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Credit quality is deteriorating in Canada, and banks are feeling the impact.

Toronto-Dominion Bank and Canadian Imperial Bank of Canada both reported fiscal first-quarter results that included higher provisions for loan losses, contributing to earnings that missed analysts’ estimates.

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Toronto-Dominion, Canada’s second-largest lender by assets, set aside $850 million for soured loans in the quarter ended Jan. 31, up 23 per cent from a year earlier and the highest level in at least two years. The lender’s Canadian and U.S. retail divisions had roughly equal shares of the provisions, at about 36 per cent each of the total, with the rest recorded mainly in the bank’s corporate segment.

“The fourth quarter and the first quarter of the year always tend to have elevated provisions because of the holiday spending season, so we tend to see that seasonality in cards and auto,” Toronto-Dominion’s Chief Financial Officer Riaz Ahmed said in a phone interview Thursday. “In Canada, bankruptcies are up a little bit and we do see a little bit of rise in delinquency in our retail cards in the U.S. None of them would rise to the level of being of particular concern for us.”