Toronto-Dominion Bank reported lower third-quarter earnings as it booked higher loan-loss provisions.

The bank said Thursday that net income for the quarter ended July 31 was $912 million, or $1.01 a share. That was down from $997 million, or $1.21 a share, a year earlier.

Excluding special items, earnings per share were $1.47 a share, higher than the $1.35 a share comparable figure reported for the year-ago period.

Provisions for credit losses nearly doubled to $557 million from $288 million in the same quarter a year ago. Continued weakness in the economy will likely continue to put upward pressure on these provisions through next year, according to Ed Clark, president and CEO of TD Bank.

“We continue to expect weak U.S. economic fundamentals, and as a result, we still expect growing PCLs, but not at the same pace as this year,” Clark said in a conference call on Thursday afternoon.

But despite the rising provisions in the third quarter, Clark said he was impressed by the bank’s quarterly performance.

“Overall, I would say that we’re very pleased with these results, delivered in a difficult economic environment,” said Clark. “Each of our major businesses made a strong contribution.”

Canadian personal and commercial banking posted record earnings of $677 million in the third quarter, up 5% from the same period last year. The impact of strong volume growth in personal and commercial lending and improving efficiency more than offset higher provision for credit losses, according to TD.

“In Canada, we’ve seen strong demand for lending up to this point in the economic cycle and have proven our willingness to lend and take market share,” said Clark.

Wealth management, including TD’s equity share in TD Ameritrade, earned net income of $163 million in the quarter, down 19% from the third quarter of last year, due to market declines, lower assets under management and lower average fees that drove down revenues in the mutual fund and advice-based businesses. But performance of the wealth management business improved over last quarter, the bank’s executives noted.

“Our wealth business is starting to see the effects of stronger markets coming into its results,” said Clark. “We’re still feeling the impact of margin pressure as a result of low nominal rates, but we’re also getting the benefit of record online brokerage trades per day and asset and volume growth.”

U.S. personal and commercial banking generated $172 million in reported net income. Excluding restructuring and integration charges, the group earned $242 million in adjusted net income for the quarter, down 11% from the same period last year, due to higher loan losses reflecting the recessionary environment, according to the bank.

“This was a solid performance in a very tough operating environment,” said Colleen Johnston, CFO at TD, in the conference call.

Wholesale banking earned net income for the quarter of $327 million, up $290 million from the same period last year.

“We continue to prudently manage our risk-weighted assets,” said Johnston.

The bank’s dividend was unchanged at 61¢ a share.

Clark said TD Bank would likely see an increase in its earnings per share this year, and said the banks executives were confident about its long-term prospects.

IE