Toronto-Dominion Bank reported second-quarter adjusted earnings of $2.38 per share for the period ended April 30, surpassing analysts’ expectations of $2.26 per share, as stronger results in Canadian banking and capital markets helped offset higher spending tied to its U.S. remediation efforts. The bank’s performance was aided by lower provisions for credit losses and continued momentum in its core businesses, according to chief executive Raymond Chun.
Canadian personal and commercial banking profit rose 15% from a year earlier to $1.93 billion, supported by higher revenue and lower provisions. Loan balances increased 6% year over year and deposits grew 3%, though management said higher interest rates, inflation and economic uncertainty continued to weigh on housing activity and demand for real estate secured lending. Chief financial officer Kelvin Tran said consumers remained resilient, while businesses appeared more willing to invest after a pause, reflecting improved confidence in the Canadian outlook.
TD’s U.S. operations also posted gains, with adjusted net income up 8% to $960 million. However, expenses in the U.S. climbed 10% from a year earlier as the bank continued spending to address shortcomings in its anti-money-laundering controls and broader risk governance. Tran said TD remains comfortable with its prior guidance for full-year expense growth in the mid-single-digit range, despite the elevated costs in the quarter.
The bank set aside $1 billion in provisions for credit losses, down from $1.34 billion a year earlier and below analyst estimates. Of that amount, $973 million was booked against loans the bank expects may not be repaid, based on forecasting models that assess economic conditions and potential future losses. TD said its exposure to private credit and private equity remains relatively small, at about 1% of total gross loans, and the bank described that exposure as low risk and predominantly investment grade.
Capital markets profit jumped 46% to $612 million, driven by higher revenue and lower provisions, while wealth management and insurance profit rose 18% to $837 million on growth in assets, insurance premiums and deposits. The bank also raised its quarterly dividend by 4 cents to $1.12 per share and continued buying back shares, reflecting its substantial excess capital.
TD was the last of Canada’s major banks to report fiscal second-quarter results, following earnings releases from Bank of Montreal, Bank of Nova Scotia, National Bank of Canada, Royal Bank of Canada and Canadian Imperial Bank of Commerce earlier in the week. Analysts said the lender delivered solid contributions across its operating units, with the lower-than-expected credit provisions providing an additional boost to results.
