Banks are generally investors, too, and Toronto Dominion Bank (TSE:TD) has invested in various sectors, with fossil fuels being high on that list. Yet this revelation isn’t hurting it much with investors, as TD Bank shares are up modestly in Wednesday morning’s trading.
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A recent report from Investors for Paris Compliance, an activist group, noted that TD Bank holds about three out of every four dollars’ worth of investment in oil and gas assets in Canada among the seven largest Canadian property and casualty insurance operations. Notably, these firms have a combined total of around $19.5 billion in that market.
This, in turn, has prompted Investors for Paris to note that the market is in a “contradiction,” in which “…their business faces an existential threat due to climate change via higher claims and growing uninsurability, (but) they continue to foster those risks via underwriting and investing in fossil fuels.” And with a growing number of natural disasters involved—which some blame on climate issues—that poses significant potential trouble for insurers and banks.
Internal Issues
While this poses a potentially unpleasant issue for TD Bank, there are perhaps more immediate concerns than climate change to consider. For instance, TD Bank is facing issues of compliance with regulators, and it’s just replaced its chief compliance officer. Monica Kowal left her position without providing a reason for the departure. It’s also unclear how connected this is to TD Bank’s earlier efforts to reform its anti-money laundering systems.
However, on the plus side, a recent TD Bank survey found that homeowners are still feeling optimistic about taking out those hefty loans to buy a house. While the market is “challenging,” nearly every age cohort believed, in at least 60% of cases, that home purchases are still “attainable.” Only boomers weren’t quite so optimistic, with 59% believing that.
Is TD Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TD stock based on six Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 3.18% loss in its share price over the past year, the average TD price target of C$90.68 per share implies 19.21% upside potential.
