TD, CIBC post profit gains and hike dividends

Thu Feb 27, 2014 12:18pm EST
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By Cameron French

TORONTO (Reuters) - Toronto-Dominion Bank (TD.TO: Quote) and Canadian Imperial Bank of Commerce (CM.TO: Quote) both posted better-than-expected quarterly profits and raised their dividends on Thursday, benefiting from recent acquisitions and strong wholesale banking income.

The results, which pushed shares of both lenders higher, built on generally stronger-than-expected results from rivals Royal Bank of Canada (RY.TO: Quote), Bank of Montreal (BMO.TO: Quote) and National Bank of Canada (NA.TO: Quote) earlier this week.

With a slowdown in Canadian lending growth, the banks have sought to expand other facets of their operations, both internally and through acquisitions.

"The core engine of the Canadian banks relative to where they've been in the past is not firing on all cylinders, however what we are seeing is the benefits of diversification that the banks have put in place," Barclays Capital analyst John Aiken said in an interview.

TD said income from wholesale banking, which includes trading, underwriting, and investment banking, rose 44 percent in the quarter, while CIBC's wholesale banking profit rose 26 percent.

TD, Canada's second-largest bank, earned C$2.04 billion ($1.84 billion), or C$1.07 a share, in the fiscal quarter ended January 31, up from a year-earlier profit of C$1.78 billion, or 93 Canadian cents a share.

Excluding items, it earned C$1.06 per share. That was ahead of analysts' expectations of a profit of C$1.04 per share.

"We just had a really strong quarter all around in wholesale," Colleen Johnston, TD's chief financial officer, said in an interview. "We had good trading revenue, certainly well above what we expect to be our normal level."   Continued...

A TD Canada Trust branch is seen in the financial district in Toronto, January 28, 2013. REUTERS/Mark Blinch