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TORONTO — Toronto-Dominion Bank, North America's sixth largest bank by branches, reported a decline in third quarter profit on Thursday but easily beat expectations.
The Toronto-based bank earned $912 million Canadian (US$834 million), or $1.01 Canadian (US$92 cents) per share, for the quarter ended July 31, down from a year-earlier profit of $997 million Canadian, or $1.21 Canadian per share.
But stripping out one-time items, TD said its adjusted earnings improved to $1.3 billion Canadian (US$1.18 billion), or $1.47 Canadian (US$1.34) per share, compared with $1.1 billion Canadian, or $1.35 per share Canadian, reported a year ago. Analysts expected the bank to earn $1.23 per share.
TD CEO Ed Clark said the results exceeded his expectations and he credited an improved economic outlook to concerted action by central banks and governments as well as the resilience of the Canadian resale housing market.
There has been no crippling mortgage meltdown or banking crisis north of the border where TD is centered and where the financial sector is dominated by five large banks.
"I continued to be impressed by resilience and adaptability of all areas of TD bank," Clark said on a conference call with analysts.
TD set aside $557 million Canadian (US$507 million) for loan losses, 15 percent less than the previous quarter
Revenue rose to $4.67 billion Canadian (US4.26 billion) from $4.04 billion Canadian.
TD's Canadian operations posted record earnings of $677 million (US$618 million), up five percent from the same period last year.
TD's U.S. operations earned $242 million (US$221 million), down 11 percent from a year earlier due to higher loan losses reflecting the economic environment.
Canada's second largest bank bulked up its U.S. presence by agreeing in 2007 to acquire New Jersey-based Commerce Bancorp for $8.5 billion, adding Commerce's roughly 460 branches on the East Coast just before the global economics crisis hit.
Toronto-Dominion Bank broke into the United States in 2004 when it bought control of New England's Banknorth. TD Bank also has a stake in the broker TD Ameritrade, based in Omaha.
"We are pleased with the results delivered in the context of a tough U.S. market," Clark said. "We are taking marketshare."
Clark said the company continues to expect weak U.S. economic fundamentals and growing credit losses but not at the same pace of this year.
Overall net interest income — or earnings from loans and deposits — grew 16 percent during the quarter, while noninterest income — or income from fees and other charges — grew 15 percent.
TD also said its quarterly dividend will remain fixed at 61 cents Canadian (US$36 cents) per share. Canada's major banks didn't cut their dividends during the global economic crisis — unlike major U.S. banks.
Canada has avoided government bailouts of banks and has not experienced the failure of any major financial institution. There has been no crippling mortgage meltdown or banking crisis north of the border where the financial sector is dominated by five large banks.
President Barack Obama said earlier this year that the United States should "take note" of how Canada has shown itself to be a good manager of its financial system. Prime Minister Stephen Harper has said Canada has strong regulation that encourages a cautious culture in the banks.
Royal Bank of Canada, Canada's largest bank, also reported third-quarter financial results that beat analysts' expectations on Thursday.
The U.S.-listed shares of TD Bank closed up $2.19, or 3.6 percent, to $62.74. Earlier in the session the stock changed hands at $64.21, its highest level since June 2008.
