Toronto-Dominion Tops Estimates as Trading Revenue Swells

Toronto-Dominion Bank (TD), Canada’s largest lender by assets, reported record quarterly profit that topped analysts’ estimates after trading revenue surged. The lender raised its dividend 9.3 percent.

Net income for the first quarter ended Jan. 31 advanced 14 percent to C$2.04 billion ($1.83 billion), or C$1.07 a share, from C$1.78 billion, or 93 cents, a year earlier, the Toronto-based lender said today in a statement. Revenue jumped 15 percent to C$7.57 billion. The bank boosted its quarterly dividend to 47 cents from 43 cents.

The profit gains were led by a 44 percent increase in its wholesale banking business, fueled by higher trading revenue. Retail banking earnings in Canada and the U.S. were also higher, as contributions from acquisitions including Target Corp.’s U.S. credit-card portfolio and New York-based money manager Epoch Holding Corp. added to results.

“It was really a great start to the year,” Chief Financial Officer Colleen Johnston, 55, said today in a phone interview. “All of our businesses had a great first quarter, and our Canadian retail bank was up 5 percent, despite a weaker insurance quarter.”

Toronto-Dominion said it earned C$1.06 a share after excluding some items, beating the C$1.04 average estimate of 10 analysts surveyed by Bloomberg.

The bank set aside C$456 million for bad loans in the quarter, up from C$385 million a year earlier, the company said.

Retail Units

Canadian retail banking, which now includes wealth management and insurance, rose 5 percent to C$1.34 billion from the year-earlier period. U.S. banking profits, which includes wealth management and the firm’s stake in TD Ameritrade Holding Corp., a discount brokerage, surged 16 percent to C$492 million on a Canadian dollar basis.

“Currency was helpful and we expect it to continue to be helpful based on the weaker Canadian dollar,” Johnston said. “But if you look purely at the operating earnings in U.S. dollars they were up about 5 percent.”

The Canadian dollar has dropped 7.9 percent against its U.S. counterpart over the past 12 months.

Earnings at Toronto-Dominion’s wholesale banking unit jumped to C$230 million from C$160 million. Trading surged 40 percent to C$408 million from a year earlier, while underwriting and advisory fees were unchanged at C$99 million from the year-earlier period.

Toronto-Dominion shares have climbed 18 percent in the past year, outpacing the 12 percent advance of the eight-company Standard & Poor’s/TSX Commercial Banks Index.

(Toronto-Dominion will hold a conference call at 3 p.m. Toronto time. To listen, dial +1-416-644-3414 or +1-800-814-4859, or visit http://www.td.com/investor/qr-2014.jsp on the Internet.)

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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