Toronto-Dominion Bank saw its expenses and provisions for credit losses rise in the third quarter, another signal that borrowers are feeling squeezed by aggressive rate hikes.

The Canadian bank set aside $766 million for troubled loans in the quarter ended July 31, about 4 per cent more than analysts had projected.

Non-interest expenses were up 24 per cent over the previous year — mostly because of higher salaries and bonuses. Technology and real estate costs were also up. 

Those factors dragged earnings per share down to $1.99 on an adjusted basis, missing consensus estimates of $2.04, as compiled by Bloomberg.

Provisions for credit losses more than doubled from a year earlier in the bank’s two main divisions, U.S. retail and Canadian personal and commercial. Chief Financial Officer Kelvin Tran said credit concerns are simply normalizing from low levels last year, and argued that consumers are still resilient.

“We see good spending, we track it looking at credit cards and that’s why you see our card balances continue to grow,” Tran said in an interview. “There’s nothing that would point us to a concern, at this point in time.”

Toronto-Dominion had a deal to buy Tennessee-based First Horizon Corp., but the transaction collapsed in May after the bank said it couldn’t secure timely approval from regulators. The deal was held up by regulatory concerns about TD’s handling of suspicious customer transactions, a person familiar with the matter told Bloomberg.

TD paid a $306 million termination fee to the US bank during the quarter.

The aborted deal left the bank with a much fatter capital cushion than its rivals. Its common equity tier 1 capital ratio, barometer of financial strength, clocked in at 15.2 per cent as of July. That’s far above the regulatory minimum and has raised questions about how Toronto-Dominion will deploy that capital — and where it will find growth.

In late May, the bank withdrew its target of increasing earnings per share by 7 per cent to 10 per cent a year over the medium term, citing the failure to get First Horizon and a softer economic outlook.

Still, TD has been the best-performing stock of Canada’s Big Six banks since the announcement that the deal wouldn’t go through. A number of analysts said the price tag of $13.4 billion had become too high given the weakened state of U.S. regional banks.

TD said it plans to repurchase as many as 90 million shares, about 5 per cent of its stock, subject to regulatory approval.