Net income excluding one-off items rose to $3.89 per share
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The Bank of Montreal reported an adjusted profit of $2.6 billion in its fiscal first quarter of 2022, a jump of 27 per cent from the same time last year on strength in its capital markets division.
Adjusted earnings came out to $3.89 per share in the three months ending Jan. 31, beating analyst expectations of $3.28 per share, according to IBES data from Refinitiv.
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The bank said personal and commercial banking income jumped 34 per cent to $1 billion year over year on the Canadian side. The bank’s capital markets division saw adjusted net income grow 47 per cent to $712 million.
However, the wealth management side of the business faltered, as adjusted net income fell to $316 million from $344 million a year ago. BMO added that the rising overall profit was also supported by the recovery of credit loss provisions.
“Results were driven by strong performance in Canadian and U.S. (personal and commercial banking), including double-digit commercial loan growth on both sides of the border; continued strength in BMO Capital Markets; as well as good underlying performance in wealth management,” BMO Financial Group chief executive officer Darryl White said during the Tuesday morning conference call. “Our growth is underpinned by our consistent risk and underwriting practices and continued strong credit quality.”
Analysts Meny Grauman and Daniel Marks from Scotia Capital Inc. said BMO has posted a string of solid quarters and they expect the trend to continue.
“For a number of quarters now BMO has delivered peer-leading performance on earnings day, and our first impression of these results is that this streak continues,” the analysts wrote.
John Aiken, senior analyst and head of research at Barclays, told clients in a note that BMO surpassed expectations with strong trading revenues.
“BMO reported earnings well ahead of expectations on the back of an exceptionally strong trading result. We estimate that trading exceeding our estimates added almost $0.50 per share to BMO’s earnings…” Aiken wrote in his note. “BMO managed strong loan growth in the U.S. and saw margin expansion and solid cost controls on both sides of the border.”
Aiken added that the bank’s capital ratio, the measure of a bank’s capital against its risk-weighted assets, was up by 40 basis points as it accumulates capital ahead of the Bank of the West acquisition announced late last year.
“We’ve been executing against our proven strategy to steadily deliver growth and grow our presence both organically and by building on key acquisitions,” White said. “The announced Bank of the West acquisition will meaningfully increase our scale and growth potential of our already high-performing U.S. segment when it closes.”
Based on these results, Canaccord Genuity Corp. Scott Chan wrote that his firm expects BMO’s stock to trade higher throughout the day.
BMO’s stock jumped over one per cent at the market open on Tuesday morning, rising to approximately $146.50 right after the opening bells.
BMO saw a total recovery in loss provisions of $99 million, compared to loan loss provisions of $156 million this time last year.
• Email: shughes@postmedia.com | Twitter: StephHughes95
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