TD Earnings Rise as Reserves Released for Loans That Didn’t Sour


Toronto-Dominion Bank is benefiting from its sizable presence in the U.S., where the waning Covid-19 crisis allowed the company to release $173 million in set-asides for loans that never ended up souring.

  • Fiscal second-quarter profit in Toronto-Dominion’s U.S. retail-banking business rose more than four-fold to $1.05 billion, helped by the release in provisions for credit losses. Overall profit topped analysts’ estimates.

Key Insights

  • Toronto-Dominion has been the most cautious among Canada’s banks in setting aside capital to cushion itself from loan losses, and the company has hinted that it may put some of that money to work on expanding its U.S. footprint. The bank released a total of C$377 million ($312 million) in provisions for loan losses. Analysts estimated it would set aside C$457.8 million.
  • The lender, Canada’s largest by total assets, has benefited from a strong housing market in its home country that has made up for low credit-card spending. Profit in the Canadian retail segment rose 86% to C$2.18 billion, helped by growth in mortgages.
  • Among Canada’s six largest banks, Toronto-Dominion gets the highest proportion of its revenue from net interest income -- a reliance that restrained results last quarter. Net interest income fell 5.9% to $5.84 billion.

Market Reaction

  • Toronto-Dominion shares have climbed 23% this year, similar to the gain for the S&P/TSX Commercial Banks Index.

Get More

  • Net income more than doubled to C$3.7 billion, or C$1.99 a share, in the three months through April. Excluding some items, profit was C$2.04 a share. Analysts estimated C$1.76 a share.
  • Click here for more on Toronto-Dominion’s second-quarter results.

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