Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (36111)	2/7/2002 3:10:14 AM
From: Johnny Canuck	Read Replies (2) \| Respond to of 68358

TD ups loan-loss provisions on Argentina, telecom woes Financial Post - Wednesday February 6, 2002 By Keith Kalawsky Raised by $375M to $1.2B TD Bank Financial Group's exposure to Argentina and deadbeat telecommunications firms forced it to boost loan-loss provisions by as much as $375-million to $1.2-billion in fiscal 2002. TD tried to soften the blow of yesterday's bad news by forecasting first-quarter earnings that meet the expectations of most analysts. But some were surprised by the magnitude of TD's increase to already hefty loan-loss provisions. "TD guided, not that long ago, to a fairly big number, and now they're going way above that," said one analyst. TD, Canada's second-largest bank, now forecasts provisions ranging from $1.1-billion to $1.2-billion in fiscal 2002, a potential increase of 37% from its previous prediction of $835-million to $875-million. In November, TD said it expected only a 10% to 15% boost to provisions. TD expects provisions of $325-million in the first quarter of 2002, compared to previous expectations of $220-million. The $105-million increase represents about a 9¢ drag on earnings per share, after-tax. But TD still predicts cash operating earnings of 77¢ to 80¢ per share in the first quarter of 2002, close to the 79¢ average estimate of 11 analysts polled by First Call. In other words, TD has made up lost ground in other areas to offset rising provisions, at least in the first quarter. The higher provisions are being offset by "strong trading revenues and securities gains," wrote Ian de Verteuil, an analyst with BMO Nesbitt Burns, in a note yesterday. "While one may debate about the quality of some of these gains, it is still impressive that TD can earn through the higher provisioning." The market is hoping for "a big earnings lift" from discount brokerage TD Waterhouse, one analyst said. If the rebound is not large enough to counter the bank's credit woes, "I think everyone will re-evaluate what the bank can earn." Robert Wessel, an analyst with National Bank, dropped his full-year earnings estimate by 4% to $3.13, from $3.26. Only TD and Bank of Nova Scotia did not substantially hike provisions in the fourth quarter of 2001. "It's not really a surprise," said analyst Lidia Parfeniuk of Standard & Poor's in Toronto. "The increase		took in 2001 was not sufficient." "Certainly, Scotia is going to announce something for Argentina [in the first quarter]," one analyst said. "The question is going to be how much." TD will take a $40-million charge in the first quarter due to its exposure to Argentina. It has loaned US$76-million to several banks in the country and US$99-million to the commercial and industrial sectors. TD owns US$10-million in political risk insurance. Most of the loans are still performing, said chief financial officer Dan Marinangeli. TD will likely recover a large portion of its Argentine loans, said Heather Wolf, an analyst with Goldman Sachs & Co. "We believe the provision taken this quarter will be ample to cover losses ... and further provisioning for Argentina is unlikely." Provisions for TD's personal and commercial portfolio were $15-million higher than expected. TD has battled problems with processing loan collections, but expects to resolve those issues by the end of the second quarter. TD, a heavy lender to the ailing telco sector, is recovering a smaller than expected proportion of these impaired loans, leading to an additional $50-million charge in the first quarter. Overall, TD's loan book has not suffered gratuitous deterioration in recent months, Ms. Wolf said. "We do not believe that the drivers of this increase indicate more material credit deterioration in the company's core portfolio," she said. "We believe this guidance is materially more realistic than previous guidance." She raised her first-quarter earnings estimate to 77¢ a share, from 74¢.