TD Bank Surpasses Profit Forecasts Thanks to Trading and Underwriting Gains
By Nivedita Balu and Arasu Kannagi Basil
TD Bank, which ranks as Canada’s second-largest lender, announced on Thursday that it had exceeded expectations for its quarterly profits. This positive outcome was largely due to expansion in its capital markets division, fueled by increased trading activities resulting from the fluctuating economic conditions.
The unit saw a 16% increase in net income and achieved a record revenue of C$2.13 billion, marking a 10% rise compared to the previous year. This growth was driven by increased revenues related to trading activities and underwriting fees, which included earnings from the disposal of their leftover stake in the American financial services company Charles Schwab.
“When there is uncertainty in the market, people take views on the direction so you actually see more trading volume happening. TD, both on the securities side and wealth management side, will benefit from that,” CFO Kelvin Tran said in an interview.
Nevertheless, the lender allocated $965.5 million CAD (£1.34 billion) for loan loss reserves to safeguard against potential deteriorating loans amid an unpredictable economic climate, significantly higher than the $1.07 billion recorded in the previous year.
Tran mentioned that the unpredictability in the market leads clients to adopt a ‘wait and see’ approach, causing them to postpone certain long-term choices. Despite this environmental uncertainty, significant growth remains visible. However, considering the current forecast and ongoing uncertainties, they establish additional reserves as a precautionary measure.
As part of an extensive strategic reassessment, TD is currently evaluating its approach under new leadership aiming to streamline operations and revitalize the institution following its money-laundering issues. Chun, who has been with TD Bank for many years, assumed the top position in February.
Tran mentioned that the bank is well into its assessment process, examining ways for TD to “boost momentum and capitalize on new opportunities.”
TD begins the earning season for Canadian lenders, with competing major banks scheduled to announce their results the following week. The bank’s financials provide insight into how tariff turmoil has affected the Canadian economy.
C$1.97 per share was the adjusted earning per share, surpassing the analysts’ average forecast of C$1.76, as reported by LSEG data.
(1 USD equals 1.3878 CAD)
(Reported by Arasu Kannagi Basil in Bengaluru; Edited by Shailesh Kuber and Jan Harvey)