(Adds executive comments from conference call, updates shares to close)
By John Tilak
TORONTO, May 28 (Reuters) - Toronto-Dominion Bank on Thursday posted a second- quarter profit that beat market expectations, on strong growth in its Canadian retail and wholesale businesses.
The Canadian retail segment recorded an 8 percent increase in earnings for the period. It was supported by loan and deposit volume growth, asset growth in the wealth business and gains in insurance.
Profit at the bank's wholesale unit rose 19 percent, benefiting from higher trading and underwriting activity.
The results follow quarterly numbers from Royal Bank of Canada, Bank of Montreal, CIBC and National Bank of Canada, all of which reported higher-than-expected quarterly earnings.
But investors remained concerned about the potential lack of growth catalysts for the Canadian banks, with worries that a sluggish economy and a slump in oil prices will further weigh on sentiment. TD slipped 1.1 percent to C$55.37.
"Our operating environment remains challenging. Prolonged low rates (are) slowing the Canadian economy," Chief Executive Bharat Masrani said on a conference call.
"Mixed recovery signals from the U.S., continued expectations for low oil prices, and regulatory and legislative pressures in both the U.S. and Canada will continue to result in slower revenue growth."
TD has been expanding in the United States and recently said it would acquire the U.S. consumer credit card portfolio of retailer Nordstrom.
While the company is now focused on growing from within, it does not rule out acquisitions, TD Chief Financial Officer Colleen Johnston said in an interview. "If there's something that's very strategically compelling and financially compelling, we'll look at it."
"We are probably more focused on looking at assets or books of business, as opposed to branches," she said. "So the Nordstrom deal is a perfect example of the kind of deal that we would like to do."
Net income in the quarter, ended April 30, was $1.86 billion, or 97 Canadian cents a share, compared with C$1.99 billion, or C$1.04 a share, a year ago.
Excluding special items, profit was C$1.14 a share. Analysts expected C$1.11 a share, according to Thomson Reuters I/B/E/S.
TD is a play on the superior growth prospects of the U.S. economy, said John Stephenson, president of Stephenson & Co Capital Management, which owns TD shares.
"TD has exposure to the best place, best quality assets within the U.S. banking system, which is the Northeast," he said.
TD is one of the 10 largest banks in the United States, with more than 1,300 branches along the East Coast, stretching from Maine to Florida. (Reporting by John Tilak; Editing by Jeffrey Benkoe and Meredith Mazzilli)