Toronto-Dominion Bank reported a 7% drop in quarterly profit on previously announced writedowns for credit trading losses in illiquid debt markets.

The bank said Thursday that net income was $1.01 billion, or $1.22 a share, in the fiscal fourth quarter ended Oct. 31. That includes various unusual items, including a litigation reserve gain of $323 million related to Enron.

A year earlier, net income was $1.09 billion, or $1.50 a share.

In November, the bank warned investors that credit trading losses would lead to a quarterly net loss of $228 million for TD Securities, its wholesale banking unit. The bank had to record mark-to-market losses as the value of some of its debt securities fell.

“In this environment, our strategy has been the right one, and we remain conservatively positioned with over 90% of our earnings coming from retail businesses,” said Ed Clark, TD president and CEO, in a release.

Adjusted to exclude a variety of unusual items, including the Enron reserve reversal, profit in the latest quarter was $665 million, or 79¢ a share, down from $1.02 billion, or $1.40 a share, a year earlier.

The company reclassified $7.4 billion of debt securities to “available for sale” in the quarter, thus avoiding any fair-value writedowns on those securities under new accounting rules.

TD Bank concluded a $1.4 billion common share issue earlier this week, which boosted its Tier 1 capital ratio to 9.1%.

Net income at TD’s Canadian retail banking unit, rose 5% to $600 million due to strength in personal deposits, business banking and life insurance.

Profit at TD’s wealth management unit, including TD’s equity share in TD Ameritrade, produced $170 million in earnings in the fourth quarter.

Global Wealth Management, which excludes TD Ameritrade, generated net income of $110
million, down 8% from the same period last year.

In Canada, very strong volumes in discount brokerage were offset by decreases in revenue from mutual funds, investment management and advice channels.

“In these difficult markets, wealth management continued to perform well on a relative basis this quarter,” said Clark. “While the impact of declining
capital markets is unavoidable, we’ve continued to invest in our businesses for future growth, meeting our target of adding 130 new client-facing advisors in 2008.”

Profit in TD’s U.S. unit more than doubled from a year earlier to $276 million due to the addition of earnings from New Jersey-based Commerce Bank.

Separately on Thursday, TD Bank announced the appointment of Brian Levitt to its board of directors.

Levitt is a partner and co-chair of Osler, Hoskin & Harcourt LLP and resides in Montreal. He is the former president and CEO of consumer goods and services company Imasco Limited.

Levitt currently serves as a director of Domtar Corporation, BCE Inc. and the C.D. Howe Institute, and is chair of the board of trustees of the Montreal Museum of Fine Arts.

“We’re pleased to have Brian join our Board of Directors,” said John Thompson, chairman of the board for TD Bank Financial Group. “Brian’s extensive business background combined with his experience as a seasoned director and as a legal advisor will bring strategic value to the Board’s deliberations.”

The appointment brings the total number of TD Bank directors to 18.

IE