TD Bank misses estimates

National Bank and other rivals shine in quarterly reports

TD Bank Group on Thursday posted quarterly profit that fell short of estimates, a sharp contrast to National Bank of Canada and other rivals, which have pulled off earnings beats.

TD Bank took a hit from its U.S retail business, which fell 8% to C$1.15 billion in the first quarter, as Brokerage TD Ameritrade, in which the bank holds a stake, earned 35% less on reduced trading commissions.

The rest of the year will “continue to show the effects” of both the reduction in contributions from TD Ameritrade and the Federal Reserve’s three interest rate cuts last year, TD Bank Chief Financial Officer Riaz Ahmed told Reuters.

Ahmed also warned that margins will continue to remain at current levels or move lower over the next quarter.

Last year, Charles Schwab Corp said it would buy TD Ameritrade Holding Corp in a $26 billion deal. After the deal closes, expected in the second half of 2020, roughly 13% stake will be held by TD Bank, TD Ameritrade’s largest shareholder.

The domestic retail unit of TD Bank posted a 2% dip in adjusted net income, hit by higher non-interest expenses, provisions for credit losses, and insurance claims.

Meanwhile, National Bank reported higher earnings and beat analysts’ estimates, driven by growth in its financial markets and wealth management units.

The strong results mirrored those of Royal Bank of Canada , Bank of Montreal , Canadian Imperial Bank of Commerce and Scotiabank , which also benefited from strength in their capital markets business.

Net income at National Bank’s wealth management business rose 10% to C$135 million, boosted by higher fee-based revenues.

The sixth-largest Canadian

lender said net income from its financial markets unit jumped 10%, helped by stronger revenue from the global markets segment.

Net income at the bank rose 10.5% to C$610 million ($459.13 million), or C$1.67 per share, in the first quarter ended Jan. 31, while TD Bank’s net income rose 24% to C$3 billion, or C$1.61 per share.

Excluding one-time items, National Bank earned C$1.70 per share, beating analysts’ expectations for a profit of C$1.66 per share, according to IBES data from Refinitiv.

However, TD earned C$1.66 per share on an adjusted basis, falling short of the average analyst estimate of C$1.69.

REUTERS/CHRIS WATTIE The National Bank of Canada logo is seen outside of a branch in Ottawa on Feb. 14, 2019.