TD Bank warns of challenging 2025 after profit miss; BMO earnings fall short

TD Bank signage is pictured in the financial district in Toronto on Sept. 8, 2023. (Andrew Lahodynskyj / The Canadian Press)

Canada's No.2 bank TD Bank on Thursday warned of a challenging 2025 and suspended its medium term earnings forecast as it works through its anti-money laundering remediation program following a U.S. regulatory probe.

TD, which faced an asset cap and a US$3-billion penalty following a probe by U.S. regulators into its anti-money laundering program, also said it would look at a strategic review of organic opportunities. It suspended its seven per cent to 10 per cent earnings per share growth forecast and said it would update its medium-term targets in the second half of 2025.

• The information you need to know, sent directly to you: Download the CTV News App

"For fiscal 2025, it will be challenging for the bank to generate earnings growth as it navigates a transition year," TD said in a statement as it works through its anti-money laundering remediation with investments in its risk and control infrastructure.

The announcement came as TD Bank and Bank of Montreal, two of Canada's biggest banks, missed analysts' estimates for quarterly profit, reflecting weakness in U.S. businesses and bigger-than-anticipated funds to cover potential loan losses.

In contrast, the smallest of the country's big five banks -Canadian Imperial Bank of Commerce - reported fourth quarter profit that surpassed estimates, helped by smaller-than-expected loan loss provisions and strength at its Canadian retail arm.

BMO and TD have faced issues in the U.S. units, both expanded through a series of acquisitions over the years, as they sought growth opportunities outside of home, catering to scores of clients on the West and East coasts.

BMO has faced credit issues as some loan books have weakened as clients struggled to repay their loans. TD paid a US$3 billion penalty following a probe by U.S. regulators for failures in its risk and compliance program following the termination of its

US$13.4 billion acquisition of Tennessee-based lender First Horizon.

"Our overall results were impacted by elevated provisions for credit losses, and we expect quarterly provisions to moderate through 2025 as the business environment improves," BMO's CEO Darryl White said in a statement.

BMO's total provision for credit losses came in at C$1.52 billion (US$1.08 billion) in the fourth quarter, compared with analysts expectation of C$988 million, according to LSEG data.

Meanwhile, CIBC's provision for credit losses fell to C$419 million from C$541 million a year ago, compared with the average estimate of C$554 million.

TD's provision for credit losses jumped to C$1.11 billion and was more than the estimate of C$1.09 billion.

TD's adjusted net income fell 8% to C$3.21 billion. On a per share, the bank earned C$1.72, 10 Canadian cents lower than analysts' average expectation.

BMO reported a 31 per cent fall in quarterly adjusted profit to C$1.54 billion. It earned C$1.90 per share, missing analysts' estimate of C$2.41.

CIBC's adjusted income rose 24 per cent to C$1.89 billion for the three months ended Oct. 31. On a per share basis, it earned C$1.91, beating the estimate of C$1.79.

(Reporting by Pritam Biswas and Jaiveer Shekhawat in Bengaluru and Nivedita Balu in Toronto; Editing by Anil D'Silva , Mark Potter and Chizu Nomiyama)