TD Bank Group (TD: Quote,TD.TO: Quote), one of the biggest banks in Canada, reported Thursday a decline in first-quarter profit reflecting mainly a litigation reserve. The lender, however, had record North American retail earnings and lower bad loan provisions in the quarter. Looking ahead, the bank said low interest rates continue to impact its business and the recovery will be slow.
Ed Clark, Group President and Chief Executive Officer said, "While we knew going into 2012 that our businesses would continue to grow in the face of a challenging environment, their performance has exceeded our expectations."
Clark stated that the company sees some promising signs of improvement in the economic outlook, especially in the U.S. During the quarter, North American retail businesses posted $1.6 billion in adjusted earnings - a new record, TD Bank added.
For the first quarter ended January 31, 2012, the Toronto-based Toronto-Dominion Bank and its subsidiaries, collectively called TD Bank Group, reported net income attributable to shareholders of C$1.40 billion, down from C$1.49 billion in the previous year. On a per-share basis, earnings were C$1.55, lower than C$1.67 per share in the prior year.
Excluding special items, net income available to shareholders increased to C$1.69 billion or C$1.86 per share from C$1.54 billion or C$1.73 per share in the year-ago quarter. One-time charges for the recent quarter included a litigation reserve of C$171 million.
On average, 16 analysts polled by Thomson Reuters expected the company to earn C$1.76 per share for the quarter. Analysts' estimates typically exclude special items.
In the quarter, Canadian Personal and Commercial Banking segment's adjusted net income was C$850 million, up 11 percent from last year. Wealth and Insurance segment's net income, excluding TD's reported investment in TD Ameritrade, increased 14 percent to C$294 million.
U.S. Personal and Commercial Banking adjusted net income improved 6 percent to $345 million. In the company's Wholesale Banking unit, net income was C$194 million, down 17 percent from last year. The decrease was mainly due to higher investment portfolio gains in the first quarter last year, the company said.
Total revenues for the quarter grew to C$5.64 billion from C$5.46 billion in the same quarter last year and came in line with analysts' estimates.
Net interest income increased to C$3.69 billion from C$3.36 billion in the preceding year. Meanwhile, non-interest income declined to C$1.96 billion from C$2.10 billion a year earlier.
Provision for credit losses decreased to C$404 million from C$421 million a year ago. Tier 1 capital to risk weighted assets was 11.6 percent, compared to 12.7 percent last year. TD said it has now exceeded the 7 percent Basel III requirement on a fully phased-in basis.
Separately, Toronto-Dominion Bank announced that a dividend of C$0.72 per share in the capital stock of the Bank has been declared for the quarter ending April 30, 2012, payable on and after April 30, 2012, to shareholders of record at the close of business on April 4.
TD closed Wednesday's regular trading at $81.52 on the NYSE.
TD.TO ended on Wednesday at C$80.83 on the Toronto Stock Exchange.
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by RTT Staff Writer
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