TD Bank Financial Group is reporting a loss for the third quarter ended July 31. The bank blamed difficult capital markets and the challenges facing its corporate loan portfolio.

The bank posted an operating loss of $271 million, or 46¢ a share, for the quarter. That compares with profit of $522 million, or 79¢, in the prior-year period.

Return on equity was negative 9.5% in the quarter, down from 17.1% in the prior-year period.

“TD’s third quarter results, while very disappointing, are reflective of the difficult capital markets and our serious commitment to dealing with the challenges in our corporate lending portfolio,” said TD chairman and CEO Charles Baillie in a relase.

During the quarter, the bank announced that it would take a $600 million sectoral loan loss provision against potential problems in its performing corporate telecommunication loan portfolio. TD also announced it would take a $250 million sectoral loan loss provision to address concerns in certain performing corporate loans in its U.S. portfolio. The bank today indicated that it would be taking a $20 million sectoral loan loss provision as part of its previously announced guidance of $1.3 billion in loan loss provisions for fiscal 2002, to address potential problems in its agricultural loan portfolio. The move brings the total for sectoral loan loss provisions in the third quarter to $870 million. With the $870 million in sectoral provisions, the company’s expected loan loss total for 2002 remains at the previously announced $2.15 billion, of which $1.25 billion was recorded in the quarter.

The bank’s Tier 1 capital ratio is 7.7% as of July 31.

TD says third quarter earnings at TD Canada Trust are up from both the second quarter and from the previous year.
Core chequing and savings account balances remain strong and the.

As a result of weak capital markets, assets under management at the bank’s wealth management operations slipped to $122 billion during the third quarter, down from $123 billion the previous quarter.