TD Bank Group reports profits down, rolls out expanded share buyback program

Toronto –

TD Bank Group introduced it was considerably increasing a share buyback program because it reported its third-quarter revenue fell in contrast with a 12 months in the past.

The financial institution stated Thursday its internet revenue totalled $2.96 billion or $1.57 per diluted share, down from $3.21 billion or $1.75 per diluted share in the identical quarter final 12 months, because it noticed an increase in provisions for credit score losses in addition to greater bills partly associated to its failed bid to purchase U.S.-based First Horizon.

TD known as off the US$13.4-billion deal in May citing regulatory uncertainty, leaving a query as to what it could do with the additional money it had constructed up for the deal.

Investors acquired a partial reply Thursday because the financial institution introduced a plan to purchase again 90 million shares, or about 4.9 per cent of excellent shares, after it simply accomplished a 30-million share buyback program.

TD chief monetary officer Kelvin Tran stated in an interview that the buybacks have been a part of the financial institution’s constant capital deployment method that balances natural development, acquisitions and payouts to shareholders.

“This strategy depends what’s optimal any point in time, but we’re really happy that we can do that by returning excess capital to shareholders.”

The buyback program comes because the financial institution’s adjusted earnings amounted to $1.99 per diluted share in its newest quarter, down from an adjusted revenue of $2.09 per diluted share in the identical quarter final 12 months.

The outcome fell under the typical analyst estimate of $2.04 per diluted share, primarily based on estimates compiled by monetary markets knowledge agency Refinitiv.

The miss got here partly from greater than anticipated provisions for credit score losses that totalled $766 million, up from $351 million a 12 months earlier, Barclay’s analyst John Aiken stated.

The higher-than-expected provisions got here largely from the financial institution’s intensive U.S. operations, the place earnings additionally dissatisfied.

“The miss can largely be attributed to weaker earnings in its U.S. retail phase, which noticed margins decline and provisions improve,” he stated in a notice.

He stated nonetheless that the modest miss will possible be offset by the share buyback program.

Revenue on the financial institution totalled $12.78 billion, up from $10.93 billion in the identical quarter final 12 months.

TD stated its Canadian private and business banking business earned $1.66 billion in contrast with $1.68 billion in the identical quarter final 12 months, primarily because of greater provisions for credit score losses, partially offset by income development.

Tran stated the financial institution’s operations have been boosted by new accounts up 26 per cent 12 months over 12 months, pushed by a file quarter for new-to-Canada accounts, whereas it additionally noticed file spending on Canadian bank cards.

Mortgage volumes are additionally rebounding from the lows earlier this 12 months, regardless of greater charges, he stated.

“Obviously when rates go up people are a little bit more cautious, but structurally there’s a lot of demand.”

And whereas these charges are affecting shoppers, bank card revolving balances stay under pre-pandemic ranges and general consumer profiles look good, he stated.

“We feel very good about the credit quality of our book,” stated Tran.

The financial institution’s U.S. retail operations earned $1.31 billion, down from $1.44 billion a 12 months earlier because it confronted prices associated to its unsuccessful try to purchase U.S. financial institution First Horizon Corp.

Meanwhile, TD’s wealth administration and insurance coverage operations earned $504 million, down from $575 million a 12 months in the past, because it confronted extra extreme weather-related occasions and decrease transaction income in wealth administration.

TD’s wholesale banking earned $272 million in contrast with $271 million a 12 months in the past.

This report by The Canadian Press was first revealed Aug. 24, 2023.