The bank has stated that it’s focusing more on selling home-equity credit lines, unsecured personal loans, and other higher profit products. Margins in Canadian banking rose 4 basis points to 2.75 per cent from Q2, the highest since 2015.
TD has also seen an increase in deposits and business lending, Bloomberg reported.
All in all, Canada’s largest lender by assets posted a 13 per cent increase in profit from domestic personal and commercial banking in the fiscal third quarter, its best performance since the second quarter of 2015.
“TD showed the strongest beat of the ‘Big 6’ this earnings season,” Barclays Plc analyst John Aiken wrote in a note to clients last week. “Domestic retail operations saw a step up in profitability after being mired in lower growth over the past few quarters."
The results extended a profit turnaround that began in the second quarter, when a 7.1 per cent jump in domestic earnings exceeded that of its rivals. Before that, Toronto-Dominion’s main business trailed or was near the bottom of Canada’s six largest lenders for the pace of growth in the three prior quarters. Canadian personal and commercial banking represents about half of the bank’s annual earnings.
A year ago, head of domestic banking Teri Currie blamed lower interest rates, competitive pricing, and cost of funds for mortgages at the time as factors for its less than stellar performance. More recently, the bank cited higher costs tied to modernizing branches with Wi-Fi and iPads, and adding mobile mortgage advisers and customer support.
“Earnings in our Canadian retail segment have been accelerating, reflecting a better than expected Canadian economic environment,” CFO Riaz Ahmed said. “We’ve been making a number of investments on the customer and operational side of the business that continue to allow us to provide for a better customer experience.”
Earnings from Canadian banking surged to $1.3 billion in the quarter ending July 31, with profit growth that outperformed Royal Bank of Canada, Bank of Montreal, and Canadian Imperial Bank of Commerce for the period.
Toronto-Dominion’s pace of growth in mortgages still lags behind rivals, rising 1.3 per cent from a year earlier, even as Canada’s real estate market has boomed.