIBC, RBC and National Bank reported profits that beat analyst expectations and said there was more growth ahead as interest rates are expected to drop further.
Even BMO, which has been struggling with a pool of shaky loans, said it expects its provisions for credit losses to have peaked in the fourth quarter with improvements ahead.
Shares of BMO opened down more than four per cent as its earnings came in well below analyst expectations because of the spike in provisions, but shares gained after an earnings call where the bank said it was turning a corner.
The bank’s share price was also boosted by an announced share buyback of up to 20 million shares, and a four-cent dividend increase from the previous quarter to $1.59 per share.
“We’re net confident in the U.S. and otherwise, and that’s underpinned by the decisions we’ve made with respect to the dividend increase and normal course issuer bid,” said chief executive Darryl White.
CIBC showed even more faith in growth ahead as it reported results that were well ahead of expectations. The bank, which saw its provisions fall 23 per cent from last year, said it was boosting its dividend by eight per cent.
“This increase reinforces the confidence we have to deliver earnings growth,” said chief executive Victor Dodig on an earnings call.