Toronto Dominion Bank’s US operation is facing a jump in “past due” loans in the fourth quarter that could herald a rise in defaults in future quarters, says Brad Smith, an analyst at CI Capital Markets.
Of the major domestic banks, TD has the biggest operation south of the border.
Citing U.S. regulatory filings, Mr. Smith said in a note to clients that TD’s U.S. banking group had a US$326-million or 48% increase in loans that were 30 to 90 days in arrears compared to the previous quarter. Of particular concern, he said, was a 134% hike in past due loans secured by non-residential properties.
The bottom line is that if the trend continues, it will likely translate into “upward pressure on future provisioning levels,” Mr. Smith said.