Toronto-Dominion Bank (TD) expects its first-quarter results will be cut by about US$400 million due to changes in U.S. taxes, but says that a lower corporate tax rate will have a positive effect on future earnings.
Tax changes signed by U.S. President Donald Trump late last year cut the corporate income tax rate to 21%, from 35%.
The Toronto-based bank has extensive operations in the United States and the new tax rate will force it to adjust its U.S. deferred tax assets, liabilities and carrying balances.
The one-time impact from the adjustments is expected to reduce TD’s common equity tier 1 ratio by approximately nine basis points.
TD will report its first-quarter financial results on March 1.