Toronto-Dominion Bank will record credit trading losses and losses in its corporate segment for the fourth quarter, the bank warned Thrusday.

The bank pre-announced fourth quarter results, which included credit trading losses (approximately $350 million after-tax), losses in the corporate segment ($153 million) and reserve release for Enron-related claims ($323 million after-tax).

TD forecast earnings per share of $1.22 for the quarter.

Credit trading losses in the bank’s wholesale banking unit will contribute to an expected loss of $228 million in that segment for the quarter. TD sees a loss in its corporate segment of $153 million and earnings of $1 billion in its retail segments.

TD is the second big Canadian bank to issue a warning on fourth-quarter earnings. Bank of Nova Scotia said on Tuesday that it would take an $890 million hit before tax in its fourth quarter on trading losses tied to bankrupt Lehman Brothers holdings as well as lower securities and derivatives valuations.

TD will release its fourth quarter and fiscal 2008 results on Dec. 4.

Following the announcement, DBRS confirmed its ratings on TD Bank, following its earnings pre-announcement that

DBRS said that the $350 million after-tax mark-to-market credit trading loss reflects the basis widening between asset and credit protection markets on a trading portfolio of approximately $2.5 billion. Approximately 50% of this book will be in wind-down mode, it says.

The losses in the corporate segment are due to losses on securitizations and negative carry on some investments held in the U.S. retail bank, DBRS reported.

Additionally, DBRS notes that TD reclassified $7.4 billion of trading financial assets into the available-for-sale category, effective August 1. Changes in the fair values of these reclassified assets of $561 million after-tax were not included in the losses but flowed through other comprehensive income, it said.

“The ratings confirmation reflects DBRS’s view that the losses are manageable relative to the bank’s earnings profile. TD has a successful retail banking franchise that generates substantial, less volatile earnings,” the credit rating agency said.

It reports that for the first nine months, reported earnings were $2.8 billion. The Tier 1 capital ratio is expected to be 8.3% as of November 1. “Although TD has a lower business risk profile, as the retail businesses are a significant component of the bank, and Tier 1 capital ratio is well within regulatory limits, should unforeseen events occur due to uncertainty surrounding capital markets and this ratio deteriorates substantially without remedial actions, DBRS would view this negatively,” it said.

IE