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TD Bank Q1 2022 earnings
Photo by Alex Tai/SOPA Images/LightRocket via Getty Images

Q1 Earnings Mortgage Morsels: TD

TD Bank kicked off the first quarter with a 13% increase in net income, while the bank’s U.S. division saw a 27% leap in earnings growth.

Despite falling behind its fellow big-bank peers in terms of Real Estate-Secured Lending (RESL) growth, despite posting 9% year-over-year growth, Michael Rhodes, Group Head, Personal Banking, said the bank has an opportunity to “do better.” Part of that strategy includes the bank’s recent announcement that its Home Equity FlexLine HELOC is now available to the broker channel.

“At the end of the day…we like to be in all channels to be everywhere where our customer is. And certainly, (the) broker is a channel where we want to be,” Rhodes said during the earnings call.

Here’s a run-down of RBC’s mortgage portfolio performance in the quarter…

Q1 net income: $3.83 billion (+13% Y/Y)
Earnings per share: $2.08

  • TD’s residential mortgage portfolio rose to $234.9 billion in Q1, up from $230.5 billion in Q4 and $215.3 billion a year ago.
  • The bank’s HELOC portfolio grew to $103.9 billion, up from $102.1 billion in Q4 and $95.2 billion a year ago. 70% of the bank’s HELOC portfolio is amortizing, up from 67% in Q1 2021.
  • TD’s residential real estate secured lending portfolio is 78% uninsured (up from 74% a year ago) with a 49% LTV for the uninsured portion (down from 52% in Q1 2021).
  • Gross impaired loans in the Canadian retail portfolio were 0.19%, unchanged from Q4 and down from 0.26% a year ago.
  • Net interest margin in the bank’s retail portfolio fell to 2.53% in Q1, down from 2.57% in the previous quarter and 2.65% a year ago.
  • 54% of the bank’s residential mortgage portfolio is in Ontario (up from 52% a year ago), followed by B.C. at 20% (up from 19%), the Prairies at 15% (down from 17%), Quebec at 9% (unchanged) and 2% in Atlantic Canada (down from 3%).
  • Overall, TD’s provisions for credit losses (PCL) increased by $72 million compared to Q4, reflecting “higher impaired PCLs” and a “smaller performing allowance release.” In Canadian retail lending, PCL fell to $33 million, down from $53 million in the previous quarter and $142 million a year ago.

Source: TD Bank Q1 Investor Presentation

Conference Call

  • Asked about the fact TD’s Canadian RESL growth is lagging behind its competitors, Rhodes said, “In terms of why, look, our branch network…has been a historical source of strength. And this was clearly disproportionately impacted during COVID. But then, coming out of COVID, we do look to create momentum in all channels, and that’s why I said we expect to do better. So, hours returned to normal as our mobile mortgage specialist productivity continues to improve…”
  • Rhodes added, “we continue to invest in training, operations, account management, and again, we’ve seen improvements in account management and retention, and see the benefits of the recent enhancements such as FlexLine in the brokerage channel…”
  • Asked about how important the FlexLine announcement is to driving growth, Rhodes said, “we’re optimistic that FlexLine and (the) broker channel will drive some nice performance on a go-forward basis. At the end of the day…we like to be in all channels to be everywhere where our customer is. And certainly, (the) broker is a channel where we want to be.”
  • TD announced it is hiring more than 2,000 technology roles in 2022 to “drive investments that will help power the future of banking with a focus on skills in cloud, machine learning and automation,” said Masrani.
  • The bank announced further expansion into the U.S. with an agreement to acquire Tennessee-based First Horizon, which grows TD’s U.S. footprint by 400 branches and increases its customer base by 1.1 million people.

Source: TD Conference Call


Note: Transcripts are provided as-is from the companies and/or third-party sources, and their accuracy cannot be 100% assured.

Feature image: Photo by Alex Tai/SOPA Images/LightRocket via Getty Images