©Reuters. FILE PHOTO: TD Bank Group President and CEO Bharat Masrani speaks during the bank’s annual shareholder meeting in Toronto, Ontario, March 30, 2017. REUTERS/Peter Power/File Photo
(Reuters) – TD Bank Group reported a decline in first-quarter earnings on Thursday as the Canadian lender set aside more funds to cover bad loans.
High interest rates have increased the chances that more borrowers will default on their loans in an uncertain economic environment, prompting lenders to set aside larger funds for tough times.
Provisions for credit losses at Toronto-based TD Bank rose to C$1 billion ($736 million) in the first quarter from C$690 million a year earlier.
Intense competition for deposits has also increased funding costs as banks pay more to keep customers from chasing higher-yield alternatives.
TD Bank’s net interest income, the difference between what banks earn on loans and pay on deposits, fell nearly 3.2% to C$7.49 billion in the first quarter.
The lender’s Canadian personal and commercial banking unit posted a 3% increase in net profit, while the U.S. retail segment posted a 43% decline.
The bank’s adjusted net income fell to C$3.64 billion, or C$2.00 per share, in the quarter, compared to C$4.15 billion, or C$2.23 per share, in the quarter. ‘last year.
($1 = 1.3587 Canadian dollars)