As shares of TD Bank (TD.TO) remain lower in the wake of a CBC report alleging suspect employee sales practices, some investors are taking the dip as an opportunity to get into the stock.
First Avenue Management Senior Vice-President and Portfolio Manager Kash Pashootan told BNN on Tuesday that TD’s current situation presents a unique buying opportunity.
Pashootan said getting past these allegations starts with a change in how some investors view Canadian banks.
“I think for a long period of time many have had the expectation that banks are our friends,” Pashootan said. “They’re not our friends. They’re not our enemies. They’re a profit engine and a profit unit and they’re there to do just that.”
Friday’s CBC report cited anonymous sources alleging TD employees had engaged in activities such as hiking credit card limits, raising overdraft limits and moving clients to higher-fee accounts, all without customer permission. The share price plunged as a result, as Friday’s 5.55 per cent drop marked the bank’s largest single day decline since the depths of the global financial crisis: Apr. 20, 2009.
TD shares have recovered modestly from the decline, but remained nearly five per cent lower at $66.53, as of 2 p.m. ET Tuesday.
Still, Pashootan said investors should not be surprised by the allegations.
“I’m not in the slightest worried about these allegations, partly because – to be frank with you – it’s not that much of a surprise. I think some of the allegations are probably stretched – It’s too early to say, we will see – but let’s not forget banks are profit engines,” he said.
“They are there to generate a return and they’re going to do whatever they can to upsell the client on products and services in the same way that if you go to a restaurant a waiter or the waitress upsells you on the wine that you get. It’s no different.”
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