TD Quarterly Profit Climbs 38% on Improved Canadian Lending

Aug 28, 2014 7:38 am ET

(Updates with CFO comment in third paragraph, unit performance starting in fifth.)

Aug. 28 (Bloomberg) -- Toronto-Dominion Bank, Canada’s largest lender by assets, said third-quarter profit rose 38 percent on higher earnings from domestic consumer lending and investment banking.

Net income for the period ended July 31 climbed to a record C$2.11 billion ($1.9 billion), or C$1.11 a share, from C$1.52 billion, or 79 cents, a year earlier, the Toronto-based lender said today in a statement. Profit excluding some items was C$1.15 a share, beating the C$1.09 average estimate of 13 analysts surveyed by Bloomberg.

“We had very good credit quality across the board, our M&A activities have performed very well and we’ve seen good organic growth across our business,” Chief Financial Officer Colleen Johnston said in a telephone interview. “If you add those up, it’s combined to give us a great result.”

Toronto-Dominion’s December purchase of a C$3.3 billion Visa credit-card portfolio from Canadian Imperial Bank of Commerce helped lift consumer-lending earnings, while higher fees from advising companies on takeovers and arranging stock sales bolstered its TD Securities investment-banking business.

Revenue rose 6 percent to C$7.51 billion from a year earlier, the bank said. Toronto-Dominion set aside C$338 million for bad loans in the quarter, down from C$477 million a year earlier.

Retail Banking

Adjusted Canadian retail profit, which includes wealth management and insurance, increased 54 percent to C$1.44 billion, as Toronto-Dominion’s December purchase of a credit- card portfolio from CIBC added to earnings. CIBC sold half its Aerogold Visa receivables after loyalty-program company Aimia Inc. ended its 22-year exclusive partnership with the bank in August and chose Toronto-Dominion as its primary partner.

U.S. retail earnings, which include wealth management and the firm’s stake in discount brokerage TD Ameritrade Holding Corp., rose 9.4 percent to C$561 million, the bank said.

The lender’s wholesale unit profit jumped 46 percent to C$216 million from a year earlier on higher investment-banking fees and trading, according to the statement. Underwriting and advisory fees advanced to C$148 million from C$89 million. Trading income gained 14 percent to C$325 million.

Earlier today, CIBC posted a 4.9 percent increase in profit, beating analysts’ estimates, on gains in investment banking and wealth management. CIBC had third-quarter net income of C$921 million ($848.7 million), or C$2.26 a share, compared with C$878 million, or C$2.13, a year earlier, the Toronto-based bank said in a statement. Profit excluding some items was C$2.23 a share, beating the C$2.21 average estimate of 16 analysts surveyed by Bloomberg News.

Toronto-Dominion has gained 16 percent this year, the third-best performer in the eight-company Standard & Poor’s/TSX Commercial Banks Index, which has climbed 14 percent. CIBC has also climbed 16 percent this year.