TORONTO – TD Bank shares climbed nearly 5% on Thursday after the bank reported better-than-expected fourth quarter profits and a 13% dividend hike.
TD’s stock closed $ 4.52, or 4.91%, at $ 96.50 on the Toronto Stock Exchange, driven by strong financial results and the broader market recovery.
The bank attributed the rise in profits in part to its U.S. division, which recorded higher margins on its loans, while retail banking in Canada also rose amid increased bank activity. customers and credit card spending.
“We have strong customer activity driving volume and revenue growth, and we’re very encouraged by that,” TD CFO Kelvin Tran said in an interview.
The bank said Thursday it would now pay a quarterly dividend of 89 cents per share, down from 79 cents per share previously. It also announced its intention to repurchase a maximum of 50 million of its shares.
The announcements come as the Office of the Superintendent of Financial Institutions (OSFI) last month lifted restrictions put in place at the start of the pandemic that prohibited banks and insurers from raising dividends, repurchasing their shares or to increase the remuneration of their directors.
TD posted net income of $ 3.8 billion for its fourth quarter, down 26% from the same period last year. His profit last year was inflated by the proceeds from the sale of his investment in TD Ameritrade. Adjusted profit, which excludes non-recurring items, was $ 3.9 billion, up 30% from last year.
TD said it earned an adjusted profit of $ 2.09 per share, up from $ 1.60 per share in the same quarter last year.
Analysts on average expected adjusted earnings of $ 1.96 per share, according to forecasts collected by financial data firm Refinitiv.
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Scotiabank analyst Meny Grauman said in a note that TD’s performance was notable because other Canadian banks failed to exceed analysts’ expectations.
“In a sea of failures, not only is better (earnings per share) than expected refreshing, but it’s likely to stand out on the day of the earnings release.”
While the quarterly results are positive, TD posted much more modest financial gains for its full year, and the question now is how sustainable the quarterly results will be.
Barclays analyst John Aiken said in a note that much of the increase in earnings was due to lower than expected bad debt provisions. Instead, the bank reported a reversal of provisions for credit losses of $ 123 million.
He said, however, that the bank’s market platform also performed well, and the financial institution benefited from a five basis point margin expansion in its US retail operations, although average loans were down slightly.
“We believe the expansion of the margin in the United States, along with a better than expected dividend increase, should attract positive attention.”
Annual profit of $ 14.3 billion
TD said its retail services in Canada posted profits of $ 2.1 billion, up from $ 1.8 billion in the same quarter last year, while its retail services in the states United earned nearly $ 1.4 billion, up from $ 871 million a year ago.
TD’s wholesale banking services, which include its capital markets and investing activities, generated profits of $ 420 million, down from $ 486 million in the same quarter last year.
For the full year, TD reported earning $ 14.3 billion, or $ 7.72 per share, from $ 42.7 billion in revenue, compared to profit of $ 11.9 billion. $, or $ 6.43 per share, with revenues of $ 43.6 billion in the prior year.
Company in this story: (TSX: TD)
Ian Bickis, The Canadian Press