Toronto-Dominion Bank exceeded expectations for profit in the last quarter despite the muted results in its main divisions. It also became the only major bank so far this profit season that did not raise its quarterly dividend.
TD said its net profit for the second fiscal quarter, which ended April 30, rose three percent year-over-year to $ 3.81 billion. On an adjusted basis, its earnings fell to $ 2.02 per share from $ 2.04 a year earlier. Analysts expected an average of $ 1.93 adjusted earnings per share. Overall credit quality has improved consistently as TD has set aside $ 27 million for loans that could deteriorate, compared to $ 72 million in the previous quarter.
Revenue and expenses at Canada’s Canadian retail unit rose nine percent year-over-year, while profit rose two percent to $ 2.24 billion. Lending activity increased during the quarter, with the total personal loan portfolio reaching an average of $ 402.7 billion, up from $ 373.3 billion a year earlier, while business loans jumped 16 percent to nearly $ 101 billion.
A number of disposable items affected the profits of TD’s retail banking department in the United States. On an adjusted basis, net profit in this business fell 10% year-over-year to $ 769 million. TD said the decline was due in part to a much more moderate exemption from loan loss provisions ($ 15 million compared to $ 173 million a year earlier).
TD is awaiting final regulatory approvals to continue the takeover of Memphis-based Tennessee-based First Horizon Corp for $ 13.4 billion. This deal was announced in February; at the time, TD said the deal would make it one of the top six banks in the United States thanks to the addition of 412 First Horizon branches and more than 1 million customers. He also said he hopes to close the deal in the first quarter of fiscal 2023, a period that ends on January 31, 2023.
Meanwhile, like many of its counterparts who announced earlier this week, TD’s wholesale banking division (which includes capital markets) has eroded profits as net profit fell six percent year-over-year to 359 million dollars.
“As we continue to emerge from the COVID-19 pandemic, we face new economic uncertainty and growing geopolitical tensions. “TD has proven its ability to adapt to changing circumstances and deliver results and progress,” said Bharat Masrani, TD’s president and CEO.
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