TD beats analyst estimates

Photo: The Canadian Press

A TD Bank branch is seen in Halifax on Thursday, March 30, 2017. THE CANADIAN PRESS/Andrew Vaughan

TD Bank's adjusted earnings came in ahead of analyst estimates Thursday, rising 15 per cent from the year-earlier period after excluding the impact of U.S. tax reform and other items.

The Canadian lender had $2.946 billion, or $1.56 per share, in adjusted diluted earnings per share for the fiscal first quarter ended Jan. 31.

That was above the analyst estimate of $1.46 per share of adjusted earnings for TD, according to Thomson Reuters.

Including the impact of a $405-million charge related to U.S. tax reform and other items, TD's net income was down from last year, but each of its main operating units showed year-over-year increases.

Net income under international financial reporting standards was $2.353 billion, down from $2.533 billion in the first quarter of fiscal 2017. Net income per share dropped to $1.24 from $1.32.

"All of our businesses are performing well and the operating environment remains favourable," TD chief executive officer Bharat Masrani said in a statement.

"While there are risks on the horizon, if these positive conditions persist, adjusted earnings growth for the full year may exceed our medium-term targets."

The bank, Canada's second largest by market capitalization, also raised its quarterly payment to common shareholders by seven cents, or 11.7 per cent, to 67 cents per share.

TD Bank is the last of Canada's six biggest lenders to report its results for the fiscal first quarter, and like the others, the bank's earnings got a lift from strong growth at home and internationally.

Its Canadian retail banking arm reported net income of $1.757 billion, up 12 per cent from a year ago, while its wholesale banking division reported net income of $278 million, up four per cent compared to the first quarter of fiscal 2017.

Meanwhile, TD Bank's U.S. retail banking arm posted a 19 per cent jump in net income to $952 million. On an adjusted basis, stripping out some one-time items, TD Bank's U.S. retail division reported $1.024 billion in net income up 28 per cent from a year earlier.

This quarter, the bank recorded several one-time charges, the largest of which was a $405 million tax charge in connection with a cut to the U.S. corporate tax rate from 35 per cent to 21 per cent as of Jan. 1. In turn, TD and other Canadian banks with a U.S. presence recorded a one-time adjustment to deferred tax assets held on company balance sheets. However, these banks are also expecting the tax reform to provide a long-term boost to earnings, and benefits from an increase in economic activity south of the border.

TD Bank's Common Equity Tier 1 ratio, a key measure of its financial health, was 10.6 per cent, marking a decrease from 10.9 per cent a year ago and 10.7 per cent in the previous quarter.