WRAPUP 1-RBC, TD shares hit record highs as results top estimates

Thu May 22, 2014 10:58am EDT
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(Merges TD, RBC stories, adds comment)

By Cameron French

TORONTO May 22 (Reuters) - Royal Bank of Canada and Toronto-Dominion Bank topped second-quarter estimates on the back of low loan-loss provisions and stronger retail lending and wealth management income, spurring shares of Canada's top two banks to all-time highs on Thursday.

Profit at RBC and TD's core domestic retail banks rose 7 percent and 13 percent, respectively, in spite of slowing growth in mortgage lending over the past few years.

"Despite calls on my end for a slowdown in personal and commercial banking, they just keep finding ways to deliver some pretty attractive results," said Tom Lewandowski, an analyst at Edward Jones in St. Louis.

At TD, acquisitions of assets such as the Aeroplan credit card portfolio helped make up for 4 percent growth in secured real estate lending.

The bank in September said it would buy about half of the Aeroplan portfolio from Canadian Imperial Bank of Commerce and became the primary issuer of the card. TD estimated at the time the new business would add 10 Canadian cents a share to its results in 2014.

"We're very pleased with the take-up on new accounts," TD Chief Financial Officer Colleen Johnston said in an interview. "I think for this year it's safe to say that Aeroplan will definitely exceed our expectations."

Acquisitions also helped drive up profit from TD's U.S. retail bank, where income rose 15 percent to US$495 million.   Continued...