TD earnings up 6% in 2Q, flat growth in wealth and insurance

TD Bank Group saw a 2% year-on-year rise in net profit in the fiscal second quarter. But earnings in the bank's wealth and insurance segment were flat as weaker performance in insurance offset gains in wealth management.

TD Bank Group reported a 2% rise in income in the fiscal second quarter, with $1.71 billion in earnings against $1.69 billion in the year-earlier period. But net earnings in the bank’s wealth and insurance segment remained flat, largely due to restructuring costs in the insurance business.

For the six months ending April 30, the bank’s net income was $3.51 billion compared with $3.17.

The bank’s wealth and insurance segment delivered net income of $364 million in the quarter, slightly lower from a year earlier. The segment’s net income in second quarter 2013 was $364 million, barely changed from $365 million a year earlier. For the six-month period income was $741 million, down from $714 million in the same period of 2012.

The bank said it saw increased wealth earnings, driven by strong performance in its advice-based and asset management businesses and good growth in client assets. During the quarter, TD acquired Epoch Investment Partners, a New York-based asset management firm, which it said it expects to advance growth in its wealth business.

"In our wealth business we have strong momentum, and we look forward to working with Epoch to drive further growth," said Mike Pedersen, Group Head, Wealth Management, Insurance, and Corporate Shared Services. "In Insurance, we expect good premium growth but face increased uncertainty, including the impact of past and future Ontario auto reforms," he said referring to the Ontario government’s plan to mandate a 15% cut in auto insurance premiums.

In the wealth business, the bank’s revenue increased mainly from higher fee-based revenue from asset growth and the addition of one month of earnings from Epoch. In the Insurance business, revenue decreased due to the sale of its US insurance business and higher claims from a more severe winter, though the drop was partially offset by premium volume growth.

Assets under administration of $275 billion as at April 30, 2013 increased by $5 billion, or 2%, compared with January 31, 2013. Assets under management of $247 billion as at April 30, 2013 increased $36 billion, or 17%, compared with January 31, 2013. The increases were driven by the addition of Epoch assets under management, an increase in the market value of assets and net new client assets.

In its forward-looking guidance, the bank said it expects positive momentum in its wealth business, in spite of continuously challenging trading and interest rate environments. “We expect continuing positive momentum from growth in new client assets in the advice-based and asset management businesses, which is further strengthened by the addition of Epoch,” it said.