Third quarter profit growth at Bank of Montreal outpaced expectations, driven higher by strong results from its Canadian retail and wealth management businesses.
Toronto-based BMO is the fourth large Canadian lender to post stronger-than-expected profit this earnings season, helped along by strong returns from its core domestic operations.
BMO earned $1.39-billion, or $2.05 per share, for the quarter that ended July 31. That was up from $1.25-billion, or $1.86 a share, earned a year earlier.
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Adjusted to exclude certain items, BMO said profit climbed 6 per cent and it earned $2.03 a share. Analysts polled by Bloomberg were expecting adjusted profit of $2.00 per share.
"All of our businesses are well-positioned for continued success in the current environment and over the long term," BMO's chief executive officer Bill Downe said in a news release.
BMO held its quarterly dividend steady at 90 cents per share.
Provisions for credit losses, or money the bank sets aside to cover soured loans, fell sharply to $134-million from $257-million a year earlier. The bank attributed the steep drop to a $76-million pre-tax decrease in the collective allowance – a sum set aside to cover losses that can't yet be tied to specific credit assets.
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Profit from BMO's core Canadian banking operations rose 9 per cent from a year ago, to $614-million, thanks in part to higher balances and lower loan losses. In the U.S. personal and commercial segment, which operates as BMO Harris Bank, profit of $278-million was flat compared with the same quarter last year.
In the wealth management division, profit shot up 32 per cent to $264-million on the strength of better results from both traditional wealth management and the insurance business.
But capital markets profit fell by 8 per cent to $292-million, due to lower revenue and higher expenses.