Photographer: Ben Nelms/Bloomberg

Toronto-Dominion Raises Dividend as Profit Exceeds Estimates

Updated on
  • Net income climbs 14% on gains in capital markets, U.S. unit
  • TD is the sixth of Canada’s biggest banks to beat estimates

Toronto-Dominion Bank said fiscal first-quarter profit rose 14 percent, beating analysts’ estimates, on gains in wholesale banking. The lender raised its dividend 9.1 percent to 60 cents a share.

Toronto-Dominion joins Canada’s five other big banks in posting profit that exceeded forecasts as improving markets helped lift trading revenue and wealth-management results. The Toronto-based bank’s earnings were driven by a 66 percent increase in capital markets, as well as improvements in U.S. retail and domestic banking.

“This has been a sigh-of-relief quarter from the Canadian banks," said Craig Fehr, an investments strategist at Edward Jones & Co. “Much of the relief comes from the fact we continue to see mid-to-upper single-digit growth from their personal-and-commercial banking businesses, which is quite healthy given some of the headwinds in Canada’s economy."

Shares of Toronto-Dominion, which surpassed Royal Bank of Canada as the country’s largest lender by assets this quarter, rose 0.5 percent to C$69.84 at 9:31 a.m. trading in Toronto. The stock has gained 5.5 percent this year, compared with the 6.1 percent advance of the eight-company S&P/TSX Commercial Banks Index.

Record Profit

Net income for the period ended Jan. 31 climbed to a record C$2.53 billion ($1.89 billion), or C$1.32 a share, from C$2.22 billion, or C$1.17, a year earlier, Toronto-Dominion said Thursday in a statement. Adjusted earnings, which exclude some items, were C$1.33 a share, compared with the C$1.27 average estimate of 14 analysts surveyed by Bloomberg.

Total revenue increased 5.9 percent to C$9.12 billion. The lender set aside C$633 million for bad loans, a 1.4 percent decline from a year earlier.

Profit from Canadian retail, which includes insurance and wealth management, rose 3.5 percent to C$1.57 billion, while U.S. retail earnings, which includes its stake in the TD Ameritrade Holding Corp. brokerage, climbed 6.5 percent to C$800 million. Wholesale banking profit was C$267 million, up from C$161 million a year earlier, helped by higher trading and investment-banking fees. Canadian personal-and-commercial banking advanced 2.3 percent.

“Canada’s growth rate has reduced a fair bit since the financial crisis, and so I think a mid single-digit growth seems to be appropriate” for domestic banking, Toronto-Dominion Chief Financial Officer Riaz Ahmed said Thursday in an interview.

Toronto-Dominion said in a separate statement it plans to buy back as many as 15 million shares, or 0.8 percent of its outstanding stock, over one year.

(Updates with share price in fourth paragraph, buyback plan in last.)
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