Toronto-Dominion Bank (NYSE:TD) beat Q2 expectations with a strong showing in its retail and investment banking businesses. TD stock was little changed in pre-market trading this morning.
Canada’s second-biggest bank said earnings per share rose to CAD $1.34 ($1.00) in the quarter to April 30, from CAD $1.20 in the same period the previous year, according to a press release. Analysts had on average forecast CAD $1.24 a share. Net income rose to CAD $2.5 billion in the quarter from $2.1 billion the previous year.
Net income at the bank’s Canadian retail business grew by 7% to $1.6 billion, benefiting from record account balances in personal checking accounts and strong growth in commercial banking. U.S. retail earnings increased by about 17.5% to CAD $845 million.
TD reported that it is nearly finished with a review of sales practices that it initiated after news reports in March claimed that TD branch staff had moved customers to higher fee accounts and raised their overdraft and credit card limits without their knowledge. “We continue to believe that we do not have a widespread problem with people acting unethically in order to achieve sales goals,” CEO Bharat Masrani said.
The bank reduced its loan-loss provisions, or money set aside to cover bad loans, in the quarter to CAD $500 million, down from CAD $633 million in the previous quarter.
TD stock has lost more than 11% of its value over the past three months. Rival Royal Bank of Canada (NYSE:RY) is down about 6% in the same period.
InvestorPlace contributor Richard Band earlier this month noted that “TD’s stock slid in late April and the concerns were growing whether it had the wherewithal to make it back. People also started wondering if it wasn’t overvalued and had carried a premium that it didn’t deserve.” “Fundamentally, you have a solid bank operating in two very good markets right now that is cheap and throwing off a 3.8% dividend yield,” he wrote on May 5.