DBRS has confirmed the ratings of Toronto-Dominion Bank, with stable trends.

The ratings are supported by TD’s leadership position in Canadian personal banking, low business risk profile and strong credit risk profile, DBRS says.

“Over the last two years, TD has been executing on its U.S. growth strategy while generating increased levels of profitability in its Canadian retail banking (Canadian P&C) franchise. DBRS expects TD’s Canadian P&C franchise to provide ongoing earnings stability given its low business risk profile,” it notes. “TD has been successful in growing its Canadian retail market shares, including credit cards, insurance, small business and commercial banking.”

DBRS adds that it believes the privatization of TD Banknorth Inc. should provide TD with more flexibility toward implementing future organic growth strategies at TD Banknorth. “Larger acquisitions made since the initial purchase of 51% of Banknorth Group Inc. have increased integration risk, but not profitability,” it says. “Management stated it needs to prove its organic development skills, with support from Canada, before further acquisitions are made.”

TD Banknorth Inc. has also been challenged to find acquisitions at reasonable prices, the rating agency says. DBRS believes successful integration and execution of an organic growth strategy at TD Banknorth Inc. are necessary to achieving acceptable return on invested capital in the medium term.