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TD CEO pushes 'cautious optimism' after bank reported $5.14B profit in Q4


TORONTO — TD Bank Group's chief executive is ending 2020 without budging from a message he's been pushing almost every quarter this year: "cautious optimism."

Bharat Masrani said Thursday that a second wave of COVID-19 has forced some areas to pause reopening measures, but every day he is seeing consumer confidence grow and more promising developments about potential vaccines to combat the virus emerge.

"The outlook remains uncertain," the told analysts on a call to discuss his bank's fourth-quarter financial results.

"The pandemic could bring new setbacks, and we expect the recovery in earnings to be uneven, but we emerged from fiscal 2020 with momentum."

Masrani's feelings have been echoed throughout the week by fellow chief executives of Canada's major banks as they reported their fourth-quarter earnings.

They all agree that it is impossible to predict the twists and turns the pandemic will cause in the coming months, but they are feeling reassured by the billions in government relief, loan deferrals and low interest rates that are slowly lifting the economy.

"Bank-led and government assistance programs have had the desired effect of helping our customers," said Ajai Bambawale, TD's group head and chief risk officer, on the same call as Masrani.

"However, the shape of the recovery and the magnitude and timing of the ultimate credit impact remain uncertain."

Bambawale and Masrani's remarks were made hours after TD announced that it had beat analyst expectations and landed a fourth-quarter profit.

The bank earned $5.14 billion or $2.80 per diluted share for the quarter ended Oct. 31, up from $2.86 billion or $1.54 per diluted share a year ago.

On an adjusted basis, TD says it earned $1.60 per diluted share in its latest quarter, up from an adjusted profit of $1.59 per diluted share in the same quarter last year.

Analysts on average had expected TD to earn an adjusted profit of $1.28 per share in the quarter, according to financial data firm Refinitiv.

Revenue totalled $11.84 billion, up from $10.34 billion in the same period a year earlier.

The bank's quarter was almost marked by the closure of a deal that saw it earn a 13.5 per cent stake in U.S. investment firm Charles Schwab Corp., following Schwab's acquisition of TD Ameritrade Holding Corp.

TD also closed out the year by booking $917 million in provisions for credit losses, a metric used to track how much money banks reserve for bad loans.

TD's fourth-quarter provisions were up from $891 million a year ago but down from nearly $2.19 billion in the third quarter.

"While I expect PCLs to be lower in 2021, reflective of our significant performing allowance bill this year, given the degree of ongoing uncertainty, they may remain elevated from pre-COVID-19 levels and could vary by quarter," Bambawale warned.

TD's results pushed its stock down by less than 1 per cent or by 28 cents to reach $70.50 in afternoon trading.

This report by The Canadian Press was first published Dec. 3, 2020.

Companies in this story: (TSX:TD)

Tara Deschamps, The Canadian Press

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