TDB reports 10% profit increase in Q1

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TD Bank joined its Big Six peers in beating first-quarter earnings expectations Thursday despite profit erosion in its U.S. banking division.

Net income for the three-month period ending Jan. 31, representing the bank’s fiscal first quarter, rose 10 per cent year-over-year to $3.28 billion. On an adjusted basis, TD earned $1.83 per share; analysts were expecting $1.49 on average.

TD’s Canadian retail banking operations led the way, as profit climbed 14 per cent year-over-year to $2.04 billion as revenue inched higher and loan loss provisions fell.

Similar to its peers, TD benefited in the latest quarter from significantly improved credit as it set aside $313 million in total for loans that could go bad, compared to $917 million in the previous quarter and $919 million a year earlier.

The bank’s large-scale operations south of the border were a drag on profit in the first quarter. Indeed, total net income in the division fell 13 per cent year-over-year to US$776 million. Stripping out its stake in The Charles Schwab Corp., TD’s U.S. retail banking profit slid 16 per cent to US$615 million.

“We believe it was a lower quality earnings-per-share beat overall for TD at first look relative to what we’ve seen with the bank’s peers this quarter given the much higher dependence on [provisions for credit losses] to drive that outperformance. Most concerning in our view was the sequential margin compression on both sides of the border, particularly U.S. retail,” wrote Credit Suisse Analyst Mike Rizvanonic in a report to clients Thursday.

TD’s capital markets activity helped mitigate that weakness in the U.S. as net income in the bank’s so-called wholesale unit surged almost 56 per year year-over-year to $437 million.

“TD reported strong results in the first quarter, benefiting from our diver

 

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