By Allison Prang
Toronto-Dominion Bank's first-quarter profit rose more than 2% from a year earlier, helped by its investment in TD Ameritrade and a much smaller provision for income tax.
At the same time, noninterest expenses -- the provision for credit losses and insurances claims and related expenses -- increased by at least 20% each. Expenses outpaced revenue growth.
The bank recorded higher expenses after closing deals to buy a loyalty program from Air Canada and Greystone Capital Management.
Speaking in an interview, Riaz Ahmed, chief financial officer, made note of recent changes in the competitive landscape. The U.S. regional-banking market was shaken up early in February, when BB&T Corp. agreed to buy SunTrust Banks Inc., creating a larger competitor in the Southeastern U.S. TD wants to expand its presence in the region, but the bank doesn't feel compelled to rush to match the deal, Mr. Ahmed said.
"Sellers still have the expectation of high prices," he said. "As our U.S. franchise has matured, we have become more selective in looking for the right target."
TD's capital ratio was 12%, giving the bank some cushion that can be put to use. Mr. Ahmed said bank executives were "comfortable" when the ratio was "in the low 10s," but said having more capital hasn't put more pressure on them to do deals.
In the latest quarter, the bank spent money building out trading desks in New York, Singapore and London to beef up its presence as a dealer in the U.S. dollar foreign-exchange market, Mr. Ahmed said.
TD announced a 10% dividend increase to C$0.67 ($0.51) a share.
Total revenue at TD rose 6.6% to C$10 billion ($7.6 billion).
Overall, net income rose 2.4% from the year-earlier quarter to C$2.39 billion, with per-share earnings of C$1.27, up from C$1.24. Analysts polled by Refinitiv were expecting C$1.49 a share.
TD's provision for income taxes fell 52% to C$503 million. Its equity in net income of an investment in TD Ameritrade more than doubled to C$322 million.
Earnings on an adjusted basis edged up to C$1.57 a share from C$1.56 a share, although analysts were expecting C$1.72 a share.
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