The Toronto-based lender will also have about $ 600 million in reserve markets related to US credit cards, which mainly consist of its retail partners’ share of the credit loss provisions, Toronto-Dominion said Friday in a statement. These are fully offset by non-business interest costs and will have no impact on profits, the bank said. Its retail credit card partners in the United States include Target Corp. and Nordstrom Inc.
Although the amount of provisions for loan losses “is certainly higher than what we had estimated, in a vacuum and without comparison with other banks, we believe that this new information should be considered neutral and not very surprising” , writes RBC Capital Markets analyst Darko Mihelic in a note to clients. Canadian banks under international accounting standards “are expected to set aside more provisions” in the second quarter, he said.
Toronto-Dominion, Canada’s second largest asset lender, is expected to release quarterly results on May 28.