Toronto-Dominion Bank (TD), Canada's largest lender by assets, said fourth-quarter profit rose 8 percent as earnings from domestic and wholesale banking increased.

Net income for the period ended Oct. 31 climbed to C$1.75 billion ($1.5 billion), or 91 cents a share, from C$1.62 billion, or 84 cents, a year earlier, the Toronto-based lender said today in a statement. Profit excluding some items was 98 cents a share, missing the C$1.06 average estimate of 13 analysts surveyed by Bloomberg.

Toronto-Dominion benefited from improvements at its banking operations in Canada as well as in investment banking. Growth in loans and deposits, along with the purchase last year of a C$3.3 billion Visa Inc. credit-card portfolio from Canadian Imperial Bank of Commerce, helped boost Canadian consumer-lending results.

"It was definitely a solid fourth quarter and that helped us deliver a great year," Chief Financial Officer Colleen Johnston, 56, said today in a telephone interview. "We had strong results in all of our businesses."

Revenue in the quarter rose 6.5 percent to C$7.45 billion from a year earlier, according to the statement. The lender set aside C$371 million for bad loans, up from C$352 million. Net interest margin, the difference between what a bank pays for deposits and charges for loans, fell to 2.15 percent from 2.18 percent in the third quarter and 2.22 percent a year earlier.

Toronto-Dominion's results were "surprisingly disappointing," John Aiken, an analyst with Barclays Plc, said in a note to clients. "Almost everything that one does not want to see at TD came through in the quarter," he said, citing higher expenses and "outsized" margin compression.

Adjusted Canadian retail profit, which includes wealth management and insurance, increased 6.8 percent to C$1.36 billion, the company said. U.S. retail earnings, which include wealth management in that country, were C$509 million, compared with C$478 million a year earlier, the bank said.

Profit from the lender's wholesale unit increased 31 percent to C$160 million, while underwriting and advisory fees climbed 50 percent to C$126 million, the bank said. Trading income dropped 14 percent to C$296 million from a year earlier, led by declines in interest-rate and credit trading.

For the fiscal year, net income rose 19 percent to C$7.88 billion, or C$4.14 a share, from C$6.64 billion, or C$3.44, Toronto-Dominion said.

Canadian Imperial Bank of Commerce, the country's fifth-biggest bank, earlier reported quarterly profit fell 1.7 percent on declining earnings in wholesale banking and Canadian lending. CIBC's earnings missed analysts' estimates by a penny.

Net income slid to C$811 million, or C$1.98 a share, from C$825 million, or C$2.02, a year earlier, the Toronto-based lender said. CIBC raised its quarterly dividend to C$1.03 a share from C$1.

Wholesale-banking earnings fell 35 percent to C$136 million in the quarter, pulled down by declines in trading, the company said. Profit from retail and business banking, the lender's largest unit, dropped 1.8 percent to C$602 million.

CIBC recorded an C$82 million charge tied to funding valuation adjustments for uncollateralized derivatives, and C$13 million in costs tied to the development of a travel rewards program and the sale of part of a credit-card portfolio to Toronto-Dominion last December.

Total trading revenue fell 81 percent to C$27 million, with losses recorded from interest rates trading, CIBC said. Fees from underwriting and advisory rose 45 percent to C$128 million.

For the fiscal year, net income fell 4 percent to C$3.22 billion, or C$7.86 a share, from C$3.35 billion, or C$8.11, a year earlier, CIBC said.

Toronto-Dominion shares have climbed 14 percent this year, outpacing the 12 percent advance of the Standard & Poor's/TSX Commercial Banks Index. CIBC has gained 18 percent this year, the top performer on the eight-company index, which has advanced 12 percent.

 

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