Bank of Montreal Beats Estimates on Consumer Lending

Bank of Montreal, Canada’s fourth-largest lender, posted third-quarter profit that beat analysts’ estimates on gains in consumer lending and investment banking.

Net income for the three months ended July 31 was a record C$1.13 billion ($1.03 billion), or C$1.67 a share, compared with C$1.12 billion, or C$1.66, a year earlier, the Toronto-based company said today in a statement. Profit excluding some items was C$1.73 a share, surpassing the C$1.66 average estimate of 15 analysts surveyed by Bloomberg.

Bank of Montreal benefited from profit increases in personal and commercial banking in Canada and the U.S., while its BMO Capital Markets unit reported higher fees from arranging stock sales and advising companies on takeovers. Those gains were partly offset by provisions for credit losses that rose from a year earlier and a drop in insurance earnings.

“Pretty good, balanced quarter from BMO,” Jason Bilodeau, an analyst with Macquarie Capital Markets in Toronto, said in a note to clients, referring to the company by its stock symbol. “The composition looks favorable as well, with in line or better-than-expected numbers in each of the segments.”

Bank of Nova Scotia, Canada’s third-largest lender by assets, said earlier today that profit rose 35 percent on gains from selling its stake in money manager CI Financial Corp. The Toronto-based firm raised its dividend 3.1 percent.

Share Performance

Bank of Montreal climbed 16 percent this year through yesterday, the second-best performer in the eight-company Standard & Poor’s/TSX Commercial Banks Index, which has advanced 14 percent. The KBW Index of 24 U.S. lenders has gained 3.5 percent since Dec. 31.

“BMO delivered very good results in the third quarter, confirming continued momentum across our businesses,” Chief Executive Officer William Downe said in the statement. “Adjusted net income was up 4 percent from particularly strong results a year ago.”

Revenue rose 5.4 percent to C$4.22 billion from a year earlier, according to the statement. The bank set aside C$130 million for bad loans, up from C$76 million a year earlier, when higher recoveries and improvements in personal and commercial lending helped the lender post its lowest provision for credit losses since 2007.

Canadian personal and commercial banking profit rose 8.2 percent to C$526 million, while earnings at BMO Harris Bank climbed 6.7 percent to C$159 million.

BMO Capital Markets’ profit rose 14 percent to C$306 million from C$268 million a year earlier. Underwriting and advisory fees advanced 69 percent to C$238 million.

The wealth-management unit, which includes insurance, posted profit of C$190 million, down 12 percent from C$217 million a year earlier, as insurance earnings slid, according to the statement.

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

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

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; David Scanlan at dscanlan@bloomberg.net Steve Dickson

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