Written by SmallCapPower.com
TD Bank Group (NYSE:TD) (TSX:TD) is the sixth-largest bank in North America by branches and serves 25 million customers in three key business segments (Canadian Retail, U.S. Retail, and Wholesale Banking), operating in a number of locations in financial centers throughout the globe. TD Bank Group ranks among the world’s leading online financial services firms, with 11.5 million active online and mobile customers. TD Bank Group had $1.3 trillion (Canadian dollars) in assets on April 30, 2017. TD has reported consistent financial performance over the past several years and is expected to continue this track record going forward as North American economy shows signs of recovery.
Investment Thesis
Strong Revenue Growth
TD Bank Group has been consistently generating strong growth in revenues over the past several years. During the second quarter of FY 2017, the bank’s revenues grew 3% to reach $8.4 billion (Canadian dollars). The four revenue segments Canadian Retail, U.S. retail, Wholesale and Corporate contributed to the positive revenue growth. Looking at the strong performance in the first and second quarter it’s safe to assume a strong performance during the fiscal year. Additionally, the strengthening of the U.S economy and rising U.S. interest rates should help the Bank maintain healthy revenue growth going forward. TD’s revenue are comprised of 60-65% Canadian Retail, 25-30% U.S. Retail, and 10-15% Wholesale Banking.
Consistent Profitability
TD Bank’s earnings have grown at a robust CAGR of 8.4% during 2012-2016. TD Bank Group has reported strong earnings from all major operating segments. During the second quarter FY 2017, the Bank’s total earning were up 22% YoY to reach $2.5 billion.
