Toronto Star

BMO’s profit climbs 4 per cent to $1.25B

Result better than expected, with few areas to ‘poke holes into,’ Barclays analyst says

- ALEXANDRA POSADZKI

The Bank of Montreal saw its thirdquart­er profit grow 4 per cent to $1.25 billion, even as it set aside more money for bad loans.

Last year, BMO reported net income of $1.19 billion during the comparable three-month period ended July 31. On a per-share basis, BMO’s earnings amounted to $1.86, compared with $1.80 per share during the same period last year.

“We had good performanc­e across our operating groups, particular­ly in personal and commercial banking and BMO Capital Markets,” CEO Bill Downe said in a statement.

“Our performanc­e year to date reflects our focus on the customer and strong operating discipline.”

The bank raked in $5.63 billion in revenue during the quarter, up from $4.83 billion a year ago.

After adjustment­s, BMO had a quarterly profit of $1.30 billion, or $1.94 per share, compared with $1.23 billion, or $1.86 per share, a year ago.

Provisions for credit losses climbed to $257 million during the quarter, up from $160 million during the same quarter last year.

Barclays analyst John Aiken says the results were better than expected.

“Generally, BMO reported a solid quarter with few areas that we can poke holes in,” Aiken said in a note to clients.

“While energy-related provisions were up sequential­ly (from the second quarter), BMO is simply playing a bit of catch-up and there did not appear to be any significan­t deteriorat­ion in the domestic consumer portfolio.”

BMO was the first of Canada’s big banks to report its third-quarter earnings, and if other banks report similar results, Aiken says that will “take some of the wind out of the sails” of those with concerns about oilsands-related loan losses.

“While credit was expected to be a significan­t theme in the quarter, we no longer believe that energy exposures are driving valuations and consumer credit remained benign,” Aiken said.

Royal Bank will report on Wednesday, followed by CIBC and TD Bank on Thursday. Scotiabank is slated to report on Aug. 30 and National Bank wraps up the earnings parade on Aug. 31.

 ?? MARCUS OLENIUK/TORONTO STAR FILE PHOTO ?? BMO reported third-quarter revenue of $5.63 billion, up from $4.83 billion in the same period a year ago.
MARCUS OLENIUK/TORONTO STAR FILE PHOTO BMO reported third-quarter revenue of $5.63 billion, up from $4.83 billion in the same period a year ago.

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