Toronto-Dominion Bank and Canadian Imperial Bank of Commerce topped estimates as both banks reported strong performance in their domestic-banking units and lower-than-expected loan-loss provisions, continuing a trend among Canada's biggest lenders as they gain more confidence about the economic outlook in a tumultuous year.
Toronto-Dominion earned C$2.20 a share on an adjusted basis in its fiscal third quarter, according to a statement Thursday, topping the C$2.05 average estimate. Net income at its Canadian personal and commercial banking division totaled C$1.95 billion ($1.42 billion) for the three months through July on record revenue, more than the C$1.84 billion average forecast of four analysts in a Bloomberg survey.
Growth in Toronto-Dominion's home market has become even more important for the bank after its US anti-money-laundering settlements imposed a cap on its American retail operations. But its Canadian unit has disappointed in recent quarters, analysts have said, and the firm has been
In contrast, CIBC's Canadian personal and business banking unit has consistently outperformed peers with strong net interest margin performance as well as cost controls. That continued in the third quarter, with the company reporting net income of C$812 million ($590 million) for the division, beating the C$754 million average forecast.
CIBC earned C$2.16 a share on an adjusted basis, it said in a statement, more than the C$2 average analyst estimate. The company saw revenue and income growth across all its business units.
Both firms — the last of Canada's Big Six banks to report third-quarter results — recorded lower-than-expected provisions for loan losses, matching a pattern set earlier in the week by Bank of Montreal, Bank of Nova Scotia, Royal Bank of Canada and National Bank of Canada.
Toronto-Dominion's provisions for potential loan losses totaled C$971 million, less than the C$1.26 billion analysts had forecast. At CIBC, provisions totaled C$559 million, compared with a C$578 million average estimate.
Kelvin Tran, Toronto-Dominion's chief financial officer, said a quarter-over-quarter decline in provisions for loans that are impaired is an encouraging sign.
"It's good to see how resilient the customer is in this macro environment," Tran said in an interview, adding that the tariff situation remains a wild card. "Whether it's time to talk peak to PCLs, it's hard to say right now given the uncertainty out there."
Executives at several of the other banks similarly said the macroeconomic picture, while still uncertain, has improved from earlier this year, and customers have proved resilient despite the impact of tariffs and trade-policy chaos.
Strategy Review
At Toronto-Dominion, Chief Executive Officer Raymond Chun is leading a strategy review and will share a formal update on the path forward at an investor day on Sept. 29. He's already made changes, including selling the firm's stake in Charles Schwab Corp. and ushering in a restructuring program that will see the bank cut about 2% of its workforce.
The bank recorded C$333 million in restructuring charges, including employee severance costs, in the third quarter. It expects to generate C$100 million of savings in this fiscal year and annual savings of C$550 million to C$650 million going forward.
In the wake of Toronto-Dominion's US anti-money-laundering settlements, the bank has grappled with a cap on its American retail operations. That's led to efforts to restructure its balance sheet, and the company has disposed of underperforming loan portfolios and rebalanced its securities holdings and put up decent returns in the business in recent quarters.
The bank has completed its bond-portfolio repositioning and met its target of reducing assets by 10%, Tran said Thursday, giving it room to keep serving clients. It incurred C$262 million in costs associated with those efforts in the quarter.
"While progress is being made in its US platform, we note that it was the one segment that came in (slightly) below expectations," Jefferies Financial Group Inc. analyst John Aiken wrote in note to clients about Toronto-Dominion. "That said, the restructuring charge and potential profitable deployment of its significant excess capital should provide support for its outlook."
As for CIBC, Aiken said the bank's results should support its stock valuation and predicted "some relative outperformance in its shares today."
CIBC also announced plans for a new
