TD Bank Group Reports Third Quarter 2012 Results
TD Bank Group (NYSE: TD) today announced its financial results for the third quarter ended July 31, 2012. The Bank delivered a new record quarter, reflecting strong retail and solid wholesale earnings.
"This was a great quarter for TD, with growth driven by record retail earnings and a significant improvement in wholesale earnings," said Ed Clark, Group President and Chief Executive Officer. "We're pleased to announce a dividend increase of 5 cents per common share and an increase in our payout range to 40-50% of adjusted earnings. This marks our second dividend increase this year and means that our fiscal 2012 dividend will increase by 11%, a big positive for our investors. Our ability to increase dividends points to the stability and high quality of our customer-driven earnings and the Board's confidence in our continuing ability to deliver long-term growth even in a tough operating environment."
Canadian Personal and Commercial Banking
Canadian Personal and Commercial Banking posted a record quarter, with reported net income of $864 million. Adjusted net income was $889 million, up 12% from the same period last year. Results for the quarter were driven primarily by good volume growth in loans and deposits, better credit performance and an elevated contribution from MBNA.
"I am very pleased with our results this quarter, as all our major businesses contributed to delivering record earnings," said Tim Hockey, Group Head, Canadian Banking, Auto Finance, and Credit Cards. "While we expect the low interest rate environment and slower economic growth to be stronger headwinds going forward, we will continue to focus on delivering legendary customer service and convenience, which has earned TD a seventh consecutive J.D. Power and Associates Award for highest customer satisfaction levels among the Big Five banks."
Wealth and Insurance
Wealth and Insurance delivered net income of $360 million in the quarter, up 3% from the same period last year. Lower transaction revenue in Wealth due to decreased trading volumes were largely offset by increases in fee-based revenue from asset growth. In the Insurance business, revenue increases from premium growth and the inclusion of MBNA were more than offset by adjustments to reserves for claims liabilities and higher claims from weather-related events. TD Ameritrade contributed $56 million in earnings to the segment, up 17% from the same period last year.
"This was a solid quarter for our Wealth and Insurance businesses, despite a tougher operating environment and lower trading volumes," said Mike Pedersen, Group Head, Wealth Management, Insurance, and Corporate Shared Services. "We are gaining market share in Wealth and fee-based revenue remains strong, with good net client asset growth in our advice-based and asset management businesses. The Insurance business has seen strong growth year to date, with good premium growth and, despite a softer quarter, is on track for a strong year."
U.S. Personal and Commercial Banking
U.S. Personal and Commercial Banking delivered solid earnings this quarter, with reported net income of US$279 million. On an adjusted basis, net income was US$355 million, up 3% from the same period last year, driven primarily by strong organic volume growth in loans and deposits.
"Strong core volume growth this quarter again helped mitigate the impact of the Durbin Amendment for TD Bank, America's Most Convenient Bank," said Bharat Masrani, Group Head, U.S. Personal and Commercial Banking. "Despite the economic and regulatory headwinds, we will continue to invest in our future growth and we remain on track to open 35 new stores in 2012."
Wholesale Banking recorded net income of $180 million for the quarter, up 61% compared with the same period last year. The increase was primarily due to higher trading-related revenue and improved fixed income and credit trading. Results were partially offset by higher non-interest expenses and PCL.
"I am very pleased that we delivered another solid quarter in challenging markets," said Bob Dorrance, Group Head, Wholesale Banking. "Trading revenue exceeded expectations, and while we believe it will normalize in the coming quarters, we expect our client-centric business model to continue to generate targeted returns."
TD's Tier 1 capital ratio was 12.2% in the quarter and capital quality remained very high. TD continues to exceed the 7% common equity tier one Basel III requirement on a fully phased-in basis.