Fourth Quarter Results
The Toronto-based company's reported net income for the fourth quarter rose to C$1.09 billion or C$1.50 per share from C$762 million or C$1.04 per share a year ago.
Net income for the latest quarter includes a gain of C$135 million after tax, or C$0.19 per share, related to the estimated value of the shares of the bank received in Visa Inc. in exchange for its membership in Visa Canada Association as part of the Visa global restructuring. In addition, net income for the quarter includes a general loan loss provision release of C$39 million after tax or C$0.05 per share based on revised loss rate factors, amortization of intangibles of C$99 million after tax or C$0.14 per share, compared with C$87 million after tax or C$0.12 per share in the year-ago period. Net income for the quarter also includes a loss of C$2 million after tax due to the change in fair value of credit default swaps hedging the corporate loan book, compared with a loss of C$8 million after tax or C$0.01 per share in the previous-year quarter.
Adjusted net income for the quarter increased to C$1.02 billion or C$1.40 per share from C$875 million or C$1.20 per share in the similar period of last year.
Net income available to common shareholders increased to C$1.09 billion from C$757 million in the comparable period of the prior year.
Total revenues for the quarter were recorded at C$3.55 billion, up from C$3.32 billion in the previous-year quarter.
Commenting on the results, Ed Clark, President and Chief Executive Officer of TD Bank Financial Group said, "A strong fourth quarter financial performance wrapped up a tremendous 2007. For the year, all TDBFG businesses posted double-digit earnings growth. This quarter demonstrated the ongoing strength of our domestic businesses and good progress in our U.S. operations."
Net interest income for the quarter was recorded at C$1.81 billion, up from C$1.71 billion in the comparable period of last year. Other income increased to C$1.74 billion from C$1.60 billion in the year-ago period.
Non-interest expenses for the quarter increased to C$2.24 billion from C$2.21 billion in the previous-year quarter.
Loan loss provisions for the quarter were C$139 million compared to C$170 million a year ago. Return on common equity increased to 20.8% from 15.7% in the prior-year period. Return on invested capital rose to 16.3% from 15.2% in the similar period of the previous year.
Canadian Personal and Commercial Banking
Earnings for the quarter increased 14% from the prior-year period to C$572 million from C$501 million in the previous-year quarter. TD Canada Trust saw continued strength in real estate secured lending, business banking and insurance businesses. Revenue for the quarter grew 10% to C$2.15 billion from C$1.95 billion a year ago, primarily due to volume growth across most banking products, particularly in real-estate secured lending, credit cards and deposits.
Wealth Management
Wealth Management, including the Bank's equity share of TD Ameritrade, recorded a 31% increase in earnings to C$194 million from C$148 million in the previous-year quarter. TD Ameritrade's fourth quarter contributed C$75 million in net income to the Wealth Management segment. In Canada, the quarter saw continued earnings strength in discount brokerage and the advice-based businesses, along with increased assets under management in TD Mutual Funds. Revenue grew 15% to C$581 million from C$504 million in the year-ago period, primarily due to a combination of higher transaction volumes in discount and full service brokerage, higher net income and fee-based income, strong mutual fund sales and strong growth in client assets.
U.S. Personal and Commercial Banking
U.S. Personal and Commercial Banking segment recorded a 97% increase in earnings to C$124 million from C$63 million in the same period last year, reflecting an increased ownership percentage in TD Banknorth from the privatization transaction that was completed in April 2007. The average ownership percentage increased to 100% from 57% in the prior-year quarter. In addition, since April 2007, the segment includes the banking operations of TD Bank USA, which provides banking services to customers of TD Ameritrade. Revenue declined 1% to C$475 million from C$478 million in the similar period of last year primarily due to a stronger Canadian dollar.
During the quarter, TDBFG announced a definitive agreement to acquire New Jersey based Commerce Bancorp. The company noted that the combination of Commerce and TD Banknorth would double the scale of the bank's U.S. banking business, and increase its overall retail network to 2,000 branches in North America.
Wholesale Banking
Wholesale Banking reported an 8% increase in earnings to C$157 million from C$146 million in the prior-year quarter. Revenue for the quarter increased to C$525 million from C$493 million in the same quarter last year and was derived primarily from capital markets, investing and corporate lending activities. Capital markets revenue increased from the year-ago quarter due to stronger non-taxable transaction revenue in equity trading and stronger foreign exchange trading, due primarily to volatility in currency markets. These increases were partially offset by weaker credit trading due to volatility in the credit markets and a breakdown in traditional pricing relationships between corporate bonds and credit default swaps or CDS during the quarter.
Corporate
Corporate segment reported a net income of C$47 million for the quarter, compared with net loss of C$96 million in the same period last year. Adjusted net loss for the quarter was C$26 million, compared with adjusted net income of $17 million a year ago, due to lower securitizations gains, a decrease in earnings on capital, lower gains on investments and the benefit of interest on income tax refunds in the prior year. Adjusted net for the latest quarter excludes a gain of C$163 million or C$135 million after tax related to the estimated value of the shares the bank received in Visa Inc, in exchange for its membership interest in Visa Canada Association as part of the global restructuring of Visa, and a general allowance release of C$60 million or C$39 million after tax based on the revised loss rate factors.
Full Year Results
For the full year, the company's reported net income declined to C$4.00 billion or C$5.48 per share from C$4.60 billion or C$6.34 per share a year ago. Net income available to common shareholders declined to C$3.98 billion from C$4.58 billion in the prior year.
Adjusted net income for the year increased to C$4.19 billion or C$5.75 per share from C$3.38 billion or C$4.66 per share in the previous year.
Total revenues for the year increased to C$14.28 billion from C$13.19 billion in the prior year.
Separately, the company announced that a dividend of C$0.57 per fully paid common share in the capital stock of the bank was declared for the quarter ending January 31, 2008, payable on and after January 31, 2008, to shareholders of record at the close of business on January 4, 2008.
The company said that In lieu of receiving dividends in cash, holders of the bank's common shares may choose to have their dividends reinvested in additional common shares of the bank in accordance with the Dividend Reinvestment Plan. Peer Performance
Among the company's peers, Toronto-based Bank of Montreal (BMO, BMO.TO) reported a decline in net income for the fourth quarter to C$452 million or C$0.87 per share from C$696 million or C$1.35 per share in the prior-year quarter, due primarily to charges. Excluding one-time items, earnings improved to C$727 million or C$1.42 per share from C$673 million or C$1.31 per share in the similar period of last year. Total revenues on a taxable equivalent basis decreased to C$2.24 billion for the quarter from C$2.49 billion in the prior-year period.
Toronto-based Bank of Nova Scotia (BNS, BNS.TO) is scheduled to report its financial results for the fourth quarter on December 6, 2007. For the third quarter, the company reported a 10% increase in earnings to $1.02 billion or $1.03 per share from $0.93 billion or $0.94 per share in the prior-year quarter. The company's total revenue increased 11% to $3.30 billion from $2.99 billion in the same quarter of last year. Net interest income improved 5% to $1.91 billion from $1.82 billion in the year-ago quarter.
Stock Movements
In Thursday's regular trading on the NYSE, TD is currently trading at US$72.31, up US$0.73 or 1.02% on a volume of 404,418 shares. In the 52-week period, the stock has been trading in a range of US$57.13-US$77.63.
In Thursday's regular trading on the Toronto Stock Exchange, TD.TO is currently trading at C$71.55, up C$1.17 or 1.66% on a volume of 1.59 million shares. In the 52-week period, the stock has been trading in a range of C$64.02-C$77.10.
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