TD Bank Financial Group (TSX: T.TD, Stock Forum) announced expected results for its fourth quarter Thursday, including $350 million in credit trading losses in its wholesale banking segment.
The credit trading losses also led to a net loss of $228 million for the wholesale banking segment. The group’s corporate segment lost $153 million in the quarter, compared to its normal loss of $40 million. TD reports net earnings of over 1 billion in retail segments for the fourth quarter, leading to retail adjusted earnings of $4 billion for fiscal 2008. The company also says it expects to report diluted earnings per share on a GAAP basis of $1.22, or on an adjusted basis of 79 cents.
The company also announced that ”in light of the recent favourable evolution of case law in similar securities class actions,” it re-evaluated the contingent litigation reserve it has held for Enron-related claims during the quarter and is releasing a substantial part of it, resulting in a positive adjustment of $323 million.
“As previously disclosed, due to global liquidity issues, the widening in the pricing relationship between asset and credit protection markets (basis) has negatively impacted credit trading-related revenues for the first three quarters of 2008. The dramatic absence of liquidity in global credit markets in September and October has produced an unprecedented widening of the basis, causing larger losses in Wholesale Banking in the fourth quarter,” says TD.
"TD's strategic positioning in wholesale banking has helped us avoid most of the problems that have hurt banks around the world. That being said, it's not been possible to completely avoid the unprecedented global liquidity crisis of the last few months," said Ed Clark, president and CEO of TD Bank. "This has meant that despite holding what we consider quality assets, assets which continue to perform, we're in a position of having to take some mark-to-market losses," added Clark.
TD plans to release its fourth quarter and fiscal 2008 results on December 4. Shares of the company fell 5.2% to $47.36 Thursday.
On the company’s Bullboard Thursday, in a post called “ugly day”, damameke said: “Very ugly..... going to take years to repair this financial mess[sic]”
