“Structurally Reducing Costs”: TD Bank Stock (TSE:TD) Jumps as Bank Plans 2% Layoff

Layoffs often prove welcome news for stockholders, who appreciate the reduction in costs and the dedication to making the “tough calls” that will ruin people’s lives for a while. And it was no different for Canadian bank stock TD Bank (TSE:TD), who brought out an earnings report and then proceeded to let 2% of its workforce know it was not likely to have a job soon. The development proved welcome for investors, who sent shares surging over 3% in Thursday morning’s trading.

Interestingly, TD Bank also rolled out an earnings report, noting that it had brought in record revenue from its capital markets and investment banking business, which posted C$2.13 billion by itself. That was fully 10% better than the same time a year prior, thanks in large part to growth in trading fees and underwriting fees, as well as the sale of its stake in Charles Schwab (SCHW). Earnings, meanwhile, came in at C$1.97 per share against projections looking for C$1.76 per share.

Despite these wins, TD Bank still planned to lay off 2,000 employees as part of a “restructuring program” geared to save around C$650 million annually. It also will be shutting down its point of sale financing operations in the United States, and, reports note, quite a few branches as well.

Extensive Pruning

Three months ago, we got word that TD Bank was looking to keep bank tellers in play. But what a difference a quarter makes, as now, we find that TD Bank is about to throw out bank tellers, along with entire bank branches, particularly in the United States. New reports suggest that TD Bank will be closing 38 different branches in 10 states in the United States, as well as the District of Columbia.

This particular move is reflective of, TD Bank notes, “evolving customer behavior,” which is generally understood to mean “we have apps now, so why should we pay tellers?”. As for the planned closures, two banks in Connecticut are on the block, and one in D.C. Three in Florida are set to go, four in Maine, six in Massachusetts, four in New Hampshire, six in New Jersey, five in New York, three in Pennsylvania, two in South Carolina and two in Virginia.

Is TD a Buy or Sell?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:TD stock based on five Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 18.95% rally in its share price over the past year, the average TSE:TD price target of C$91.44 per share implies 1.48% downside risk. .

See more TSE:TD analyst ratings

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