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The Bank of Montreal building in Ottawa. The bank booked $2.49-billion of profit in its first quarter and is targeting a 15% return-on-equity.Sean Kilpatrick/The Canadian Press
Bank of Montreal BMO-T reported higher first-quarter profit that beat analysts’ estimates on stronger earning across its businesses as the lender attempts to boost its profitability.
BMO earned $2.49-billion, or $3.39 per share, in the three months that ended Jan. 31. That compared with $2.14-billion, or $2.83 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $3.48 per share. That topped the $3.21 per share analysts expected, according data from S&P Capital IQ.
“Through disciplined execution of our strategy we are making meaningful progress on the clear path we set to elevate returns and drive profitable earnings growth as we focus on delivering value for our clients and shareholders,” BMO chief executive officer Darryl White said in a statement.
BMO has been rejigging its U.S. operations and committed to improving the bank’s profitability, targeting a 15-per-cent return-on-equity. In the first quarter, the lender posted a return-on-equity of 12.4 per cent.
Bank of Montreal is the second major bank to report earnings for the fiscal first quarter. National Bank of Canada NA-T also releases results on Wednesday. On Tuesday, Bank of Nova Scotia BNS-T posted profit that beat analyst expectations. Royal Bank of Canada RY-T, Toronto-Dominion Bank TD-T and Canadian Imperial Bank of Commerce CM-T will close out the week on Thursday.
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In the quarter, BMO set aside $746-million in provisions for credit losses – the funds banks set aside to cover loans that may default. In the same quarter last year, BMO reserved $1.01-billion in provisions.
Total revenue rose 6 per cent in the quarter to $9.82-billion while expenses increased 6 per cent to $5.75-billion, which the bank said was in part driven by higher performance-based compensation and severance costs.
Profit from Canadian personal and commercial banking was $948-million, up 8 per cent from a year earlier, on higher revenue and lower provision for credit losses. But loan balances were up a slim 2 per cent year over year.
Profit from the bank’s U.S. arm rose 17 per cent to $742-million, driven by lower provision for credit losses.
The wealth management division generated $352-million of profit, up 7 per cent as revenue increased, spurred by stronger global markets.
Capital markets profit climbed 11 per cent to $657-million, driven by higher equities trading and advisory fee revenue.
