TD, CIBC join rivals with strong quarterly results
Toronto-Dominion Bank and Canadian Imperial Bank of Commerce closed out quarterly results reporting on Thursday, joining major rivals in beating expectations, thanks to much lower provisions for loan losses and trading strength, even as their retail businesses posted muted growth or declines.
All six major banks surpassed pre-pandemic profit levels in the first quarter as an increase in soured loans has so far failed to materialize, but executives cautioned that a rise is still on the cards amid continued uncertainty and as government assistance programs come off.
“There are some positive signs with expectations of vaccines, but we need to be vigilant about a possible third wave” of the pandemic, Riaz Ahmed, chief financial officer at TD, Canada’s secondlargest lender, said in an interview.
But the bank, which has almost $9 billion of reserves to cover loan losses, is satisfied with its level of coverage for future losses, he added.
TD reported a decline of 13 per cent in its U.S retail business, while growth in its Canadian banking unit was driven largely by its wealth business, which also helped lift earnings at the other lenders.
In addition to margins under pressure, anemic loan growth and higher expenses in TD’s U.S. business, “strong contributions previously received from Ameritrade have ebbed under the new, previously announced earnings from Schwab,” Barclays analyst John Aiken said in a note.
CIBC reported higher profit at all its businesses, with strength in capital markets, and the recovery of $89 million in provisions on performing loans offsetting sluggish growth in its Canadian banking unit.
TD reported adjusted net income of $1.83 a share, in the three months to Jan. 31, versus analysts’ expectations of $1.49 a share. CIBC saw adjusted income rise to $3.58 a share, compared with estimates of $2.81 a share.