February 26, 2015 / 12:38 PM / 3 years ago

UPDATE 2-TD Bank posts firmer profit in line with expectations

(Adds CFO interview, context)

By Jeffrey Hodgson

TORONTO, Feb 26 (Reuters) - Toronto-Dominion Bank , Canada’s second-largest lender, reported a slightly higher profit on Thursday in line with expectations, as gains at its retail division offset weakness in wholesale banking.

TD Bank’s net income rose to C$2.06 billion ($1.66 billion), or C$1.09 per share in the first quarter ended Jan. 31, from C$2.04 billion, or C$1.07 per share, a year earlier.

Excluding one time items, the company earned C$1.12 per share, in line with the analyst average estimate, according to Thomson Reuters I/B/E/S.

The lender also raised its quarterly dividend to 51 Canadian cents per share from 47 Canadian cents.

Investor sentiment had soured on Canadian banks heading into the first-quarter results season on concerns about the impact of a sharp price drop in oil prices and the resulting drag on the Canadian economy.

But the weaker energy prices have so far had a limited impact on TD’s loan book and results, said Colleen Johnston, TD Bank’s chief financial office.

“We’re really not seeing any direct effects to this point, but keeping a very close eye on this because needless to say, low oil prices are a negative for Canada overall,” she told Reuters.

Net income from the lender’s Canadian retail business rose 20 percent to C$1.45 billion, while that from its U.S. retail arm jumped 27 percent to C$625 million.

Johnston said she expects to see lending growth stay consistent for the balance of the year.

Net income in the wholesale banking business, which includes capital markets and corporate lending, fell 16.5 percent to C$192 million ($154 million) in the first quarter ended Jan. 31, hurt by lower fee-based revenue on reduced volumes.

Johnston said going forward, the bank would be focused on organic growth, though acquisitions were possible.

“We don’t feel that we’re strategically disadvantaged in any of our businesses where we have to go and acquire something. If something came along that was really attractive financially and strategically we would consider it,” she said.

“The higher likelihood would be in the United States, and not acquiring a bank or new branches, but acquiring some portfolios that would be a natural fit with our business. Credit cards would be a great example.”

$1 = 1.24 Canadian dollars With additional reporting By Shubhankar Chakravorty in Bengaluru; Editing by Maju Samuel and W Simon

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