Dominion Bond Rating Service Ltd. has upgraded its rating trend on TD Bank to “stable” from “negative.”

DBRS said that following the completion of its review, all long-term debt trends for TD are upgraded as a result of positive ongoing actions taken: to improve the bank’s credit risk profile by reducing the net-drawn, non-core loan portfolio; to transform itself into a predominantly retail bank, which should provide more earnings stability; and, to strengthen its financial risk profile.

DBRS says that it expects TD to meet or exceed its goal of fully exiting the non-core loan portfolio by the end of 2005. It has already made a 62% reduction in net-drawn, non-core loans over the past 12 months to $4.2 billion, and reserves remain reasonable given the current credit environment.

It notes that TD has been making progress in its retail plan, including: strong growth in retail earnings; achieving higher customer satisfaction index levels; and, using capital, including buying branches, to grow its already-strong retail market share.

“Despite early progress, DBRS expects the retail strategy to be challenging for revenue growth, increasing operating efficiency, and redeploying released capital in a manner that will maximize shareholder value,” DBRS cautions.

The rating trends for the bank have been “negative” since February 27, 2003. The long-term ratings are confirmed and the short-term rating and trend remains unchanged at “stable.”