TD Bank Financial Group returned to the black Thursday, announcing a second quarter profit of $511 million, reversing the loss of $273 million in the year-earlier quarter despite ongoing exposure to the Enron scandal.

Net income in the fiscal second quarter ended April 30 came in at 21¢ a share vs the loss of 22¢ per share in the year-ago quarter, Toronto-based TD said Thursday.

The bank credited 17% earnings growth in TD-Canada Trust personal and commercial banking and strong results in wealth management and wholesale banking.

“I am extremely pleased with the continued success at TD Canada Trust over the last several quarters,” CEO Edmund Clark said in a release. “Personal and commercial banking has consistently delivered solid income growth despite an environment marked by intense competition and sustained margin compression.”

TD said the Laurentian Bank branch acquisition in Ontario and Western Canada added one percentage point to revenue growth in the segment in the second quarter and integrations are on track. The bank said it expects to complete the Laurentian branch integrations in the third quarter.

The bank added $195 million after-tax to its contingent litigation reserves, mostly for its exposure to Enron and its financial scandal in the United States. “I want to be clear that we remain comfortable that our actions in relation to Enron were entirely legal and consistent with market practices at the time,” Clark said. “However, the reserve is a reflection of today’s uncertain and difficult litigation environment and we feel it is prudent to recognize that at some point, it may well be expedient to settle and put these issues behind us.”


The bank said its mutual funds unit posted a “particularly” strong quarter, bolstered by a successful RRSP season. “With back-to-back strong quarters, TD Mutual Funds now holds the industry’s number two net sales position for fiscal 2004,” the bank said. “April established another record for mutual fund assets under management at $34 billion.”

Clark also announced that Michael Foulkes will become president and CEO of brokerage TD Waterhouse International, based in Britain. Paul Douglas will become president of commercial banking.

“This was a very successful quarter because we have been able to buy back shares and set up reserves while still growing Tier 1 capital by eight per cent,” Clark said. “This was possible because our businesses delivered strong results and because we effectively managed our capital. With two very solid quarters behind us, I am confident that we will continue to consistently execute against our strategies.”