Toronto-Dominion Bank‘s ability to expand its retail banking business in the United States has been restricted, leaving investors wondering whether it will do the obvious and focus on growing its personal and commercial banking segment in Canada or its wealth and insurance business in the U.S., but analysts say any potential moves would be “easier said than done.”

Gabriel Dechaine, an analyst at National Bank of Canada, said there are “obvious constraints” that TD would face if it looked to expand in the “mature and concentrated” Canadian market.

“TD’s historical track record raises questions,” he said in a note on Thursday, pointing out that the bank has either grown at a similar pace to the industry in key product categories or lagged over the past five years or so.

“For material market share gains to be achieved, TD may need to adopt a more aggressive pricing strategy,” he said. “Such a move would dilute the profitability of new growth, while also presenting a threat to overall industry profitability.”

TD was fined about US$3.1 billion and ordered to cap the expansion of its retail banking business last month by the U.S. Department of Justice and other regulators for failing to monitor money laundering activities at its branches.

The fine was expected — the Toronto-based lender had kept aside the money beforehand — but the cap was a bit of a surprise.

After the charges were announced, TD unveiled a number of steps to mitigate the impacts of the curbs, describing 2025 as a “transition” year. It said it would sell about 10 per cent of its U.S. assets to create liquidity and support the financial needs of its customers, as well as introduce measures to improve return-on-equity metrics in the near term.

Despite those efforts, analysts are likely facing a tough period when trying to predict TD’s future earnings. For example, John Aiken at Jefferies Inc. in October said it was going to be an “absolute nightmare” to forecast TD’s earnings in the coming quarters.

“TD laid out its plan, but we don’t know the specifics,” he said. “We don’t know what’s going to happen when. We don’t know what the unintended consequences (of the caps) are going to be. This is an incremental level of uncertainty that was not generally expected.”

Dechaine said many investors may not be aware of the challenge of replacing the huge contribution that TD’s U.S. segment makes to the bank’s growth. He said TD’s Canadian retail business would need to double its annual pre-tax, pre-provision (PTPP) profit growth to offset a lack of U.S. PTPP growth.

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