May 23 (Reuters) -

TD Bank on Thursday reported better than expected

quarterly earnings helped by strength in Canada and its wealth

management unit, even as its U.S segment struggled amid probes

related to its anti-money laundering program.

TD, Canada's second largest bank, said net income at

home rose 7%. This was helped by loan growth and newcomers

opening accounts as it increased focus on the segment through a

partnership with India's HDFC bank to attract customers, such as

students moving to the country.

South of the border, the lender is facing a U.S.

Department of Justice probe over its ties to a $653 million drug

money-laundering case in New York and New Jersey related to

illegal drug sales.

In the U.S, earnings fell 58% as it set aside $450

million to cover potential fines for one of three regulatory

probes on the issue and is anticipating more monetary penalties.

The U.S. typically brings in about a quarter to a third

of TD's profit after its rapid expansion over the past decade,

acquiring smaller region banks on the east coast and southeast

U.S. and building a network of 1,100 branches.

But after its proposed $13.4 billion acquisition of

First Horizon was scrapped, TD said it would continue to focus

on the U.S. market expanding brick by brick by opening about 150

branches.

"The way we look at it is that it (AML probe) is

situation dependent. We may pace the store opening differently

given these priorities but we have a very strong franchise," CFO

Kelvin Tran said in an interview.

"The US continues to be an important part for TD... we

still believe in expanding stores and our footprint," he said,

adding that it has invested over $500 million in program

remediation and platform enhancements.

TD said it is working with U.S. regulators to bring

these investigations to a resolution so investors can have more

clarity, and that a "comprehensive overhaul" of its U.S. AML

program is well underway.

"We continue to view TD's U.S. anti-money laundering

investigations as the biggest event impacting the company," RBC

Capital Markets analyst Darko Mihelic said, noting that revenues

were stronger than expected.

Loan loss provisions rose to C$1.07 billion from C$599

million a year ago.

The Wealth Management and Insurance unit's net income rose

19% to C$621 million, compared with the same quarter last year.

The bank's adjusted net income rose to C$3.79 billion

($2.77 billion), or C$2.04 per share, in the quarter, from

C$3.71 billion, or C$1.91 per share, a year earlier.

Analysts were expecting C$1.85, according to LSEG data.

($1 = 1.3664 Canadian dollars)