TD Bank Financial Group (TDBFG) announced its financial results for the second quarter ended April 30, 2008. The quarter reflected solid earnings contributions from TD's Canadian and U.S. Personal and Commercial Banking segments, while Wholesale Banking results were impacted by challenging financial market conditions.
"I would characterize our second quarter as slightly disappointing but quite acceptable in the context of what's happening in the markets. Our retail businesses in both Canada and the U.S. - which produced more than 90% of our earnings - delivered very solid results this quarter. This shows that we're competing well in a tougher operating environment," said Ed Clark, TD Bank Financial Group President and Chief Executive Officer.
SECOND QUARTER BUSINESS SEGMENT PERFORMANCE
Canadian Personal and Commercial Banking
TD Canada Trust posted solid earnings of $582 million in the second quarter, up 8% over the same period last year. The quarter was defined by good volume growth across all Canadian Personal and Commercial Banking operating businesses. Strength in core banking, real estate secured lending, and business banking and insurance, led earnings growth in the quarter.
"Our second quarter performance clearly demonstrated the strength and resilience of the TD Canada Trust franchise. We made further investments in our businesses by opening more new branches with longer hours, and adding more employees to deliver the great customer experience we're known for," said Clark.
Wealth Management
Wealth Management, including TDBFG's equity share of TD Ameritrade, earned $182 million in the quarter. Within Canadian Wealth Management, discount brokerage was impacted by a lower trading commission strategy, while the full service broker business saw lower new issue activity and trading volumes due to weaker capital markets. As previously announced, TD Ameritrade contributed $67 million to Wealth Management's earnings for the quarter.
"We continue to believe our diversified Wealth Management offering positions us well for future growth through a long-term focus on growing assets, building an advisor network, and increasing trading volumes. But the reality is, this quarter our Canadian Wealth Management business was affected by weaker market activity, and to a lesser extent, strategic pricing decisions we made last year which we believe will pay off in the future," said Clark.
U.S. Personal and Commercial Banking
TD Banknorth earned $130 million in the second quarter. The business continued to see strength in commercial banking and solid overall asset quality.
"We're very pleased with the performance of TD Banknorth, which delivered core earnings growth in a challenging environment and is building momentum on organic growth initiatives," said Clark.
TDBFG completed the acquisition of Commerce during the quarter. As previously announced, earnings from the Commerce operations will be included in TDBFG's results beginning in the third quarter of 2008.
"The close of the Commerce deal is a major milestone for TD, and we're incredibly excited about the progress we have already made on the integration. We're feeling very positive about our U.S. Personal and Commercial Banking segment's ability to grow organically and deliver value to our shareholders. That's why last month we increased our 2008 earnings target for the segment from $700 million to at least $750 million, and reiterated our expectation for a minimum of $1.2 billion in earnings for 2009," Clark said.
Wholesale Banking
Wholesale Banking produced earnings of $93 million for the second quarter. The segment's results were impacted by the capital markets operating environment, resulting in lower trading revenue, a decline in origination fees and reduced security gains.
"Despite the near-term market challenges, TD Securities remains committed to our focus on delivering high-quality earnings without extending out the risk curve. While our Wholesale Banking strategy has helped us avoid the direct hits of significant asset writedowns, our second quarter clearly reflected we haven't been able to outrun the collateral effects of the issues facing the financial services industry," said Clark.
Conclusion
"At the halfway mark of the year, we remain confident that all of our businesses are well positioned to perform in a challenging environment and deliver on their longer term strategies," said Clark. "And while we don't expect to see earnings growth in 2008, we continue to believe TD will be a positive outlier in both Canada and the United States." -- TD Bank Financial Group
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