BMO’s CEO Darryl White said the uncertainty created by U.S. tariffs has receded in recent months.Sean Kilpatrick/The Canadian Press
Bank of Montreal’s BMO-T leader sounded a note of cautious optimism on North America’s economic outlook on Tuesday as the lender boosted its share buyback program after reporting stronger-than-expected financial results.
Darryl White, chief executive officer at the country’s third-largest bank, said the business uncertainty created by U.S. President Donald Trump’s tariff policies has receded in recent months. He said ahead of the potential renegotiation of the trade pact between Canada, the U.S. and Mexico next year, “the economy is proceeding as expected, neither robust nor recessionary.”
Prior to this quarter, higher interest rates and a potential trade war with the U.S. led banks to increase loss provisions. But they now expect tariffs to have a milder impact on the economy, easing concerns over credit defaults.
BMO’s loan loss provisions came in at $797-million during the quarter, compared with $906-million a year ago.
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BMO reported a $2.22-billion profit in the three months ended July 31, up 25 per cent from $1.87-billion in the same period a year ago. The bank’s earnings per share rose 26 per cent to $3.14, compared to $2.48.
The bank’s adjusted net income, the measure of profit investors focus on, was $2.4-billion, or $3.23 per share. That compared with $1.98-billion, or $2.64 per share, a year earlier. BMO’s results beat analysts’ consensus estimate of a $2.97 per share profit.
BMO increased the size of its stock buyback program to 30 million shares, from 20 million, subject to approval by regulators and the Toronto Stock Exchange. The increase in the normal course issuer bid is one of the ways the bank can return more of its excess capital to shareholders.
“Credit performance in the quarter was slightly better than we had expected,” said analyst Mike Rizvanovic at Bank of Nova Scotia in a report on Tuesday. “An increased share buyback program was another positive.”
So far this fiscal year, BMO has repurchased 15.7 million shares. The bank’s Tier 1 ratio, a benchmark for its financial strength, increased to 13.5 per cent from 13 per cent a year ago.
“We’re leveraging our strong balance sheet to support client growth while returning excess capital to our shareholders,” said Mr. White in a press release.
In June, BMO announced plans to expand its wealth management platform by buying employee-owned Burgundy Asset Management Ltd. for $625-million. The Toronto-based firm manages $27-billion for wealthy clients and institutions. On Tuesday, Mr. White said: “”We continue to invest to drive sustainable growth across our businesses, including our recently announced acquisition of Burgundy."
Mr. White has focused on increasing BMO’s return on equity (ROE) after acquiring San Francisco-based Bank of the West in 2023 for US$16.3-billion. The lender’s adjusted ROE rose to 12 per cent in the most recent quarter, from 10.6 per cent in the same period a year ago. “We anticipate that BMO’s strong beat should receive an initial warm reception by the market,” said analyst John Aiken at Jefferies. “However, the bulk of better-than-expected results came from lower-than-forecast provisions, particularly in performing provisions.”
Most of BMO’s operating units modestly missed analysts’ expectations, said Mr. Aiken. “We view the quality of earnings as being not as high as we had originally anticipated and, along with negative loan growth in the U.S., we anticipate that we could potentially see stronger earnings from BMO’s peers.”
BMO’s shares have gained 13 per cent so far in 2025, outperforming peer Royal Bank of Canada RY-T, which is expected to report its third-quarter earnings on Wednesday.