TD posts strong beat in fourth quarter as provisions decline and wholesaler profits triple

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The Toronto-Dominion Bank ended the earnings season for Canada’s six major lenders on Thursday on the same note as its rivals: steep decline in profits due in part to dramatic growth in financial markets and far less cash set aside for loans that could go wrong.

TD’s net profit for the three months ending Oct. 31 totaled $ 5.1 billion, up from $ 2.9 billion a year earlier, amid a gain of $ 2.3 billion arising from its stake in TD Ameritrade prior to the takeover of the brokerage by The Charles Schwab Corp.

On an adjusted basis, TD earned $ 1.60 per share in the fourth quarter of the year. Analysts expected adjusted earnings of $ 1.27.

The bank recorded $ 917 million in provisions for credit losses in the quarter, compared to $ 2.2 billion in the prior quarter and $ 3.2 billion in the second quarter of the year.

“TD delivered strong fourth quarter results, ending a year that demonstrated the strength of our business model and our balance sheet, as well as the resilience of our people through the unprecedented COVID-19 pandemic TD CEO Bharat Masrani said in a statement.

“Although 2020 is not the year we expected, we have learned from experience and demonstrated the speed and agility of our organization,” he added. “We will continue to adapt to the current environment to meet the needs of all our stakeholders and support an inclusive and sustainable recovery.”

TD’s capital markets business more than tripled profit from a year earlier, with net income reaching $ 486 million in the last quarter of 2020. The bank attributed the growth to higher revenues from trading activities as well as an increase in debt underwriting costs. The division’s profit growth contrasts sharply with its situation less than two years ago when it recorded a surprise loss in the first quarter of 2019.

The bank’s bread and butter retail operations in Canada were a mainstay of strength in the fourth quarter of the year, with profits rising 3% year-over-year to settle to $ 1.8 billion.

TD’s business south of the border struggled in the quarter, as U.S. retail banking profits fell 41% year over year to $ 403 million of US dollars. The decrease came amid rising provisions for credit losses and pressure on commission income and loan margins.

Line-up Note: Don’t miss BNN Bloomberg’s conversation with TD CEO Bharat Masrani on Friday, December 4 at 2 p.m. ET / 11 a.m. PT.

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