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TD Bank beats expectations with boost from retail banking business

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Toronto-Dominion Bank beat analyst expectations in the first quarter on growth in its U.S. retail banking operations.

TD’s net income fell nearly 58 per cent to $1.58 billion for the three months ending Jan. 31. On an adjusted basis, the bank’s profit grew 8 per cent to $4.16 billion, or $2.23 per share. On average, Bloomberg analysts were expecting $2.20 per share.

Adjusted earnings excluded the cost of settling a lawsuit related to the Allen Stanford Ponzi scheme and costs tied to TD’s US$13.4 billion takeover of First Horizon Corp. announced in February 2022.

Profit in TD’s core personal and commercial banking business rose seven per cent year-over-year to $1.73 billion on higher margins and loan volume growth. Revenue grew 17 per cent to $4.59 billion.

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South of the border, the bank’s net income in retail banking grew by 25 per cent since last year to $1.59 billion as loans rose by nine per cent. The bank said those figures included acquisition costs for First Horizon.

The wealth management segment’s profit fell 14 per cent year-over-year to $550 million amid market volatility.

TD joined other banks in being affected by the Canada Recovery Dividend, with a $585 million tax hit.

It also set more funding aside for bad loans with credit loss provisions increasing to $690 million from $72 million a year ago.

“TD had a strong start to 2023 with Canadian and U.S. retail businesses delivering robust revenue growth and record earnings, demonstrating the benefits of our diversified business mix,” said TD chief executive Bharat Masrani in a press release accompanying the results.

In the same week TD reported earnings, First Horizon announced it doesn’t expect to close the deal by the May 27 deadline.

“TD is fully committed to the transaction and we are in discussions with First Horizon about a potential further extension beyond May 27,” Masrani said. “This is a great transaction that offers scale and new capabilities for the U.S. bank.”

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