Bank of Montreal (NYSE:BMO) reported stronger-than-expected third-quarter results on Tuesday, supported by robust growth in its Capital Markets division and improved performances across its Canadian and U.S. banking operations.
Adjusted earnings per share reached Cdn$3.96, ahead of analysts’ forecast of Cdn$3.74 and up 22% from Cdn$3.23 in the same quarter last year. Revenue increased 11% year-on-year to Cdn$9.9 billion from Cdn$9.0 billion, also exceeding the consensus estimate of Cdn$9.7 billion.
Adjusted net income climbed 19% to Cdn$2.86 billion, compared with Cdn$2.40 billion a year earlier.
Business Sale Charge Weighs on Reported Profit
While adjusted performance strengthened, BMO’s reported net income fell 25% to Cdn$1.75 billion, equivalent to Cdn$2.38 per share.
The decline largely reflected a Cdn$962 million after-tax charge associated with the previously announced sale of the bank’s Transportation Finance and Vendor Finance businesses.
“BMO delivered another strong quarter, driven by disciplined execution against the commitments we made at our March Investor Day to elevate ROE and accelerate growth,” said Darryl White, CEO of BMO Financial Group.
Capital Markets Profit Jumps 46%
Capital Markets was a major contributor to the quarter’s growth, with net income rising 46% year-on-year to Cdn$645 million. The improvement was driven by higher revenue across both Global Markets and Investment and Corporate Banking.
Canadian P&C also performed strongly, generating net income of Cdn$980 million, an increase of 16% from the previous year.
In the U.S., Banking net income advanced 13% to Cdn$868 million, adding to the broad-based improvement across BMO’s core businesses.
Credit Loss Provisions Decline
BMO recorded provisions for credit losses of Cdn$722 million during the quarter, down from Cdn$797 million in the corresponding period last year.
The bank’s Common Equity Tier 1 ratio stood at 13.0%, compared with 13.5% a year earlier, leaving BMO with a substantial capital buffer as it continues pursuing its growth and capital-return strategy.
BMO Raises Dividend and Continues Share Buybacks
Alongside its quarterly results, BMO declared a fourth-quarter dividend of Cdn$1.71 per common share, representing a 5% increase from the previous year.
The bank also continued returning capital through share repurchases. During the quarter, BMO bought back 3.8 million common shares for cancellation at an average price of Cdn$239.37 per share.
The combination of stronger adjusted earnings, double-digit revenue growth, lower credit-loss provisions and particularly strong Capital Markets performance helped BMO surpass third-quarter expectations, despite the one-off charge weighing on reported net income.
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