Bank of Montreal Raises Dividend as Profit Tops Estimates

Bank of Montreal raised its dividend for the first time in five years after posting third-quarter profit that beat analysts’ estimates on U.S. consumer banking.

Net income for the period ended July 31 rose 37 percent to C$970 million ($981 million), or C$1.42 a share, compared with C$708 million, or C$1.09, a year earlier, the Toronto-based bank said today in a statement. Revenue rose 17 percent to C$3.88 billion.

Canada’s fourth-biggest bank raised its dividend for the first time since the financial crisis began and is the last Canadian lender to boost its payout. The lender raised its dividend 2.9 percent to 72 cents a share, and lowered its payout range to between 40 percent and 50 percent of earnings, from a previous range of 45 percent to 55 percent.

“We increased the dividend, reflecting our strong capital position and our confidence in our continued ability to generate sustained earnings growth,” Bill Downe, chief executive officer of Bank of Montreal, said in the statement.

The bank said it had profit excluding items of C$1.49 a share, beating the C$1.38-a-share average estimate of 15 analysts surveyed by Bloomberg.

Profit was boosted by the July 2011 takeover of Marshall & Ilsley Corp., the Wisconsin lender Bank of Montreal (BMO) bought for C$4.1 billion in the largest acquisition in its 195-year history. The lender is integrating M&I into its Chicago-based BMO Harris Bank consumer lending unit.

Bank of Montreal set aside C$237 million for bad loans, up 3 percent from a year earlier.

Consumer Bank

Canadian consumer banking profit rose 2.3 percent to C$453 million, while profit from BMO Harris Bank rose 43 percent to C$129 million after adding M&I contributions.

The BMO Capital Markets investment-banking unit had profit of C$232 million, 14 percent lower than a year earlier as underwriting and advisory fees fell 13 percent to C$123 million. Trading revenue rose 38 percent to C$213 million, led by interest-rate contracts and commodities.

The private-client group, which includes insurance and mutual funds, had profit of C$109 million, up 4.8 percent from a year ago.

Bank of Nova Scotia, Canada’s third-biggest bank, also reports results today. Royal Bank of Canada, the country’s largest lender, Toronto-Dominion Bank (TD), the No. 2 lender, and Canadian Imperial Bank of Commerce, the fifth-biggest bank, report Aug. 30.

(Bank of Montreal will host a conference call to discuss quarterly results at 2 p.m. at +1-888-789-0089 or +1-416-695-9753 or at www.bmo.com/investorrelations)

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

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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