Profit doubles as Montreal Bank shines

City A.M. Reporter
BANK of Montreal (BMO) said yesterday profit doubled in the second quarter as wealth management and capital markets surged and the bank set aside less money to cover bad loans.

The higher-than-expected result kicked off Canada’s bank earnings season with a bang. It was the fifth straight quarter of higher revenues and net income for Toronto-based BMO, which has retail and wholesale banking operations across Canada and the US Midwest.

Canada’s fourth-largest bank said it had net income of C$745m (£486.1m), or C$1.26 a share, for the fiscal quarter ended 30 April, up from C$358 million, or C$0.61 a share, a year earlier. Cash earnings per share were C$1.28, up from 63 Canadian cents in the second quarter of 2009.

Analysts were expecting a per share profit of C$1.10.

BMO’s Canadian operations once again powered earnings, with profit up 16 per cent from a year ago to C$396m. The capital markets segment was also strong, with profit rising 38 per cent to C$259m.

BMO has been stung by higher loan losses in the United States relative to its Canadian operations as US consumer and business borrowers struggle with the slower US recovery.

The bank has said it is retooling its US operations to focus on commercial lending. Under the restructuring, corporate customers will be moved to the bank’s commercial lending arm.

Toronto-based BMO said provisions for credit losses, or the amount of money the bank set aside to cover bad loans, fell to C$249m, down C$123m from a year earlier.

Tier one capital was 13.3 per cent, at the high end of Canadian peers and well above most global rivals.

The quarterly dividend was unchanged at 70 Canadian cents a share, as expected.