TD Q12020 net income rises by 24% to C$2.99bn ($2.24bn) but US margin pressure results in TD missing analyst forecasts. On an adjusted basis, TD Q12020 net income rises by 4% year-over-year to C$2.95bn.
By contrast, Canadian peers RBC, Scotiabank and Bank of Montreal all beat analyst expectations for the quarter to end January.
TD’s earnings miss is driven by a 7.6% y-o-y drop in net income at its US retail unit to C$1.15bn. Margin pressure following three Fed cuts in rates drives a drop in net interest margin by 35 bps to 3.07%.
The bank’s US retail unit cost-income ratio also drifts up, by 30 bps y-o-y to 54.9%.
Net income rises by 30% y-o-y to C$1.79bn on a reported basis. But this primarily reflects charges related to TD’s Air Canada marketing agreement in the first quarter of 2019. On an adjusted basis, net income falls by 2% y-o-y to C%1.81bn, driven by slightly higher provisions for credit losses.
TD Q12020 highlights
Canadian Retail unit hits include a 4% rise in net interest income. Average loan volumes rise by 4% reflecting 4% growth in personal loans and 8% growth in business loans. Average deposit volumes increase 7%, reflecting 7% growth in personal and business deposits, and an 8% increase in wealth deposits.
Non-interest income rises by 5%, reflecting higher revenues from insurance and higher fee-based revenue in TD’s wealth business.
In the US, retail banking average loan volumes increase 5% y-o-y. Specifically, business and personal loans rise by 2% and 8%, respectively.
Average deposit volumes increase by 5%. This is driven by 10% growth in business deposit volumes and 5% growth in personal deposit volumes.
TD Q12020 digital banking highlights
Active Canadian mobile banking users rise by 12.5% y-o-y to 5.4 million. Meantime, active US mobile banking users are up by 12.3% to 3.4 million.
TD ends the first quarter with a digital adoption rate of 55.5% in Canada, up from 54.2% a year ago. Over the same period the bank’s Canadian retail self-serve transaction rate rises to 86.7% of all transactions from 84.8%.
The TD branch network in Canada now comprises 1,088 outlets, down from 1,099 a year ago. In the US the TD branch network is down by a net 20 units to 1,220 outlets.