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%, from 35%.

The Toronto-based bank 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 will report its first quarter financial results on March 1.

Read: How U.S. tax reform threatens Canadian corporates

In a weekly economics report, CIBC chief economist Avery Shenfeld says effects from the U.S. tax bill will be felt earlier than previously expected because, in the final push to pass the bill, a further US$100 billion in fiscal stimulus was shifted into 2018 rather than delayed until 2019.

“That should help the U.S [dollar] hold ground after tumbling close to our 2018 targets, but will be less friendly to the 2018 bond market,” he says.

Also read:

Tax changes to look for in budget 2018

Your 2018 inside scoop: outlook roundup

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