TD expects U.S. tax changes to cut its Q1 earnings by US$400M

Toronto-Dominion Bank expects its first-quarter results will be cut by about US$400-million due to changes in U.S. taxes, but says that a lower corporate tax rate will have a positive effect on future earnings.

Tax changes signed by U.S. President Donald Trump late last year cut the corporate income tax rate to 21 per cent, from 35 per cent.

The Toronto-based bank (TSX:TD) has extensive operations in the United States and the new tax rate will force it to adjust its U.S. deferred tax assets, liabilities and carrying balances.

The one-time impact from the adjustments is expected to reduce Toronto-Dominion's common equity tier 1 ratio by approximately nine basis points.

TD Bank (TSX:TD) will report its first-quarter financial results on March 1.