Bloomberg News

Toronto-Dominion Raises Dividend as Profit Rises on U.S.

September 01, 2011

(Updates with company comment from third paragraph, unit profits from eighth, other banks at end.

Sept. 1 (Bloomberg) -- Toronto-Dominion Bank, the last of Canada’s six main banks to report earnings, said third-quarter profit climbed 23 percent on increases at its U.S. and Canadian consumer banks. The lender boosted its dividend for the second time in three quarters.

Net income in the period ended July 31 rose to C$1.45 billion ($1.48 billion), or C$1.58 a share, from C$1.18 billion, or C$1.29, a year earlier, Canada’s second-biggest bank said today in a statement.

Consumer-banking in Canada and the U.S. had record adjusted profit of about C$1.5 billion, Chief Financial Officer Colleen Johnston said, led by asset and deposit growth. The bank has a “cautious” outlook for 2012.

“There’s lots of uncertainty in what’s going on in the broader economy as well as in financial markets,” Johnston said today in a telephone interview. “But as you step back from it, you see the strength and stability of TD’s model, the fact that we have such a significant business mix in the retail bank and that those retail earnings are performing so exceptionally well.”

Toronto-Dominion raised its quarterly dividend 3 percent to 68 cents a share, joining Canadian Imperial Bank of Commerce as the only banks to boost payouts this quarter. The bank was expected to increase its dividend to 70 cents a share, according to the Bloomberg Dividend Forecast.

Tops Forecast

Excluding one-time items, Toronto-Dominion earned C$1.72 a share. That topped the C$1.62-a-share average estimate of 14 analysts surveyed by Bloomberg News.

Toronto-Dominion rose C$2.01, or 2.7 percent, to C$77.47 in trading yesterday on the Toronto Stock Exchange. The shares have risen 4.3 percent this year, compared with a decline of less than 1 percent for the 10-member S&P/TSX Banks Index.

Canadian consumer banking profit climbed 13 percent to a record C$954 million because of increases in business lending and real estate lending.

“The platform is so profitable, it’s really punching above its weight in terms of contribution to earnings,” Stonecap Securities analyst Brad Smith said before results were released.

Asset-management results, which includes the stake in U.S. online brokerage TD Ameritrade Holding Corp., climbed 8.9 percent to C$195 million. Investment-banking profit fell 40 percent to C$108 million because of lower revenue in fixed income and currency trading.

U.S. Banking

Consumer banking profit in the U.S. climbed 12 percent to C$317 million. Toronto-Dominion has spent more than $25 billion on acquisitions in the U.S. since 2005, including the $6.3 billion purchase of auto lender Chrysler Financial.

“They’re becoming more of a U.S. franchise because they keep buying,” said Todd Johnson, a money manager at BCV Asset Management in Winnipeg, Manitoba, which oversees C$300 million in assets including Toronto-Dominion. “Anybody investing in TD is looking over the next five years of an eventual recovery, and look at the platform and scale they’ve built down there.”

Canadian Imperial, Bank of Montreal, National Bank of Canada and Bank of Nova Scotia topped analysts’ estimates this quarter, while Royal Bank of Canada missed expectations.

Laurentian Bank of Canada and Canadian Western Bank are scheduled to release results tomorrow.

(Toronto-Dominion will hold a conference call at 3 p.m. Toronto time. To listen, dial +1-416-644-3416 or +1-877-974-0445.)

--With assistance from Doug Alexander in Toronto. Editor: David Scanlan

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net


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