TD hikes dividend as profit tops $2 billion

Toronto-Dominion Bank raised its quarterly dividend Thursday as it reported its first-quarter results edged higher compared with a year ago.

The bank said it will now pay a quarterly dividend of 51 cents per share, up from its previous rate of 47 cents.

The increased dividend came as TD said it earned $2.06 billion or $1.09 per diluted share for the quarter ended Jan. 31 compared with a profit of $2.04 billion or $1.07 per diluted share a year ago.

Revenue totalled $7.61 billion, up from $7.57 billion.

On an adjusted basis, TD said it earned $2.12 billion or $1.12 per share, up from $2.02 billion or $1.06 per share a year ago.

Beat expectations

Analysts were expecting earnings of $1.12 per share and $7.1 billion of revenue for the quarter, according to estimates compiled by Thomson Reuters.

TD chief executive Bharat Masrani said the bank was pleased with its start to the year.

"Our results reflect strong retail earnings on both sides of the border and strong fundamentals," he said in a statement.

Banks, which borrow money at short-term interest rates and lend it out to customers at higher, long-term rates, have been grappling with tight lending margins, as interest rates have hovered near historic lows for some time.

Those lending margins are likely to become even tighter, especially if the Bank of Canada cuts its benchmark interest rate again in March. The central bank already cut its key rate by a quarter of a percentage point in January, citing concerns over the impact of plummeting oil prices on the country's economy.

The country's big banks followed with a 15 basis point cut to their prime lending rates, which impact variable rate mortgages and other loans, but stopped short of passing on the entire quarter-point drop to borrowers.

Late last year TD Bank subsidiaries agreed to pay more than $13.5 million to clients who were charged excess fees on their accounts.

The "no contest" settlement with the Ontario Securities Commission followed allegations of inadequate supervision and other controls at TD Waterhouse Private Investment Counsel Inc., TD Waterhouse Canada Inc. and TD Investment Services Inc.