TD Bank reports higher Q2 profit on retail growth and wholesale banking rebound

The Toronto-based lender also benefited from positive earnings at its wholesale banking business — following a net loss in the first quarter — as it reported better-than-expected earnings in the three months ended April 30. (File Photo: Mike Mozart/Flickr, CC BY 2.0)

TORONTO — Strong growth in Canadian and American retail operations helped TD Bank Group earn an adjusted profit of $3.27 billion in the second quarter, up from $3.06 billion in the same quarter last year.

The Toronto-based lender also benefited from positive earnings at its wholesale banking business — following a net loss in the first quarter — as it reported better-than-expected earnings in the three months ended April 30.

“As I reflect on the first half of the year, I am pleased with our performance. It reflects continued momentum in our franchise businesses, good credit quality and better conditions this quarter for market-based revenues,” said CEO Bharat Masrani on a conference call with analysts.

“Looking ahead, the macro environment remains fluid. Trade and geopolitical tensions are heating up and economic conditions remain mixed with several output indicators still soft while employment growth remains strong.”

He reiterated his expectation that the bank will post earnings-per-share growth this year at the low end of its seven-to-10 per cent medium-term target range.

On an adjusted basis, TD said it earned $1.75 per share in the quarter, up from $1.62 per share in its second quarter last year.

Analysts on average had expected a profit of $1.67 per share, according to Thomson Reuters Eikon.

“TD produced the first meaningful beat against expectations in the quarter as it enjoyed strong loan growth in both of its retail platforms and an impressive bounce back in capital markets earnings,” wrote analyst John Aiken of Barclays in a report.

TD reported its U.S. retail business earned $1.26 billion, up from $979 million, as revenue rose by six per cent and expenses were slightly lower. TD Ameritrade contributed $258 million, up from $134 million a year earlier.

Its Canadian retail business earned $1.85 billion, up from $1.83 billion a year ago, on an eight per cent increase in revenue, offset by a $30-million charge related to its purchase in November of Saskatchewan-based Greystone Managed Investments and other higher expenses.

Profit at its wholesale banking business was $221 million, down from $267 million a year ago, but up compared with a net loss of $17 million in the previous quarter, on lower expenses and revenue that matched the second quarter 2018 number.

TD recorded a provision for credit losses of $633 million in the second quarter, an increase of $77 million, or 14 per cent, compared with the second quarter last year, but down by $217 million, or 26 per cent, compared with the prior quarter.