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BMO’s Downe Says He’s in No Rush to Raise Payout

Bank of Montreal Chief Executive Officer William Downe said he’s in no rush to raise dividends at Canada’s fourth-biggest bank.

“It’s all dependent upon our earnings,” Downe, 58, said today in an interview. “We’re committed to increase dividends over time, but I don’t think we’re in a rush.”

Bank of Montreal kept its dividend unchanged at 70 cents for 14 quarters. The Toronto-based bank has a dividend payout target of 45 percent to 55 percent of earnings. Bank of Montreal’s dividend payout was equal to 56 percent of profit in the fourth quarter.

National Bank of Canada and Canadian Western Bank announced dividend increases within the past two weeks, the first jump among the country’s lenders since Laurentian Bank of Canada announced a dividend increase in December 2009.

Downe also said he expects takeover opportunities to emerge in the next year as U.S. banks consolidate. Downe said he’d consider takeovers but he doesn’t want to divert attention to those unrelated to Bank of Montreal’s areas of expertise.

“We just have to focus on the Midwest of the U.S. with respect to personal and commercial banking, and wealth management on a North American basis,” Downe said.

Bank of Montreal also increased its medium-term financial performance objective to 12 percent annual growth in earnings per share, up from 10 percent, on an expectation that markets will improve in a business-led economic recovery.

“The headwinds have abated,” Downe said. “We’re going to see stronger economic growth in the next two or three years than we’ve seen in the previous two and three years.”

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