Toronto-Dominion Bank (TD 1.50%) reported its results for the second quarter of its 2014 fiscal year today, and its adjusted earnings per share -- which exclude acquisition costs -- jumped 15% from CA$0.95 to CA$1.09. Through the first half of the year its adjusted earnings per share have risen from CA$1.94 to CA$2.15, a gain of 11%.
"By any measure, our results this quarter were outstanding," noted the CEO and group president of TD Bank, Ed Clark, in the company's earnings announcement. "Adjusted earnings were CA$2.1 billion, up 14% from the same period last year, driven by strong organic growth and contributions from our recent acquisitions. These results demonstrate the considerable earnings power of our business model."
TD Centre Source: Flickr / Oliver Mallich.
As noted by Clark, part of the reason behind the strong gains were the various acquisitions TD Bank made in recent years, including the acquisition of the credit card portfolio of Target Corporation and its acquisition of Epoch Investment Partners (both completed in March 2013) and the Aeroplan acquisition (fully completed in January of this year).
The impressive gains reported by TD Bank came from both its Canadian and U.S. retail segments. Its larger Canadian business saw its adjusted net income rise from CA$1.20 billion to CA$1.35 billion, a gain of 12%. In addition its retail business in the U.S. delivered impressive growth, as its net income rose 26% to CA$548 million, including strong growth in its investment in TD Ameritrade, which saw its earnings rise to CA$78 million, a gain of 35%.
The wholesale banking business saw its net income fall by CA$13 million to CA$207, a decline of 6%, as a result of heightened expenses. The head of the wholesale banking unit, Bob Dorrance, was optimistic, though, noting: "We are pleased with our second quarter results. We are confident that our diversified, integrated business model will continue to deliver solid earnings."
In total TD Bank also delivered growth in its profitability ratios as its adjusted return on common equity rose from 16.1% to 16.6% and its efficiency ratio declined from 55% to 54.2%.
"At the half-year mark, earnings growth has exceeded our expectations." added Clark, as he noted the company plans to grow earnings between 7% and 10% for the full year. "In addition to great execution on acquisitions and good organic growth in a tough operating environment, we benefited from strong credit performance and favourable currency translation."
Clark concluded his remarks by noting, "Looking ahead, our strategy remains focused on delivering legendary experiences, attracting new customers and leveraging the power of TD across our businesses."
