Great spike in the past couple of weeks, up 20%. Looks like a little more to come:
Thursday August 17, 4:44 pm Eastern Time
Toronto-Dominion Bank earnings surge higher
(UPDATE: Adds comments from analyst, background, byline and updates stock price)
By Luke McCann
TORONTO, Aug 17 (Reuters) - Toronto-Dominion Bank (Toronto:TD.TO - news) kicked off a much anticipated parade of high-flying quarterly earnings by Canada's ``Big Six'' banks on Thursday by topping forecasts with a strong earnings report.
TD Bank, Canada's second largest in terms of assets, reported higher third-quarter profit before markets opened on Thursday, crediting the addition of Canada Trust, the nation's largest trust firm.
``The level of earnings from Canada Trust was very strong, so that was better than expected...but overall the numbers were quite good,'' said Kevin Choquette, a bank analyst at Scotia Capital Markets.
TD Bank said profit, excluding a special gain from the sale of 11.5 percent of its TD Waterhouse Group last year, was C$511 million ($345 million), or 80 Canadian cents a share, in the quarter. That is up from year-earlier figures of C$402 million, or 66 Canadian cents a share.
Analysts had estimated TD Bank would earn 72 Canadian cents a share for the quarter, according to First Call/Thomson Financial, which tracks consensus forecasts.
Shares of TD Bank were trading near a 52-week high the close on Thursday on the Toronto Stock Exchange, up 90 Canadian cents at C$39.40, on a volume of nearly 4 million shares.
The bank said revenue rose 41 per cent to C$2.59 billion. Total assets at the end of the quarter were C$273 billion, a 23 percent increase from last year.
The bank's return on common equity on a cash basis, a key measure of profitability, fell to 18.1 percent in the quarter, versus 18.2 percent last year. Credit loss provisions rose to C$125 million from C$25 million last year.
Canada Trust, which is scheduled to begin integrating retail branch networks with Toronto-Dominion in the second quarter of fiscal 2001, contributed about 10 Canadian cents a share to overall cash earnings.
The bank's bottom line was also bolstered by business at its U.S. discount brokerage unit TD Waterhouse Group Inc. (NYSE:TWE - news), which reported earnings on Wednesday in line with analysts' expectations.
``TD Waterhouse delivered excellent year-over-year gains while reinforcing its position as one of the largest global discount brokers as it successfully executed aggressive expansion strategies in key markets such as the U.K., Japan and India,'' said Charles Baillie, chairman and chief executive.
The integration of Canada Trust following last year's C$7.8 billion merger is on track, the bank said, along with the divestitures of assets -- conditions required by the federal competition Bureau.
``We have now successfully integrated most head office functions, as well as the brokerage businesses, and are on track to merge mutual fund operations before the fiscal year ends,'' Edmond Clark, president and chief operating officer of TD Bank Financial Group, said in a statement.
The bank has reached agreement to sell 13 TD Bank and Canada Trust branches in southern Ontario, along with the Canada Trust MasterCard consumer and merchant issuing credit card businesses.
The deal with Canada Trust will not be the last move to gain scale on the retail banking side, TD Bank said, adding that bigger mergers are going to happen once the public is sold on the idea.
Canada's big banks, which consistently report strong earnings, are not in favour with the public as a result of layoffs, rising user fees and branch closings.
Nor do the banks find much sympathy in government circles. Federal Finance Minister Paul Martin vetoed two sets of merger plans by four of the country's Big Six banks in 1998, saying they were not in the public interest. Martin unveiled a bill last month that forces future bank mergers to get federal approval.
With a strong economy and stable interest rates seen for the immediate future, Canadian banks are all expected to continue to report better earnings on a year-over-year basis.
``I think the other banks will report earnings in line, maybe a little bit better than expected, but probably not to the same extent that TD bank has,'' Choquette said.
($1 equals $1.47 Canadian) |
