BMO profit edges higher as loan losses swell amid slower retail banking growth - The Globe and Mail

Bank of Montreal's third-quarter profit edged 1 per cent higher as expected loan losses swelled amid slower growth in retail banking.

Canada's fourth-largest bank by assets is the third bank to report earnings for the fiscal third quarter, which ended Jul. 31, after Royal Bank of Canada and Canadian Imperial Bank of Commerce both reported steady but encouraging results last week.

BMO reported profit of $1.56-billion, or $2.34 per share, both up 1 per cent from $1.54-billion, or $2.31 per share, a year ago.

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Adjusted to exclude certain items, BMO said it earned $2.38 per share. But that fell far short of the consensus estimate of $2.49 per share among analysts.

The bank held its quarterly dividend steady at $1.03 per share.

Provisions for credit losses, or the money banks set aside to cover bad loans, were 65 per cent higher at $306 million, rising from unusually low levels a year ago and acting as a major drag on BMO's results.

Profit from BMO's core Canadian banking operations rose 1 per cent to $648-million, as higher expected loan losses and expenses offset much of the division's revenue growth. And earnings from the U.S. personal and commercial banking division, which has been a key engine for the bank in recent quarters, also rose 1 per cent to $368-million.

Wealth management was a weak point, with profit falling to $249-million, compared with $291-million a year ago, due to a sharp drop in profit from the bank's insurance arm. Profits from traditional wealth management activities rose 11 per cent to $225-million.

And BMO’s capital markets division reported profit of $313-million, up 4 per cent from a year earlier, after RBC and CIBC both reported lower capital markets earnings amid difficult market conditions last week.

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August 27, 2019 at 04:59PM