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Measured Increase In Credit Loss Provisions For First Of Big Six Banks

CANADA
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  • TD kicked off Q2 earnings season for Canadian banks today, although the other main banks don’t follow until next week through May 28-30.
  • It beat estimates for adjusted EPS (C$2.04 vs est C$1.85) although as our credit team noted at the time, results are a headline miss due to higher exceptionals.
  • At the same time though, they also note credit stats are broadly stable and the rate of NPL formation is slowing.
  • From a macro perspective, the continued increase in provisions for credit losses shows monetary policy continuing to have an increasing impact but increases remain measured for now, something to be watched across other banks next week. (Provisions C$1.07bn vs est C$1.0bn, from C$1.00bn in Q1 and C$0.88bn in Q4; PCL ratio 47bps vs 44bps in Q4)

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  • TD kicked off Q2 earnings season for Canadian banks today, although the other main banks don’t follow until next week through May 28-30.
  • It beat estimates for adjusted EPS (C$2.04 vs est C$1.85) although as our credit team noted at the time, results are a headline miss due to higher exceptionals.
  • At the same time though, they also note credit stats are broadly stable and the rate of NPL formation is slowing.
  • From a macro perspective, the continued increase in provisions for credit losses shows monetary policy continuing to have an increasing impact but increases remain measured for now, something to be watched across other banks next week. (Provisions C$1.07bn vs est C$1.0bn, from C$1.00bn in Q1 and C$0.88bn in Q4; PCL ratio 47bps vs 44bps in Q4)