BMO posts 27% increase in Q2

By Staff, with files from The Canadian Press | May 23, 2012 | Last updated on May 23, 2012
2 min read

Earlier this week, CIBC Capital Markets predicted Canadian banks would grow an average 5.3% in 2012’s second quarter. Bank of Montreal, however, far surpassed those expectations, with profits leaping 27%.

The bank beat analyst expectations on stronger results in both its U.S. and Canadian retail operations.

Read: RBC is top North American bank for more positive news about the success of Canada’s banking sector.

BMO says net income rose to nearly $1.03 billion for the three months ended April 30, an increase of $215 million from the same time last year, or $1.51 per share.

After adjustments, BMO’s net income was $982 million or $1.44 per share—eight cents higher than a consensus estimate compiled by Thomson Reuters prior to the report.

The bank also saw a significant drop in its provisions for credit losses, which fell $102 million to $195 million.

Shares of the bank slipped 45 cents to $54.80 in morning trading on the TSX.

BMO’s Canadian personal and commercial banking operations accounted for nearly half of overall profits, rising 7.8% or $32 million to $446 million.

U.S. banking operations report net income more than doubled to US$122 million, from US$54 million a year earlier, before adjustments. After adjustments related to the acquisition of Marshall & Ilsley, net income was $137 million, up $78 million from a year earlier.

Net income at BMO Capital Markets slipped marginally to $225 million, from $229 million a year earlier.

Barclays analyst John Aiken says lower loan losses and a better than expected effective tax rate boosted earnings by about five cents per share. “Both of these issues represent a beat on lower quality earnings, in our opinion,” he says.

He adds, “While the lower provisions will recur for some time, we don’t believe the market is willing to give BMO full valuation credit for it.”

The bank also reports its private client group had $145 million in net income, up 59% from a year ago before adjustments. Net income from corporate services was $91 million, an increase of $65 million over last year.

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Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.