BIG BANKS KEEP ON ROLLING

BMO latest to defy earnings expectations

Better than expected credit quality and strong trading revenues are helping drive Canada’s big banks to one of their best quarters ever.

On Tuesday, Bank of Montreal joined Royal Bank of Canada and the Canadian Imperial Bank of Commerce — which both reported last week — in posting blow-out first quarter earnings, with adjusted net income rising 30 per cent over the year ago quarter.

Only the Bank of Nova Scotia, which Tuesday reported solid earnings growth that just met estimates, has so far drawn mixed reactions.

Still, even with Scotiabank’s “notional miss” Canada’s financial sector continues to defy expectations, said John Aiken, an analyst at Barclays in Toronto.

“By and large, we can take a look at the results (so far) this quarter and highlight the resiliency of the Canadian banks and the benefit of their diversified operating platforms,” he said in an interview.

While concerns linger about a surging housing market, the impact of low oil prices — top of mind for bank executives and analysts a year ago — continues to abate.

BMO, Canada’s fourth-largest bank by assets, reported net income of $1.53-billion or $2.28 per share, adjusted to exclude one-off items, compared with $1.75 a year earlier. This was far ahead of the $1.87 analysts had expected, according to those surveyed by Bloomberg.

The earnings growth was driven in part by big gains in capital markets and wealth management, up 46 per cent and 81 per cent from a year ago, respectively, as well as by improved net interest margins in the U.S. on the back of rising interest rates.

BMO also announced a second quarter 2017 dividend of $0.88 per common share, unchanged from the preceding quarter.