Bank of Montreal BMO-T posted higher first-quarter profit that topped analysts’ estimates as capital markets activity surged.
BMO earned $2.1-billion or $2.83 per share in the three months that ended Jan3 31. That compared with $1.3-billion or $1.73 per share in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $3.04 per share. That beat the $2.41 per share analysts expected, according to Refinitiv.
“We delivered strong first quarter performance with broad-based revenue growth driving positive operating leverage in each of our operating groups,” BMO chief executive officer Darryl White said in a statement. “Provisions for credit losses declined from the prior quarter as expected, and we initiated our share buyback program.”
The bank kept its quarterly dividend unchanged at $1.59 per share.
BMO is the second major Canadian bank to report earnings for the fiscal first quarter. Bank of Nova Scotia reported earnings that beat analyst expectations earlier Tuesday. National Bank of Canada will post earnings on Wednesday. Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce will close out the week for major bank earnings on Thursday.
In the quarter, BMO set aside $1.01-billion in provisions for credit losses – the funds banks reserve to cover loans that may default. That was slightly lower than analysts anticipated, and included $859-million against loans that the bank believes may not be repaid, based on models that use economic forecasting to predict future losses.
In the same quarter last year, BMO reserved $627-million in provisions.
Total revenue jumped 21 per cent in the quarter to $9.3-billion and expenses increased 1 per cent to $5.4-billion.
Profit from Canadian personal and commercial banking was $894-million, down 3 per cent from a year earlier, as higher expenses and provision for credit losses offset an uptick in revenue. But loan balances were up 6 per cent year over year and deposits grew 9 per cent.
Profit from the bank’s U.S. arm increased 4 per cent to $580-million, driven by higher revenue and lower expenses.
The wealth management division generated profit of $369-million, up 53 per cent as revenue was boosted by stronger global markets.
And capital markets profit climbed 49 per cent to $587-million as revenue climbed, largely driven by stronger performance in global markets, offsetting a rise in expenses and provisions for credit losses.