05/23/2013 06:48 EDT | Updated 07/23/2013 05:12 EDT

TD Bank 2Q Earnings 2013: Profit Rises Slightly But Misses Expectations


TORONTO - TD Bank Group (TSX:TD) says it had a "solid" second quarter, with growth in most of its major sectors, but came up short of analyst estimates.

The bank's net income was up two per cent from a year ago $1.723 billion or $1.78 per share while its adjusted earnings were $1.8 billion, or $1.90 per common share.

While the adjusted earnings were up six per cent from a year ago, they were just short of a consensus estimate of $1.91 per share compiled by Thomson Reuters. Net income, which is less closely watched by analysts, also missed.

Outgoing TD chief executive Ed Clark, who has announced he'll retire in November 2014, described it as a "solid" quarter.

"We feel positive about these results in the context of a challenging operating environment. We remain confident that our customer-focused, retail-driven business model will help us manage through a period of slower growth and low interest rates," Clark said in a statement.

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Clark had told shareholders at their annual meeting last month that it would be tougher for TD to meet its growth targets due to the slow economy.

Among other things, the Canadian banking sector faces a slowing housing market and stricter lending rules that could affect their mortgage businesses.

In addition, the uncertain economic conditions in Canada and the United States could affect lending and other services to the business sector.

The bank increased its provision for credit losses to $417 million, up from $388 million a year earlier and up from $385 million in the first quarter of fiscal 2013.

Nevertheless, TD continued to show higher profits in its major operations.

In the three months ended April 30, TD's Canadian personal and commercial banking sector reported $847 million of net income, or $877 million of adjusted earnings — up five per cent from the second quarter of 2012.

Its wealth management and insurance operations delivered $364 million of net income, which was about the same as last year.

TD's American personal and commercial banking operations, mostly located in the eastern states, generated US$392 million of net income — up nine per cent, year-over-year.

Wholesale banking — often a volatile sector for any of Canada's big banks — had $220 million of net income, up 12 per cent from the second quarter of 2012.

"We are pleased with our second quarter results and the continued performance of our strong franchise businesses in a difficult trading environment," said Bob Dorrance, the head of wholesale banking.

"We are encouraged by the gradual improvement in capital markets, and we expect to capitalize on increased market activity as macroeconomic conditions stabilize."

TD's net income, before adjustments, was equal to $1.78 per share — about the same as a year earlier, when total net income in the second quarter was $1.693 billion but there were fewer shares outstanding.

The consensus estimate for net income was $1.85 per share.

Adjusted net income in the second quarter of 2012 was $1.736 billion, or $1.82 per share.

TD bank also announced Thursday that it plans to buy back up to 12 million of its common shares over the coming year, or about 1.3 per cent of the total.