TD and BMO stumble while CIBC rises to cap big bank earnings season

TD Bank on Thursday warned of a challenging 2025 and suspended its medium-term earnings forecast as Canada's second-biggest lender.

TD Bank on Thursday warned of a challenging 2025 and suspended its medium-term earnings forecast as Canada’s second-biggest lender works through its anti-money laundering remediation program following a U.S. regulatory probe.

Shares of TD, which faces an asset cap and a $3 billion penalty following a probe by U.S. regulators last year into its anti-money laundering program, were down about 5% after it said it would only update its targets in the second half of 2025.

TD also said it would hold a strategic review of opportunities, as it would take at least four years for it to complete its audit and regulatory reviews.

“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.

TD ran into problems with U.S. regulators for shortfalls in its risk and compliance program that provided ground for a host of illicit activity, from fentanyl and narcotics trafficking to terrorist financing.

Waiting another half a year or more for management to disclose the longer-run implications of its U.S. consent order “leaves the stock without a proper anchor,” Scotiabank analyst Meny Grauman said.

TD issued its updates after the lender and Bank of Montreal, two of Canada’s biggest banks, missed analysts’ estimates for quarterly profit, reflecting weakness in their 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 a fourth-quarter profit that surpassed estimates, helped by smaller-than-expected loan loss provisions and strength at its Canadian retail arm.