Toronto-Dominion Bank exceeded earnings expectations in its last quarter despite silenced performance in its major divisions. It also became the only major bank so far this earnings season that did not increase its quarterly dividend.
TD said its second-quarter net income, which ended April 30, rose three percent year-on-year to $ 3.85 billion. On a tight basis, its profit fell to $ 2.02 per share from $ 2.04 the previous year. Analysts, on average, were expecting $ 1.93 in earnings per share. Overall credit quality improved sequentially as TD set aside $ 27 million for loans that could go bad, compared to $ 72 million in the previous quarter.
TD’s Canadian retail banking unit’s revenue and expenses rose nine percent year-over-year, while profits rose two percent to $ 2.24 billion. Lending activity increased during the quarter, with the total personal loan portfolio averaging $ 402.7 billion, compared to $ 373.3 billion the previous year, while business lending increased 16% to nearly $ 101 billion.
A number of specifics affected the profits of TD’s U.S. retail banking unit. On a tight basis, net income from this business fell 10% year-on-year to $ 769 million. TD said the drop was caused in part by a much more moderate release of funds from loan loss provisions ($ 15 million, compared to $ 173 million the previous year).
TD is awaiting final regulatory approval to take control of Memphis, Tennessee-based First Horizon Corp for $ 13.4 billion. This transaction was announced in February; at the time, TD said the deal would make it one of the top six U.S. banks thanks to the incorporation of First Horizon’s 412 branches and more than 1 million customers. He also said he expected to close the deal in the first quarter of fiscal year 2023, which is a period ending on January 31, 2023.
Meanwhile, similarly to many of its peers who reported earlier this week, TD’s wholesale banking unit (which includes capital markets activity) suffered a erosion of profits as net income they fell six percent year-over-year to $ 359 million.
“As we continue to emerge from the COVID-19 pandemic we face new economic uncertainties and growing geopolitical tensions. TD has demonstrated its ability to adapt to changing circumstances and deliver performance and progress,” said Bharat Masrani. , President and CEO of TD. in a statement.