The Toronto-Dominion Bank (TD) reported net income of $3.5 billion for third quarter 2021, which ran from May 1 to July 31. This result is up 57.7 per cent or $1.3 billion from the $2.2 billion in net income reported in Q3 2020.
“The increase reflects lower PCL and higher revenues, partially offset by higher non-interest expenses and higher insurance claims,” TD says.
Insurance and wealth management
For its Canadian retail business alone, which includes insurance and wealth management operations, the company reported net income of $2.1 billion in third quarter 2021, up from $1.3 billion in Q3 2020. This increase of 68.2 per cent or $862 million reflects “lower PCL and higher revenue, partially offset by higher non-interest expenses.”
Two of the three businesses in this division have made progress:
- Canadian Personal and Commercial Banking: Net income of $1.5 billion, up 108.5 per cent or $782 million
- Wealth Management: Net income of $445 million in Q3 2021 compared with $361 million in Q3 2020, for an increase of 23.3 per cent or $84 million.
Insurance, the third business in this group, declined for the first time since second quarter 2019.
It posted net income of $177 million in Q3 2021, compared with $181 million in Q3 2020. It thus decreased by 2.2 per cent or $4 million.
Non-interest income: Increase in insurance
Overall non-interest income for Canadian retail business was $3.5 billion in third quarter 2021, compared with $3.1 billion in Q3 2020.
It thus rose by 13.4 per cent or $419 million “reflecting higher fee-based revenue in the banking and wealth businesses, and higher insurance volumes, partially offset by a decrease in the fair value of investments supporting claims liabilities, which resulted in a similar decrease in insurance claims.”
Insurance non-interest income alone was $1.3 billion in third quarter 2021, compared with $1.2 billion in Q3 2020. It thus grew by 11.5 per cent or $136 million.
Gross insurance premiums written were $1.4 billion in third quarter 2021. This increase amounts to 3.7 per cent or $50 million.
Claims and expenses increase
Insurance claims and related expenses were $836 million in third quarter 2021, compared with $805 million in Q3 2020. This increase of 3.8 per cent or $31 million reflects “higher current year claims from business growth, partially offset by a decrease in the fair value of investments supporting claims liabilities, which resulted in a similar decrease in non-interest income,” TD explains.