TD Bank Q3 net falls on insurance losses; dividend hiked

TD Bank Q3 net falls on insurance losses; dividend hiked

Toronto-Dominion Bank (TSE:TD), Canada’s second-largest lender by assets, said profit in the fiscal third quarter slid 10 percent after reporting insurance losses. But the bank lifted its quarterly dividend by 4.9 percent. Shares jumped.

Net income for the three months ended July 31 declined to C$1.53 billion, or C$1.58 a share, from C$1.7 billion, or C$1.78 a share, in the year-earlier period, the Toronto, Ontario-based company said in a statement today.

Taking out a C$59 million charge for the amortization of intangibles, a C$70 million gain on the change in fair value of derivatives hedging, and other unusual items, Toronto-Dominion earned C$1.65 a share. This beat the average estimate of 10 analysts surveyed by Thomson Reuters that was for per-share earnings of C$1.55.

Revenue rose 1.9 percent to C$5.95 billion, below analysts' estimate of C$5.99 billion.

Toronto-Dominion said it raised its dividend to 85 Canadian cents a share from 81 Canadian cents.

Toronto-Dominion rose 2 percent to C$89.28 at 9:49 a.m. in Toronto after the earnings report was released. The shares lost 0.9 percent this year before today, compared with a 1.4 percent gain for the S&P/TSX Composite Index (TSE:OSPTX).

Earnings from U.S. retail banking jumped 57 percent to C$ 445 million, while earnings from Canadian retail banking increased 13 percent to C$997 million, according to the statement. Toronto-Dominion has about 2,400 branches in Canada and the U.S.

"Our results this quarter demonstrate the strength of our diversified business model, as evidenced by very strong results in a number of businesses, the dividend increase announced today, and our higher capital ratio," Chief Executive Officer Ed Clark, who's been at the helm since 2002, said in the statement.

Net income from the bank's wealth-management and insurance unit dropped to C$7 million, from C$360 million a year earlier.

TD Insurance posted a third-quarter loss of $243 million after tax, the result of charges of approximately $418 million after tax, from a combination of severe weather-related impacts and increased general insurance claims, according to the statement.

Income from wholesale banking, which represents trading, investment banking and corporate lending, dropped 18 percent to C$147 million as revenue from trading fell.

Insurance results were hurt by flooding in southern Alberta in June and a record deluge in Toronto, the nation’s most populous city, on June 8.

Six major Canadian banks have reported quarterly results this week. Earlier today, Royal Bank of Canada (TSE:RY), the country’s largest lender by assets, reported a stronger-than-predicted 2.9 percent increase to C$2.3 billion in fiscal third-quarter profit as gains from its wealth-management and retail banking businesses increased. The bank hiked its dividend by 6 percent.

Canadian Imperial Bank of Commerce (TSE:CM), the fifth-biggest bank, posted today a better-than-predicted 5.8 percent increase in third-quarter profit to C$890 million, helped by gains in wealth-management, investment banking and Canadian consumer lending units.

Yesterday, National Bank of Canada (TSE:NA), the nation’s sixth-largest lender, posted an 11 percent climb to C$419 million in fiscal third-quarter profit that topped analysts' expectations on gains from wealth management and financial markets.

On Tuesday, Bank of Montreal (TSE:BMO), Canada’s fourth-largest lender by assets, reported a better-than-predicted 17 percent jump in profit to C$1.14 billion on higher insurance income and lower provisions for bad loans.

Also on Tuesday, Bank of Nova Scotia (TSE:BNS), the third-largest bank, reported a stronger-than-expected gain in adjusted profit and hiked quarterly dividend by 3.3 percent.

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