Toronto-Dominion Bank's Earnings Growth in Canada May Slow, CEO Clark Says
Toronto-Dominion Bank, Canada’s second-largest lender by assets, may report slower earnings growth at its domestic banking unit after two consecutive record quarters, Chief Executive Officer Edmund Clark said.
“We think almost mathematically it has to slow down because we’ve been coming across such big increases,” Clark said yesterday in a telephone interview. “We’re still going to have solid growth in that area.”
Clark cited a slowdown in the housing market as one of the factors that could lead to smaller profit increases. The Toronto-based lender told investors yesterday it expects “strong but more moderate” growth for the second half of the year across all of its business segments.
“Yes, the rate of increase is slowing down, but there’s still tremendous volume momentum coming through the system,” said Clark, 62.
Toronto-Dominion reported yesterday profit at its Canadian consumer banking arm surged 29 percent to a record C$761 million ($726 million), bolstered by increases in real estate secured lending and deposits. Net income for the period ended April 30 more than doubled to C$1.18 billion, or C$1.30 a share. Profit before one-time items missed analysts’ estimates.
Profit in the U.S. climbed 55 percent to C$245 million in the second quarter, reflecting lower loan loss provisions and the integration of its Commerce Bancorp branches.
Clark said Toronto-Dominion will “pause” on future purchases after expanding in the U.S. Southeast this year. In April, it agreed to buy the assets of three U.S. banks to expand its branch network in Florida. Toronto-Dominion also agreed to buy Greenville, South Carolina-based South Financial Group Inc. for about $191.6 million in cash.
“I think for the next few months we’re kind of in pause mode,” Clark said. “We’ll see later in the fall what comes along.”
For the remainder of 2010, Toronto-Dominion will look at Federal Deposit Insurance Corp.-assisted deals or “small” transactions, Clark said.
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