Bank of Montreal Profit Beats Estimates on Lending, Wealth

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Bank of Montreal, the first Canadian lender to report third-quarter results, posted profit that beat analysts’ estimates on gains in consumer banking and wealth management.

Net income for the period ended July 31 climbed 5.9 percent to a record C$1.19 billion ($901 million), or C$1.80 a share, from $1.13 billion, or C$1.67, a year earlier, the Toronto-based lender said Tuesday in a statement. Profit excluding some items was C$1.86 a share, compared with the C$1.73 average estimate of 16 analysts surveyed by Bloomberg.

“The results were driven by good operating group performance, particularly in our combined personal and commercial banking business” and wealth management, Chief Executive Officer William Downe, 63, said the statement.

Adjusted profit for Canada’s eight biggest banks is expected to climb 2 percent in the quarter from a year earlier, the slowest growth since the first period of 2012, according to estimates by Sumit Malhotra, a Scotia Capital analyst.

Revenue rose 1.9 percent to C$4.83 billion from a year earlier, Bank of Montreal said, exceeding analysts’ C$4.6 billion estimate. The firm set aside C$160 million for bad loans, up from C$130 million.

Bank of Montreal shares fell 19 percent this year through Monday, the second-worst performance in the eight-company Standard & Poor’s/TSX Commercial Banks Index, which declined 14 percent.

Canadian Banking

Canadian personal- and commercial-banking profit rose 5.9 percent to C$556 million from a year earlier, reversing a trend of declining earnings growth in the prior two quarters.

Profit at its Chicago-based BMO Harris Bank surged 38 percent to C$222 million, helped in part by a 17 percent decline in the value of the Canadian dollar relative to the greenback from a year earlier. The unit’s profit in U.S. currency rose 17 percent to $175 million.

Earnings from wealth management, which includes insurance, rose 11 percent to C$210 million as assets increased on favorable foreign exchange and market gains. Bank of Montreal bought London-based F&C Asset Management Plc last year for about C$1.3 billion to expand its money-management business in Europe.

Profit from capital markets fell 11 percent to C$273 million, on higher costs and provisions for credit losses, the bank said. Underwriting and advisory fees slid 13 percent to C$207 million, while total trading revenue increased 16 percent to C$264 million, lifted by interest rates trading.

Royal Bank of Canada, the country’s largest lender, and National Bank of Canada, the sixth biggest, report results Wednesday. Toronto-Dominion Bank, the No. 2 lender, and Canadian Imperial Bank of Commerce, post results Thursday, followed on Aug. 28 by No. 3-ranked Bank of Nova Scotia.

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