Inside the Market’s roundup of some of today’s key analyst actions
“Our rationale: 1) the regulatory fine provision ‘clears the deck’ for potential CEO succession, which could include an external candidate; and 2) we expect street estimates to be cut closer to our 2025 ,” he said. “Despite the upgrade, we would still position TD in the bottom half of our bank pecking order, especially over the longer term, as TD’s relative growth may trail peers.”While he sees the US$3-billion in provisions against potential U.S. regulatory fines as a “clearing event”,Mr.
“Aside from penalties, the fallout from TD’s U.S. regulatory matters has put pressure on the bank’s cost base. Case in point, expenses have grown at 10 per cent year-to-date, outpacing guidance for mid-single-digit growth this year. Aside from Cowen expenses, this guidance included $500-million of after-tax compliance costs related to U.S. regulatory matters. The bank had not provided guidance for these costs for F2025.
“Earnings were a little noisy as weather-related claims impacted insurance earnings; otherwise, we see earnings power as closer to $2.16 per share all else equal, although expense creep seems to be an issue,” said Mr. Mihelic. “We see credit quality as stable. We model a US$1 billion AML-related provision in Q4/24, and a final resolution to its AML issues is close at hand. We do not anticipate a ‘hard’ asset cap for TD, but expect higher expenses and some growth challenges in the U.S.
“While our colleagues are now calling for a 10-year GCAN rate in the 2.60-2.75-per-cent range through 2025 on the back of another 175 basis points of expected overnight rate cuts, we highlight expectations of a more normalized 3.0-per-cent range by mid-2026. As such, we have lowered our long-term GCAN 10- year assumption embedded in our cost of capital assumptions across our coverage universe to 3.0 per cent .
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