Toronto-Dominion Bank (NYSE:TD) delivered strong profits and a dividend hike to start Canada’s bank earnings season, but Dundee Securities analyst John Aiken found something else to be positive about in TD’s third-quarter report.
“TD announced that it had no U.S. subprime mortgage exposure,” Mr. Aiken points out. “Coupled with the strong quarter, we believe this is excellent news for the sector overall.”
TD’s disclosure likely means the overall exposure of Canadian banks to the U.S. subprime meltdown is lower than some had speculated, he said. “Consequently, we anticipate a strong day for TD and the other Canadian banks as well.”
TD’s net income for the quarter was C$1.1-billion compared to C$796-million last year, a jump of 38%. Diluted earnings per share before adjustments were C$1.51 compared to C$1.09 last year. The bank also increased its dividend by 7.5% or 4 cents to 57 cents a share.
Mr. Aiken has a “market outperform” rating on TD and a 12-month target price of C$78.
TD 1-yr chart: