Toronto-Dominion Bank reported adjusted earnings of $4.06 billion for its fiscal fourth quarter, an increase of five per cent over the prior year, driven primarily by higher net interest income in a rising rate environment and insurance revenue.
The adjusted earnings of $2.18 per share beat average analyst expectations of $2.07 per share. TD Bank also raised its quarterly dividend to 96 cents from 89 cents.
Report net earnings for the quarter were $6.67 billion, up more than 70 per cent from last year, but included significant one-time gains, including $1.74 billion from strategies to mitigate interest rate risk on its acquisition of First Horizon and $997 million on the sale of shares in The Charles Schwab Corp.
“Q4 was a strong quarter for TD,” said TD Bank Group president and chief executive officer Bharat Masrani in a conference call on Thursday afternoon. “Our banking businesses have performed well in this environment, enabling us to continue to make strategic investments in our people, in technology and in new capabilities in our businesses to drive future growth.”
For the full 2022 fiscal year, TD Bank reported net income of $17.43 billion, up more than 20 per cent from last year. On an adjusted basis, TD reported net income of $15.43 billion, which was a five per cent jump from the year prior.
TD’s personal and commercial banking led the gains with an 11 per cent increase in fourth quarter net income to $1.69 billion. Revenues increased 16 per cent on higher net interest income and more client acquisition and activity.
The U.S. retail banking segment, excluding TD’s investment in the Charles Schwab Corp., reported a profit of $1.23 billion, rising nine per cent from a year ago. Profits in TD’s wealth management and insurance segment fell 15 per cent to $516 million as insurance claim expenses grew.
Gabriel Dechaine, analyst at National Bank of Canada, largely attributed TD’s beat to a lower tax rate, but also pointed to the loan growth on both sides of the border as a positive.
John Aiken, senior analyst and head of research at Barclays Bank PLC, expected TD’s strong performance in its retail segments would be well-received by the market.
“Not only did TD come in ahead of expectations but it managed to earn through higher-than-forecast provisions (a roughly $0.05 per share headwind),” Aiken wrote in a Dec. 1 note to clients. “TD saw strong performances in both of its retail businesses and the performances on both sides of the border should bolster investor sentiment.”
Shares of TD closed up two per cent at $91.84 in Toronto Thursday.