* Sees Canada earnings growth in 'mid-single digits'
* Domestic earnings flat but U.S. retail growth strong
* Earnings of C$1.22 per share match expectations (Adds details of revised growth target in Canada)
By Matt Scuffham
TORONTO, Dec 1 (Reuters) - Toronto-Dominion Bank on Thursday reported fourth-quarter profit in line with market expectations and lowered its earnings growth target in Canada, blaming sluggish economic growth in its domestic market.
Chief Executive Bharat Masrani said the bank had pegged back its earnings target in Canada in the expectation that the country's economic output will remain modest in 2017 and 2018.
"We think it is prudent to moderate our medium term growth expectation for the Canadian retail segment from the 7 percent plus target identified at our investor day to mid-single digits," he told analysts on a conference call.
Canada's second biggest bank said earnings, excluding one-off items, rose to C$1.22 per share in the fourth quarter to Oct. 31, from C$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 C$2.35 billion from C$2.18 billion the year before. Net income at its Canadian business was flat at C$1.5 billion while net income at its U.S. retail business rose by 18 percent to C$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.
Shares in TD closed on Thursday down 0.8 percent.
The bank said its core tier 1 ratio, a key measure of its financial strength, stood at 10.4 percent at the end of October, the lowest of the four major Canadian banks to report fourth-quarter earnings so far.
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 ten 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 percent earnings growth objective," he said.
Ahmed said the bank continued to evaluate acquisition opportunities in the U.S. but rising valuations were deterring deals.
For the full year, net income, excluding one-off items, rose to C$9.29 billion from C$8.75 billion the year before.
$1 = 1.3414 Canadian dollars Reporting by Matt Scuffham; Editing by Bernadette Baum, James Dalgleish and Chris Reese