TD Toronto Dominion Bank

By David George-Cosh 

Toronto-Dominion Bank on Thursday reported a 25% increase in fiscal fourth-quarter earnings, in line with analyst expectations, as a strong performance from the bank's U.S. retail and wholesale banking divisions helped offset moderating growth in Canada.

TD, Canada's second-biggest bank by assets, said its overall profit for the quarter ended Oct. 31 rose to 2.30 billion Canadian dollars (US$1.71 billion), or C$1.20 a share, from C$1.84 billion, or 96 Canadian cents a share, a year earlier.

Adjusted to exclude items, the bank said it earned C$1.22 a share, meeting the Thomson Reuters mean estimate. Revenue rose almost 9% to C$8.75 billion.

U.S. retail earnings rose about 18% in the latest quarter, the bank said, while Canadian banking earnings were little changed. Wholesale banking profits climbed 21%.

"Where growth in the Canadian market moderated, the performance of our U.S. retail business and wholesale franchise grew our overall net income, " Chief Financial Officer Riaz Ahmed said in a phone interview.

"I would expect these trends to continue in 2017 as the U.S. economic picture is brightening and we are well poised to continue growing earnings," he said.

Loan-loss provisions, or money set aside to cover bad loans, totaled C$548 million in the latest quarter, up from C$509 million a year earlier but down from C$556 million in the previous quarter. Mr. Ahmed said the increase came largely from the bank's auto portfolio, while there were no credit losses in its wholesale business during the quarter.

Canadian lenders have mostly sidestepped the fallout from the prolonged commodity-price rout. At just 1.2% of total loans, TD has one of the lowest exposures to the oil-and-gas sector among Canadian banks.

"Overall for the year, it's mostly volume-related," Mr. Ahmed said, adding that the bank had encountered "a little bit of effect from oil's impact to provinces, but it's very much moderating in the second half of the year."

Mr. Ahmed said he expects improved market conditions for TD's U.S. business over the next year, with a steepening yield curve and stronger U.S. dollar bolstering overall economic activity, which should contribute to earnings growth of 7% to 10%. TD also said it expects "moderate pressure" on gross margins in 2017 due to the low-interest rate environment and competitive pricing in the market.

TD's report caps a week of mixed results from Canada's big lenders. Bank of Nova Scotia, the country's third-largest by assets, kicked off earnings season on Tuesday with a better-than-expected profit. Canadian Imperial Bank of Commerce, the fifth largest, followed suit earlier Thursday. On Wednesday, Canada's biggest lender, Royal Bank of Canada, reported results that fell shy of expectations. Bank of Montreal, ranked fourth in size, will wrap up bank-earnings seasonon Dec. 6.

Judy McKinnon contributed to this article.

Write to David George-Cosh at david.george-cosh@wsj.com

(END) Dow Jones Newswires

December 01, 2016 12:06 ET (17:06 GMT)

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