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Toronto-Dominion Profit Tops Estimates on Canadian Recovery – Yahoo Finance

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(Bloomberg) — Toronto-Dominion Bank’s Canadian operation is getting a boost from a rebound in consumer spending and the continued strength of the country’s housing market.

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Profit in the Canadian retail business rose 19% to C$2.14 billion ($1.7 billion) in the fiscal fourth quarter, the Toronto-based bank said Thursday in a statement. Overall profit topped analysts’ estimates.

Toronto-Dominion has seen its balances of mortgages and home-equity lines of credit swell throughout the pandemic as Canadian home prices soared and sales volumes remained strong. The unit has posted two straight quarter-over-quarter gains in credit-card balances as the country’s consumers start to ramp up spending.

“The recovery is under way, and we’re especially pleased with that because we are a strong consumer, retail bank,” Chief Financial Officer Kelvin Tran said in an interview. “We’re purpose-built for this recovery.”

The bank — freed last month from industrywide restrictions on boosting its dividend and buying back stock — also raised its quarterly dividend 13% to 89 cents a share and said it would repurchase 50 million shares, or 2.7% of shares outstanding, which would cost roughly C$4.6 billion at the current price.

Toronto-Dominion rose 3.1% to C$94.82 at 9:45 a.m. in Toronto. The shares have risen 32% this year, compared with a 27% gain for the S&P/TSX Commercial Banks Index.

Net income declined 26% to C$3.78 billion, or C$2.04 a share, in the quarter ended Oct. 31. Excluding some items, profit was C$2.09 a share. Analysts estimated C$1.96, on average.

The lender’s net interest margin — the difference between what it earns from loans and what it spends on deposits — widened to 1.58% in the fourth quarter from 1.56% in the third. That’s a contrast to rivals including Royal Bank of Canada and National Bank of Canada, which reported narrowing spreads for last quarter. For Toronto-Dominion, the margin was helped by higher wholesale lending revenue and better investment revenue in the U.S. bank, Tran said.

Toronto-Dominion released C$123 million in provisions for credit losses. Analysts estimated the bank would set aside C$161 million.

The company’s U.S. retail operations haven’t gained the same momentum as the Canadian division. While the full personal loans category increased from the third quarter, business loans fell 5.9%. In Canada, business loans have gained sequentially for four straight quarters. Total profit for the U.S. unit rose 66% to $1.09 billion in the fourth quarter, helped by a recovery of credit provisions.

“In the U.S. there’s more excess liquidity due to various government programs,” Tran said. “So our customers don’t have a need at this point in time to get more loans from banks.”

(Updates shares in sixth paragraph.)

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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