The Toronto-Dominion Bank (TD) reported net income of $3.7 billion for the second quarter of 2021, which ran from February 1 to April 30. An increase of 143.9 per cent or $2.2 billion from the $1.5 billion in net income reported in the second quarter of 2020.
“The increase reflects lower provisions for credit losses and lower insurance claims, partially offset by higher non-interest expenses, and lower revenue,” the financial institution explains.
Wealth and insurance
In Canadian Retail alone, a segment that includes insurance and wealth businesses, the company reported net income of $2.2 billion in the second quarter of 2021, up from $1.2 billion in Q2 2020. This increase of 86.2 per cent or $1 billion mainly reflects “lower provisions for credit losses (PCL) and record results in wealth and insurance,” TD said.
The three sub-businesses of this division have progressed:
- Insurance posted net income of $248 million (M), up from $189 million in Q2 2020. An increase of 31.2 per cent or $59 million.
- Wealth reported net income of $490 M, up from $341 M in Q2 2020. This result, the best since at least 2018, amounts to growth of 43.7 per cent or $149 million.
- Canadian Personal and Commercial Banking reported net income of $1.4 billion versus $642 million in Q2 2020. The corresponding increase is 124.9 per cent or $802 million.
Non-interest income: Insurance hampers performance
Overall non-interest income in Canadian Retail was $3.2 billion, compared with $3 billion in Q2 2020. This increase of 5.6 per cent or $168 million was driven by “higher transaction and fee-based revenue in the wealth and banking businesses and higher insurance volumes.”
However, this result was “partially offset by premium rebates for customers in the insurance business and a decrease in the fair value of investments supporting claims liabilities which resulted in a similar decrease in insurance claims,” TD notes.
Non-interest income in the insurance segment alone was $1.1 billion in the second quarter of 2021. This represents a decrease of 3.5 per cent or $39 million from Q2 2020.
Premiums decline
Gross originated insurance premiums were $1 billion in the second quarter of 2021, for a decrease of 4.2 per cent or $46 million.
Compensation and expenses decrease
Insurance claims and related expenses totalled $441 million in the second quarter of 2021, versus $671 million in Q2 2020.
The decline of 34.3 per cent or $230 million reflects “lower current year claims, a decrease in the fair value of investments supporting claims liabilities which resulted in a similar decrease in non-interest income, and more favourable prior years' claims development,” TD says.
RBC and BMO also released their financial results for the second quarter of 2021, including their insurance and wealth management results.
