TD Warns of $800 Million of Loan-Loss Provisions for U.S. Unit

(Bloomberg) -- Toronto-Dominion Bank said it expects to record about C$1.1 billion ($800 million) in loan-loss provisions for its U.S. retail division in its fiscal second quarter, the result of the coronavirus pandemic’s economic impact.

The Toronto-based lender also will have about C$600 million of set-asides tied to U.S. credit cards that consist primarily of its retailer partners’ share of provisions for credit losses, Toronto-Dominion said Friday in a statement. Those are fully offset through corporate non-interest expenses and won’t have an impact on earnings, the bank said. Its U.S. credit-card retail partners include Target Corp. and Nordstrom Inc.

While the loan-loss provisions “figure is certainly higher than what we had estimated, in a vacuum and without comparisons to other banks we think this new information should be viewed as neutral and not terribly surprising,” RBC Capital Markets analyst Darko Mihelic wrote in a note to clients. The Canadian banks under international accounting standards “should be expected to book larger provisions” in the second quarter, he said.

Toronto-Dominion, Canada’s second-largest lender by assets, is scheduled to report quarterly results on May 28.

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