BMO tops quarterly profit expectations... Bank of Montreal reported higher first-quarter profit helped by strong retail banking revenue in Canada and the U.S. and a busy quarter for capital markets.
For the three months that ended Jan. 31, BMO earned $2.9-billion, or $4.43 per share, compared with $2-billion, or $3.03 per share, in the same quarter last year. The bank’s results were boosted by one-time gains from hedging strategies related to its pending acquisition of California-based Bank of the West as well as the sale of its European asset management business.
Adjusted to exclude those items, BMO said it earned $2.6-billion, or $3.89 per share, while analysts expected adjusted earnings per share of $3.26 on average, according to Refinitiv.
The bank kept its quarterly dividend unchanged at $1.33 per share.
BMO also recovered $99-million in provisions for credit losses - the funds banks set aside to cover loans that may default. The bank released provisions that had previously been earmarked against loans that were still being repaid, citing “reduced uncertainty on future credit conditions.”
BMO’s Canadian retail banking division reported profit of $1-billion, up 34 per cent year-over-year, as revenue increased 15 per cent. Loan balances increase 9 per cent and profit margins on those loans expanded, while revenue from fees surged by 26 per cent.
In BMO’s U.S. retail arm, profit of $681-million increased by 18 per cent. Commercial lending, which is the unit’s strength, increased by 9 per cent from the same quarter last year. The bank has not yet closed its deal to buy Bank of the West, which will substantially expand its U.S. footprint.
Profit from capital markets increased 47 per cent to $705-million as high levels of activity by clients created strong demand for underwriting, advisory and trading services.
In wealth management, profit declined by 6 per cent to $315-billion after BMO sold its European asset management unit and its private banking business in Hong Kong and Singapore, reducing revenues.
The bank’s common equity Tier 1 (CET1) ratio was 14.1 per cent, up from 13.7 per cent in the previous quarter, as the bank continues to store up capital to help pay for its $20.9-billion Bank of the West deal.