TD Bank profit up 3% to $1.9B disappoints analysts

TD Bank increased its fourth-quarter adjusted net earnings by three per cent but failed to meet analyst expectations.

Adjusted income was $1.86 billion or 98 cents a share, compared with $1.81 billion or 95 cents a share a year earlier.

TD reported income from its Canadian retail operations was up seven per cent to $1.4 billion and its wholesale banking operations saw a sharp 31 per cent increase, reflecting a rebound in the sector. U.S. operations grew but profits were flat.

The bank's revenue increased by $452 million from a year earlier to $7.452 billion — well above the estimate of $7.01 billion.

However, TD's profit missed analyst estimates of $1.05 per share of adjusted earnings sending its stock lower by three per cent.

The quarter included $54 million of integration charges related to its acquisition of MBNA Canada's credit card portfolio as well as amortization of intangibles which reduced its profit by four cents per share.

TD also increased its provision for credit losses by $19 million to $371 million.

"Almost everything that one does not want to see at TD came through in the quarter," Barclays analyst John Aiken wrote in a commentary.

"Considering we had anticipated that TD's relative exposures would result in relatively more positive earnings than peers, the fourth quarter is a decidedly negative surprise. Given that we anticipate the market will share in our sentiment, we would expect the shares to be off sharply today."

For the full 2014 financial year ended Oct. 31, TD had $29.96 billion of revenue — up $2.7 billion from 2013 — while net income rose by $1.2 billion to $7.88 billion and adjusted profit increased about $900 million to $8.12 billion.