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TD Bank's Q2 profits rise 13% on strong retail markets performance

May 26, 2011 3:36 PM ETTD
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TD Bank Group (TSE:TD) (NYSE:TD) reported Thursday an 13% increase to second quarter profits, mainly due to strong performance in its Canadian and U.S. retail banking segments.

For the three months ending April 30, the Toronto, Ontario-based bank reported net income  of $1.33 billion, or $1.46 per share, compared to the year-ago period of $1.18 billion, or $1.30 per share.

Group president and CEO, Ed Clark, called these earnings "a great display of the resilience and earnings capability of the bank's customer-focused franchises."

Adjusted for one-time items, earnings were $1.59 per share, still falling short of the $1.61 per share expected by analysts.
The company's total revenues increased 7% from the second quarter of 2010 to $5.12 billion from $4.77 billion.
Provisions for credit losses, or the amount of money banks set aside to cover bad loans, fell to $343 million, from $365-million a year ago.

"These results show yet again that TD can deliver profitable and sustainable growth thanks to the strength and stability of our retail businesses," Clark added.

Indeed, TD's Canadian personal and commercial banking segment pulled in the bulk of the company's billion-dollar profits, as net income grew 11% to $847 million from last year's $761 million. Net revenues also improved slightly, increasing to $2.58 billion from $2.52 billion.

The bank cited volume growth in business loans and deposits, as well as in personal deposits, mortgages and indirect lending as the root of the unit's improvement.

The U.S. personal and commercial banking division also produced solid results, with a 31% hike in net income and revenues strengthening 23% to $1.37 billion, primarily driven by growth in loans and deposits, as well as acquisitions.

TD Bank's wealth management division reported a 35% increase in profits to $150 million, excluding the company's investment in TD Ameritrade. The higher revenue of $706 million was mainly a result of higher client assets, an increase in trading activity, and higher net interest margin.

Meanwhile, the bank's wholesale banking and corporate divisions each found poorer results than the bank's other segments in the second quarter.

Wholesale banking profits dropped 18% to $180 million due to lower revenue from equity derivatives and fixed income trading, while the company's corporate division netted a loss of $102 million on higher expenses.

"Our results were at the lower end of our expectations reflecting the global shocks and increased competition in fixed income markets that characterized the quarter," Group Head of Wholesale Banking, Bob Dorrance, said.

TD Bank's shares dropped 1.86% on the New York Stock Exchange to $85.17 per share on Thursday morning.

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