Key Takeaways:
TD Bank posted a record C$4.62 billion third-quarter profit, up 38% from a year earlier, as its wholesale banking unit delivered record revenue and U.S. operations rebounded.
Raymond Chun, president and chief executive officer of TD Bank Group, said the quarter reflected revenue growth across the bank's Canadian businesses and wholesale banking, with improving momentum in U.S. operations. Management also raised confidence that full-year credit losses will land near the low end of its prior guidance range.
Net income from TD's wholesale banking unit, which houses global markets and corporate and investment banking, vaulted 87% to a record C$743 million, driven by higher lending and trading-related revenue as well as underwriting fees. Earnings from the U.S. banking arm jumped 41% to C$1.07 billion. The lender earned C$2.74 per share, or $1.98 adjusted, beating the average analyst estimate of $1.74, while revenue reached $20.45 billion.
The results cap a quarter in which Canada's largest banks all beat estimates, as persistent volatility drove elevated trading activity and stronger dealmaking lifted advisory and underwriting fees. Capital-markets earnings across the country's big lenders rose 35% from a year earlier, with Royal Bank of Canada's unit generating C$1.54 billion. TD's shares have jumped 28% so far this year, outperforming the broader Toronto index.
The strength in trading and investment banking has become the primary earnings driver for North American banks, offsetting pressure on net interest income as central banks ease policy. For TD, the wholesale banking surge helped lift overall profit even as its U.S. retail franchise continues to rebuild after regulatory constraints imposed in prior years. Executives across Bay Street, including at Bank of Montreal, Bank of Nova Scotia and National Bank of Canada, have brushed aside the impact of U.S. tariffs, saying clients can adapt to the evolving environment.
The credit-loss guidance is notable for a lender that has spent the past two years strengthening its compliance and risk controls. Management's confidence that provisions will land near the low end of the prior range suggests asset quality is holding up even as the Canadian economy slows. That, combined with the record wholesale banking results, gives TD a cleaner earnings base heading into fiscal 2027.
With credit losses tracking toward the low end of guidance, TD enters the final quarter of its fiscal year with momentum. The bank's capital-markets franchise, which generated record revenue in the quarter, is expected to benefit if dealmaking activity continues to recover into next year. Investors will watch whether the U.S. banking arm can sustain its 41% earnings growth as the lender works through the tail of its regulatory remediation.
This article is for informational purposes only and does not constitute investment advice.
