(Bloomberg) -- Toronto-Dominion Bank is getting a lift from its massive retail-banking business, helped by mortgage growth driven by Canada’s strong housing market.

  • Toronto-Dominion’s heavy reliance on personal and commercial banking in Canada proved helpful in the fiscal fourth quarter. Profit in the unit rose 3.3% to C$1.8 billion, contributing to overall earnings that beat analysts’ estimates.

Key Insights

  • Toronto-Dominion front-loaded its provisions for credit losses early in the pandemic, giving it a boost in the three months through October as fears of worst-case scenarios from the crisis subside. The lender set aside C$917 million in the quarter ended Oct. 31. That’s down from C$3.22 billion in the second quarter and C$2.19 billion in the third quarter.
  • Lower interest rates have squeezed profitability in the bank’s retail lending business by narrowing the difference between what it pays for deposits and what it can charge for loans. The bank’s overall net interest margin shrank to 1.65% in the quarter from 1.94% a year earlier.

Market Reaction

  • Toronto-Dominion shares have fallen 2.8% this year, compared with a 1.7% decline for the S&P/TSX Commercial Banks Index.

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  • Net income rose 80% to C$5.14 billion, or C$2.80 a share. Excluding some items, profit was C$1.60 a share, beating analysts’ C$1.27 average estimate.
  • Click here for more on Toronto-Dominion’s fourth-quarter results.

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