Toronto-Dominion Raises Dividend as Profit Exceeds Estimates

(Bloomberg) -- Toronto-Dominion Bank said fiscal first-quarter profit rose 14 percent, beating analysts' estimates, on gains in wholesale banking. The lender raised its dividend 9.1 percent to 60 cents a share.

Toronto-Dominion joins Canada's five other big banks in posting profit that exceeded forecasts as improving markets helped lift trading revenue and wealth-management results. The Toronto-based bank's earnings were driven by a 66 percent increase in capital markets, as well as improvements in U.S. retail and domestic banking.

“This has been a sigh-of-relief quarter from the Canadian banks," said Craig Fehr, an investments strategist at Edward Jones & Co. “Much of the relief comes from the fact we continue to see mid-to-upper single-digit growth from their personal-and-commercial banking businesses, which is quite healthy given some of the headwinds in Canada's economy."

Shares of Toronto-Dominion, which surpassed Royal Bank of Canada as the country's largest lender by assets this quarter, rose 0.5 percent to C$69.84 at 9:31 a.m. trading in Toronto. The stock has gained 5.5 percent this year, compared with the 6.1 percent advance of the eight-company S&P/TSX Commercial Banks Index.

Record Profit

Net income for the period ended Jan. 31 climbed to a record C$2.53 billion ($1.89 billion), or C$1.32 a share, from C$2.22 billion, or C$1.17, a year earlier, Toronto-Dominion said Thursday in a statement. Adjusted earnings, which exclude some items, were C$1.33 a share, compared with the C$1.27 average estimate of 14 analysts surveyed by Bloomberg.

Total revenue increased 5.9 percent to C$9.12 billion. The lender set aside C$633 million for bad loans, a 1.4 percent decline from a year earlier.

Profit from Canadian retail, which includes insurance and wealth management, rose 3.5 percent to C$1.57 billion, while U.S. retail earnings, which includes its stake in the TD Ameritrade Holding Corp. brokerage, climbed 6.5 percent to C$800 million. Wholesale banking profit was C$267 million, up from C$161 million a year earlier, helped by higher trading and investment-banking fees. Canadian personal-and-commercial banking advanced 2.3 percent.

“Canada's growth rate has reduced a fair bit since the financial crisis, and so I think a mid single-digit growth seems to be appropriate” for domestic banking, Toronto-Dominion Chief Financial Officer Riaz Ahmed said Thursday in an interview.

Toronto-Dominion said in a separate statement it plans to buy back as many as 15 million shares, or 0.8 percent of its outstanding stock, over one year.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net.

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net, David Scanlan at dscanlan@bloomberg.net, Steven Crabill, Steve Dickson