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.
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.