TD Bank Q2 Results Beat Estimates

(RTTNews) - Canada's second-largest lender TD Bank Group (TD, TD.TO) Thursday reported a 6 percent decline in profit for the second quarter from last year, as higher revenues and lower provision for credit losses were offset by restructuring charges. However, both revenue and adjusted earnings for the quarter beat analysts' estimates.

Bharat Masrani, group president and chief executive officer, said, "We are very pleased with TD's second quarter results, with adjusted earnings of $2.2 billion, an increase of 5% compared with the same quarter last year. Our performance was driven by good fundamentals, stable credit performance, and favourable foreign exchange translation."

For the second quarter, net income attributable to common shareholders declined to C$1.81 billion or C$0.97 per share from C$1.92 billion or C$1.04 per share last year.

The latest quarter's results include amortization of intangibles of C$0.04 per share, restructuring charges of C$0.12 per share, and litigation-related charge/reserve of C$0.02 per share.

The results also include a gain of C$0.01 per share due to the change in the fair value of derivatives hedging the reclassified available-for-sale securities portfolio.

Stripping out these items, adjusted net income for the quarter was C$2.12 billion or C$1.14 per share, compared to C$2.01 billion or C$1.09 per share in the same period last year.

On average, thirteen analysts polled by Thomson Reuters expected the company to report earnings of C$1.11 per share for the quarter. Analysts' estimates typically exclude special items.

Quarterly revenue grew 4 percent to C$7.76 billion from C$7.44 billion in the same period last year. Wall Street expected revenues of C$7.28 billion for the period.

Net interest income improved 4 percent to C$4.58 billion from last year's C$4.39 billion. Non-interest income increased 5 percent to C$3.18 billion from C$3.04 billion a year ago.

Provision for credit losses declined 4 percent to C$375 million from C$392 million last year.

In the quarter, Canadian Retail segment's earnings rose 8 percent to C$1.44 billion, driven by good loan and deposit volume growth, new asset growth in the Wealth business, and higher Insurance earnings.

U.S. Retail's earnings declined 4 percent to $476 million. However, adjusted net income rose 2 percent on lower provision for credit losses and higher net interest income, partially offset by a decrease in other non-interest income. TD Ameritrade contributed $69 million in earnings to the segment, down 1 percent from last year.

Wholesale Banking's net income increased 19 percent to C$246 million, driven by higher fee-based and trading-related revenue on improved client activity.

TD Bank's Common Equity Tier 1 Capital ratio on a Basel III fully phased-in basis was 9.9 percent, compared with 9.5 percent last quarter, reflecting strong organic capital growth.

In addition, the bank declared a dividend of 51 cents per fully paid common share for the quarter ending July 31, 2015 payable on and after July 31 to shareholders of record at the close of business on July 9.

Looking ahead, TD Bank said that for the Canadian Retail segment, it expects core fundamentals for volumes for the second half of the year to remain stable with volume growth rates in line with first half of the year.

However, the company expects margins to decline moderately in the second half of the year, as a result of product mix, seasonal factors and competitive pricing.

For the U.S. Retail unit, TD Bank expects strong growth in loans to result in increasing net interest income, but loan mix could result in modest net interest margin compression over the remainder of the year.

The company expects that low interest rates will continue, with the potential for modest increases in the second half of the calendar year.

TD.TO closed Wednesday's trading at C$55.98, up $0.29 or 0.52 percent on a volume of 2.39 million shares.