UPDATE 1-TD Bank says oil loan losses manageable, eyes U.S. acquisitions

Thu Mar 31, 2016 1:08pm EDT
 
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* TD CEO says "indirect exposure" to oil slump a concern

* TD CEO says bank would consider Southeast U.S. purchases

* TD CEO calls for tougher scrutiny of alternative lenders (Adds CEO comments from conference call)

By Matt Scuffham

TORONTO, March 31 (Reuters) - Toronto Dominion Bank, Canada's second biggest bank, said on Thursday that it expected losses from bad loans in the oil and gas sector to be manageable and would consider acquisitions in the United States.

TD has set aside a comparatively low amount to cover loans that have turned sour. Gross impaired loans in the oil and gas sector fell to C$86 million in the first quarter from C$93 million in the fourth quarter. Other Canadian banks, such as Bank Nova Scotia, have warned of much higher losses.

"We remain confident that any losses in our oil and gas portfolio will be manageable given the small size of this exposure relative to our overall balance sheet," Chief Executive Bharat Masrani told shareholders at the bank's annual meeting.

However, Masrani acknowledged that the collapse in global commodity prices presented Canada with its biggest economic challenge, causing "a lot of pain in many parts of the country" and said he was concerned about the "indirect exposure" of the oil price slump on the bank's customers.

"It is the indirect exposure, not just from a financial perspective but I think sometimes it is underestimated what it does to the local economy and what it does to our customers... Do I worry about it? Yes," he told reporters on a conference call following the meeting.   Continued...