TD Bank (TD CN) Canada
Report by Veritas Investment Research
Growth at any price? While the acquisition of First Horizon certainly makes strategic sense as it expands TD’s footprint into attractive Southeastern US markets, Nigel D’Souza questions whether it makes financial sense. TD’s purchase price represents an implied P/B multiple of 1.75x. Even after fully realising expected cost synergies (which won’t happen until FY25), FHN is expected to generate a return of ~10% on invested capital. By comparison, North American banks that generate a 10% ROE typically trade at a 1.0x P/B multiple.