Nov. 25 (Bloomberg) -- Bank of Montreal, Canada’s fourth- biggest bank, said higher revenue from consumer banking helped boost fourth-quarter profit by 24 percent from a year ago, when it had debt writedowns and trading losses.

Net income for the quarter ended Oct. 31 rose to C$560 million ($450 million), or C$1.06 a share, from C$452 million, or 87 cents, a year earlier, the Toronto-based bank said today in a statement. Revenue rose 28 percent to C$2.81 billion, helping the lender post its first profit rise in six quarters.

“The Bank of Montreal, which everyone thought would startle people with something extraordinarily negative, did not,” said Douglas Davis, president of Davis-Rea Ltd. in Toronto, who owns the bank’s shares among about $325 million in assets. “If they’re not reporting it now, that’s a really good sign.”

Bank of Montreal, the first Canadian bank to report complete quarterly results, may be the only lender to increase earnings this quarter as debt writedowns and trading losses curb profits at its bigger rivals.

Three of the banks have already released preliminary results to reflect writedowns and credit losses. Royal Bank of Canada, the biggest lender, said yesterday that profit probably fell 15 percent to C$1.1 billion, driven down by C$360 million in trading losses and writedowns. The bank reports full results on Dec. 5.

Bank of Montreal rose 83 cents, or 2.4 percent, to C$34.95 at 4:10 p.m. on the Toronto Stock Exchange. The stock has fallen 38 percent this year.

Debt Writedowns

Last week, Toronto-Dominion Bank reported preliminary results that missed analysts’ estimates after incurring a C$350 million trading loss. Bank of Nova Scotia said it had a C$890 million pretax writedown tied to trading and declining investments.

Bank of Montreal’s earnings were pared by pretax charges of C$348 million on derivatives and other investments. Those costs were partly offset by C$303 million in gains from credit-default swaps, widening credit spreads and other adjustments.

The bank reclassified C$2 billion in securities in its trading portfolio as “available for sale” under new accounting rules, avoiding a C$183 million writedown.

National Bank Financial analyst Robert Sedran said the bank had profit of C$1.13 a share before one-time items such as a tax recovery. That topped his estimate of C$1.06 a share.

Rating Upgrade

“Bank of Montreal’s earnings were much stronger than we had anticipated,” Dundee Securities Corp. analyst John Aiken said in a note. Aiken raised his rating to “neutral” from “sell” after profit beat his estimates.

Bank of Montreal’s so-called Tier 1 capital ratio was 9.77 percent at the end of the quarter.

“We’re going to continue to focus on growing our earnings and paying our dividend,” Chief Executive Officer William Downe said in an interview. “We think there’s going to be growth opportunities for the bank that will come from the stronger Tier 1 capital ratio, and we’re going to continue to pursue it.”

Bank of Montreal set aside C$465 million in provisions for bad loans, up from C$151 million a year earlier.

Canadian consumer-banking profit rose 20 percent to C$344 million from a year earlier as personal loans rose 21 percent and it added more mortgages. Commercial loans and credit-card revenue also rose from a year earlier.

Profit from its Chicago-based Harris consumer bank fell 64 percent to C$12 million on costs to integrate its takeovers of two Wisconsin lenders, Merchants and Manufacturers Bancorporation Inc., and Ozaukee Bank.

Investment Banking

Investment-banking profit soared to C$285 million from C$46 million a year earlier, when the firm had C$275 million in losses from trading, bad bets on natural-gas options contracts and writedowns on debt investments.

Trading revenue was C$435 million, compared with a loss of C$165 million a year ago. The Canadian Standard & Poor’s/TSX Composite Index fell 28 percent during the three-month period.

Profit from the private-client group, which includes brokerage, investing services and mutual funds, fell 24 percent to C$78 million after taking a C$19 million cost tied to the bankruptcy of Lehman Brothers Holdings Inc., and as investors fled markets amid plunging stock prices.

Bank of Montreal said it isn’t disclosing financial targets for 2009 because of “uncertainty” in credit and capital markets. The bank said it achieved one of its five performance targets for fiscal 2008.

Bank of Nova Scotia, the country’s third-biggest bank, is scheduled to report results Dec. 2. Canadian Imperial Bank of Commerce, Toronto-Dominion and National Bank of Canada are scheduled to report on Dec. 4.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

Last Updated: November 25, 2008 16:35 EST