AMTD TD Ameritrade Holding Corporation

By Vipal Monga and Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 31, 2018).

TORONTO -- Toronto-Dominion Bank's U.S. division helped drive profit higher in the company's third quarter.

The Toronto-based bank whose U.S. unit is among the 10 largest banks in the U.S. by assets, cited higher interest rates, increases in consumer and business loans and a reduction in U.S. tax rates for boosting its earnings.

"The U.S. footprint is powerful," said James Shanahan, an analyst with Edward Jones, based in St. Louis.

The U.S. retail division, earned 1.14 billion Canadian dollars ($883.16 million), up 27% from the year-earlier comparable quarter. The unit contributed almost 37% to TD's total third-quarter net income of C$3.11 billion, up 12% from a year earlier. The quarter, ended July 31, was the first in which TD has earned more than C$3 billion, said Riaz Ahmed, the company's finance chief, in an interview.

He cited a combination of economic growth, U.S. tax reform, rising interest rates and deregulation for an improved banking environment in the U.S.

The U.S. business also got a boost from the equity of its TD Ameritrade investment, which brought in C$225 million for the division, up 91%, primarily as a result of TD Ameritrade's purchase of Scottrade. TD Ameritrade Holding Corp. bought Scottrade Financial Services Inc. in September 2017.

TD executives have said in the past that they are interested in expanding in the southeastern U.S., but Mr. Ahmed said Thursday that lofty valuations for targets could keep TD from doing deals.

Overall, earnings per share totaled C$1.65, up from C$1.46. TD's provision for credit losses rose 11% to C$561 million.

The bank's share price was at $60.91, down 0.83%, Thursday afternoon on the New York Stock Exchange. The shares were down because TD's earnings weren't as strong as those of its Canadian banking peers as expenses rose, said Barclays analyst John Aiken in a note. "Had its performance been more in line with what we have seen with its peers this quarter, earnings would have been significantly stronger," he said.

Earnings in TD's Canadian banking division rose 7.4% to C$1.85 billion. Both noninterest income and net interest income rose. Residential mortgage loans rose roughly 5%, and the bank expects similar growth for the rest of the year, said Mr. Ahmed.

Wholesale banking profits fell 24% to C$223 million. TD said trading revenue was down.

Chief Executive Bharat Masrani cited a positive outlook for the remainder of the year. "While we continue to see pockets of market uncertainty stemming from the geopolitical climate, both the Canadian and U.S. economies continue to perform well and support a positive outlook for our diversified businesses across the bank as we head into the final stretch of the year, " he said in prepared remarks.

TD set aside $25 million during the quarter partly to deal with "trade related uncertainty" amid heightened worries in Canada over the fate of North American Free Trade Agreement. Mr. Ahmed said he was very encouraged that Canada and the U.S. have resumed talks and that the sides had set an optimistic tone about the possibility of an agreement by Friday. "We're very hopeful for a good outcome," he said.

Write to Vipal Monga at vipal.monga@wsj.com and Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

August 31, 2018 02:47 ET (06:47 GMT)

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