TD’s Rapid Growth in Home-Equity Loans Shows Signs of Cooling

(Bloomberg) -- Toronto-Dominion Bank’s rapid growth in Canadian home-equity loans has eased up just a bit.

After posting year-over-year growth of more than 30 percent in hybrid home loans pitched as mortgage substitutes for the past five quarters, Toronto-Dominion’s growth streak in its fiscal first quarter cooled slightly. Amortizing home equity line of credit balances totaled C$51.3 billion, up 28 percent from C$40 billion a year earlier.

Despite the growth, Toronto-Dominion’s earnings in its Canadian retail division fell, contributing to overall fiscal first-quarter profit that missed analysts’ estimates.

Key Insights

Market Reaction

• Toronto-Dominion shares rose 2.7 percent in the 12 months through Wednesday, outperforming the 0.9 percent decline in the eight-company S&P/TSX Commercial Banks index.

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• First-quarter net income rose 2.4 percent to C$2.41 billion, or C$1.27 a share, from C$2.35 billion, or C$1.24 a share, a year earlier. Adjusted per-share earnings totaled C$1.57, missing the C$1.71 estimate of 12 analysts in a Bloomberg survey.
• Toronto-Dominion raised its quarterly dividend 10 percent to 74 cents.
• Read more about Toronto-Dominion’s earnings here.

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