TORONTO (Canadian Press) - TD Bank Group (TSX: T.TD) reported a second-quarter profit of more than $1.7 billion and growth in most of its major sectors, including its main Canadian and U.S. banking operations.
The bank's overall net income was up two per cent from a year ago at $1.723 billion or $1.78 per share while its adjusted earnings were $1.8 billion, or $1.90 per diluted common share.
A year ago, TD earned a profit of $1.69 billion or $1.78 per diluted share and an adjusted profit of $1.74 billion or $1.82 per share.
Total revenue was $6 billion, up from $5.75 billion a year ago.
While the overall adjusted earnings were up from a year ago, they were just short of a consensus estimate of $1.91 per share compiled by Thomson Reuters.
However, Desjardins Securities analyst Michael Goldberg wrote that some of the details in the report will probably be good for investors in the longer term, pointing to the U.S. banking division's acquisition of Target's credit card assets.
"While TD’s results appear neutral to negative at first glance, upon closer examination, the acquisition of the Target credit card portfolio had an immediate positive reaction and should have a favourable continuing impact on results," Goldberg wrote.
TD shares were down slightly Thursday morning. They traded as low as $82.83 but recovered some lost ground to trade at $83.74 just before midday, off just 30 cents or 0.36 per cent from the previous close.
TD president and CEO Ed Clark said in a statement that the quarter's results were "solid" and his management team is confident that the bank's business model will help weather a period of slow growth and low interest rates.
"We feel positive about these results in the context of a challenging operating environment," Clark said in a statement.
Clark had told shareholders at their annual meeting last month that it would be tougher for TD to meet its growth targets due to the slow economy.
Among other things, the Canadian banking sector faces a slowing housing market and stricter lending rules that could affect their mortgage businesses.
In addition, the uncertain economic conditions in Canada and the United States could affect lending and other services to the business sector.
The bank increased its provision for credit losses to $417 million, up from $388 million a year earlier and up from $385 million in the first quarter of fiscal 2013.
Nevertheless, TD continued to show flat or higher profits in its major operations.
In the three months ended April 30, TD's Canadian personal and commercial banking sector reported $847 million of net income, or $877 million of adjusted earnings — up five per cent from the second quarter of 2012.
Its wealth management and insurance operations delivered $364 million of net income, which was about the same as last year.
TD's American personal and commercial banking operations, mostly located in the eastern states, generated US$392 million of net income — up nine per cent, year-over-year.
Wholesale banking — the bank's capital markets operations — had $220 million of net income, up 12 per cent from the second quarter of 2012.
"We are pleased with our second quarter results and the continued performance of our strong franchise businesses in a difficult trading environment," said Bob Dorrance, the head of wholesale banking.
"We are encouraged by the gradual improvement in capital markets, and we expect to capitalize on increased market activity as macroeconomic conditions stabilize."
TD bank also announced Thursday that it plans to buy back up to 12 million of its common shares over the coming year, or about 1.3 per cent of the total.