Toronto-Dominion Bank

posted better-than-expected results across its operations in the first quarter, with adjusted earnings up 16 per cent to a record $4.2 billion.

Earnings per share of $2.44 in the three-month period ending Jan. 31 beat analyst expectations of $2.26.

“We achieved robust trading and fee income growth in our markets-driven businesses, volume growth in Canadian Personal and Commercial Banking, and margin expansion,” said Raymond Chun, the bank’s chief executive.

Capital markets and trading revenue largely drove TD’s outperformance, with lower provisions for credit losses also contributing, said Gabriel Dechaine, an analyst at National Bank Financial, in a note to clients.

Return on equity, a closely watched measure of a bank’s performance, rose to 14.2 per cent, while the bank’s CET1 capital ratio was 14.5 per cent.

TD’s Canadian personal and commercial banking division posted net income of $2.04 billion, with pre-tax, pre-provision earnings up seven per cent over the prior year, and lower provisions for credit losses.

Revenue increased five per cent year-over-year to $5.4 billion, reflecting increased commercial loan and deposit volumes.

In U.S. banking operations, adjusted net income was $1 billion, an increase of $168 million year-over-year, reflecting the impact of U.S. balance sheet restructuring activities and lower provisions for credit losses, partially offset by costs for U.S. anti-money laundering remediation and higher employee-related expenses.

The remediation is part of TD’s

settlement of criminal money-laundering charges

with authorities in the United States. The Canadian bank pleaded guilty in 2024 and paid combined fines of more than US$3 billion.

The bank also faces an asset cap in the U.S., and has taken steps to accommodate growth.

“We worked really hard last year in restructuring our balance sheet, creating that room so that would have a lot of headroom to serve our clients for many years to come,” the bank’s chief financial officer Kelvin Tran said Thursday. “And then, if needed, we have additional levers that we can pull to do that.”

  • Ex-TD Bank trader Nadarajah banned while awaiting spoofing trial
  • TD Bank’s Super Bowl ad announces plans to be ‘more human’

Across the bank, Tran said TD is seeing the benefits of cost-cutting and share buybacks last year.

The share buyback program was renewed in January, with plans to repurchase up to $7 billion of its common shares.

“As of the end of Q1, we had bought back approximately 84 million shares across these two buy back programs,” Chun said on a conference call with analysts Thursday morning. He said TD remains committed to returning excess capital to shareholders because management believes the bank’s share price does not fully reflect the intrinsic value of the business.

“TD has strong momentum, and we see considerable upside from here, even with significant share buybacks,” Chun added.

Tran said the buybacks will boost return on equity.

“It’s a very, very good place to be in, and with that much excess capital, we can continue to support our clients,” he said.

Tran said TD’s wealth management and insurance division “knocked it out of the park,” in the first quarter, with record earnings derived from strong contributions from both business lines.

Net income of $757 million was up $77 million year-over-year, driven in part by insurance premium growth. Trades per day in TD Direct Investing, part of the wealth management segment, increased 10 per cent from a year earlier.

Revenue in TD’s wholesale banking division, meanwhile, was up 24 per cent in the first quarter from a year earlier, driven by global markets and investment banking. Pre-tax pre-provision earnings were $907 million, up 75 per cent year-over-year.

Total provisions for credit losses across the bank were $1.04 billion, below analyst expectations. Provisions on impaired loans also came in lower than expected, thanks in part to performing releases of $125 million.

• Email: bshecter@postmedia.com