TD Bank Group's profits fell in the first quarter, following what's proved to be a trend among big banks in the quarter as they set aside more money for potentially tougher economic conditions ahead.
The bank's $690 million in provisions for credit losses, up from $72 million a year earlier, come as high interest rates raise concerns about pressure on borrowers and the chance of rising defaults.
Along with rising provisions for credit loss, profits at TD and other banks were also hit by rising expenses as inflationary pressures took hold. Banks also saw profits dip as new taxes on banks came into effect, while earnings for TD and CIBC were also lower because of major lawsuit settlements. And while credit loss provisions spiked, they were in comparison to a quarter when banks were still unwinding an earlier build of provisions, making the contrast with this last quarter seem higher.
Expenses at TD rose 10 per cent as salaries and investments in technology especially weighed, while other banks reported expense increases of between the mid-single digits up to the 17 per cent RBC reported and that chief executive Dave McKay vowed to get a hold on. TD also had a loss in the quarter related to its deal to buy U.S. bank First Horizon Corp., the future of which became less clear after TD confirmed Thursday that it doesn't expect to get regulatory approval for the deal by the already extended May 27 deadline.
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