TORONTO - Toronto-Dominion Bank on Thursday reported fourth-quarter profit in line with market expectations, underperforming rivals, as slower growth in its domestic market overshadowed a stronger U.S performance.

The bank said earnings, excluding one-off items, rose to $1.22 per share in the fourth quarter through Oct. 31, from $1.14 a year earlier, matching the average forecast of analysts, according to Thomson Reuters I/B/E/S.

Total net income, excluding one-off items, rose to $2.35 billion from $2.18 billion the year before. Net income at its Canadian business was flat at $1.5 billion while net income at its U.S. retail business rose by 18 per cent to $701 million.

Analysts said the bank's performance contrasted negatively with forecast-busting results by CIBC on Thursday and Bank of Nova Scotia earlier this week.

"In light of earnings produced by some of TD's peers, we would expect relative underperformance on its valuation today, with TD's now noticeably lagging capital ratio likely adding to the pressure," said Barclays analyst John Aiken.

TD said its core tier 1 ratio, a key measure of its financial strength, stood at 10.4 per cent at the end of October, the lowest of the four major Canadian banks to report fourth-quarter earnings so far.

Shares in TD were down 0.6 per cent in early afternoon trading.

In an interview, Chief Financial Officer Riaz Ahmed said he was comfortable with the bank's capital strength.

"I think we're very well capitalised and I don't see any shareholder value in running it up unnecessarily," he said.

Ahmed said he expected the bank to benefit from an improving U.S. economy during 2017.

TD is one of the 10 biggest banks in the United States, where it has a major retail presence with 1,300 branches.

"If these conditions are sustained into 2017, I think we'll be well poised to deliver inside our medium-term 7 to 10 per cent earnings growth objective," he said.

Ahmed said the bank continued to evaluate acquisition opportunities in the U.S. but rising valuations were deterring  deals.

"Over the last couple of years, for banking acquisitions particularly, valuations have been steep," he said.

For the full year, net income, excluding one-off items, rose to $9.29 billion from $8.75 billion the year before.