A TD Canada Trust branch is shown in the financial district in Toronto on August 22, 2017. THE CANADIAN PRESS/Nathan Denette

Toronto-Dominion Bank increased its dividend as it reported a 2.4 per cent uptick in first-quarter profits to $2.41 billion, falling short of street expectations.

The lender's earnings from its U.S. retail operations were strong, up 30 per cent from a year earlier, but net income from its Canadian retail operations slipped and wholesale banking reported a net loss of $17 million.

The quarter also included a $607-million charge related to the long-term loyalty agreement with Air Canada, which had an impact of 24 cents per share, the bank said.

"TD's retail segments in both Canada and the U.S. had a strong start to the year, with continued revenue growth and solid earnings," chief executive Bharat Masrani said in a statement.

"However, market volatility and lower client activity impacted our wholesale segment in the quarter."

The bank's net income for its first quarter amounted to $1.27 per diluted share, up from $1.24 for the quarter ended Jan. 31 last year.

The result came as TD increased its quarterly payment to common shareholders by seven cents to 74 cents per share.

On an adjusted basis, TD earned $2.95 billion, relatively flat compared with the same period a year earlier. That amounted to $1.57 in adjusted earnings per diluted share, up from $1.56 a year earlier, but below the $1.72 expected by analysts surveyed by Thomson Reuters Eikon.

Canadian retail net income totalled $1.38 billion, down 22 per cent from the same quarter a year ago. Adjusted net income, to exclude the Air Canada charge and a $31-million charge associated with its acquisition of Saskatchewan-based Greystone Managed Investments, was $1.86 billion, up six per cent from a year earlier.

It's U.S. retail division, however, was a bright spot with net income of $1.24 billion, up 30 per cent from the first quarter in 2018. TD Ameritrade contributed $311 million, up from $106 million a year earlier. TD's retail banking division, excluding TD Ameritrade, earned $929 million, up 10 per cent on loan and deposit volume growth, and higher margins, the bank said.

Wholesale banking, however, reported a net loss for the quarter of $17 million, compared with earnings of $278 million in the first quarter last year "reflecting lower trading-related revenue and origination activity, and higher expenses." Revenue was down 35 per cent from the same period last year, "impacted by challenging market conditions and reduced client activity."

TD is the latest Canadian lender to report weaker market-related earnings, in the wake of market volatility late last year amid political uncertainty, including trade tensions between the U.S. and China.

Provisions for credit losses, or money set aside for loans that could go bad, totalled $850 million, up $157 million from the same quarter in 2018.

The bank's common equity tier one ratio, a key measure of its financial health, was 12 per cent, up from 10.6 a year ago but flat from the previous quarter.

TD's loss in capital markets drove this quarter's miss, said Gabriel Dechaine, an analyst with National Bank of Canada Financial Markets.

"Canadian P&C performed relatively well, while U.S. P&C was weighed down by single-name utilities loss," he said in a note to clients.

Companies in this story: (TSX:TD)

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