TD Bank raises dividend, but Q1 profit falls short of expectations

Toronto Dominion Bank Group marked the start of its financial year by being the only member of the Big Six to fall short of analyst expectations.

The Toronto-based bank reported Thursday a first-quarter profit of $3 billion, up from $2.4 billion in the same quarter last year.

On an adjusted basis, TD said it earned $1.66 per diluted share for the quarter, compared with an adjusted profit of $1.57 per diluted share in the first quarter of 2019.

Analysts on average had expected an adjusted profit of $1.69 per diluted share, according to financial markets data firm Refinitiv.

Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Bank of Montreal and Royal Bank of Canada all beat analyst expectations when they reported earnings over the past week.

TD was hampered by the elimination of trading commissions, which impacted TD Ameritrade, its online brokerage for stock trading, long-term investing and retirement planning. It dropped the commissions in response to Charles Schwab Corp., which did the same when it announced that it would buy Ameritrade in November.

TD's $24-million purchase of Greystone Managed Investments Inc., a Regina-based multi-asset class manager, also brought charges of $24 million after-tax or two cents share, weighing on the bank's quarter. 

Its U.S. retail division, which saw its net income tumble by 8 per cent, didn't help either.

"While U.S. retail bank earnings growth was more subdued this quarter, we continue to add new households and grow core accounts," said TD's chief executive Bharat Masrani on a Thursday call with analysts.

"We're driving volume growth through our store network as well as online and digitally."

Masrani was also upbeat because TD will now pay a quarterly dividend of 79 cents per share, up from its previous payment of 74 cents per quarter.

The increased payment to shareholders came as TD earned $1.61 per diluted share for the quarter ended Jan. 31.

The earnings caused TD shares to tumble by about 3 per cent to $70.90 in afternoon trading.

This report by The Canadian Press was first published Feb. 27, 2020.

Companies in this story: (TSX:TD, TSX:RY, TSX:CM, TSX:NA, TSX:BNS)

The Canadian Press