BMO Profit Increases 6.8% After Bank Buys GE Finance Unit

BMO, National Bank Climb as 1Q Profit Beats Estimates
  • Earnings from BMO Capital Markets, Canadian banking climb
  • National Bank of Canada also posts profit that tops estimates

Bank of Montreal posted fiscal first-quarter profit that beat analysts’ estimates as contributions from its purchase of General Electric Co.’s transportation-finance business added to U.S. earnings.

Net income for the period ended Jan. 31 climbed 6.8 percent to C$1.07 billion ($778 million), or C$1.58 a share, from C$1 billion, or C$1.46, a year earlier, Canada’s fourth-largest lender by assets said Tuesday in a statement. Profit excluding some items was C$1.75 a share, compared with the C$1.72 average estimate of 15 analysts surveyed by Bloomberg.

“These results underline the benefits of our business mix, which is well diversified by geography and customer segment,” Chief Executive Officer William Downe, 63, said in the statement.

Bank of Montreal is the first major Canadian bank to report first-quarter results. The country’s six largest lenders are expected to increase per-share adjusted earnings by an average of 1 percent from a year earlier, Mario Mendonca, a TD Securities analyst, said in a Feb. 9 note.

The December purchase of GE’s transportation-finance business in the U.S. and Canada added about C$11.9 billion of net earning assets to the Toronto-based lender’s commercial-banking unit. A stronger greenback relative to the Canadian dollar also aided earnings from U.S. businesses, including Chicago-based BMO Harris Bank.

Revenue Climbs

Bank of Montreal shares declined 5.4 percent this year through Monday, the second-worst performance in the eight-company Standard & Poor’s/TSX Composite Banks Index, which slid 3.6 percent.

Revenue rose 0.4 percent to C$5.08 billion from a year earlier. The bank set aside C$183 million for bad loans, up from C$163 million.

Impaired loans for oil and gas companies were C$162 million, up from C$102 million in the fourth quarter, C$106 million in the third and C$26 million in the second.

Canadian personal and commercial banking profit rose 5.2 percent to C$529 million from a year earlier, while earnings from its U.S. personal and commercial banking jumped 31 percent to C$251 million. In U.S. dollars, the business posted profit of $182 million, up from $161 million a year earlier.

BMO Capital Markets profit surged 18 percent to C$260 million, helped by higher trading revenue from bonds and foreign exchange. Total trading revenue rose 41 percent to C$281 million from C$200 million a year earlier. Wealth management, which includes insurance, fell 6.9 percent to C$148 million.

National Bank

National Bank of Canada, the country’s sixth-largest lender, also posted results that beat analysts’ estimates. Profit fell 37 percent to C$261 million, or 67 cents a share, from C$415 million, or C$1.16, a year earlier after writing down its investment in Maple Financial Group Inc., the Montreal-based lender said in a statement.

The bank said Feb. 8 that earnings would be reducedby a C$165 million writedown of its 25 percent stake in Maple, a firm seized by regulators in Germany and Canada this month amid a tax probe. National Bank said adjusted per-share earnings, which exclude some items, were C$1.17 a share, topping the C$1.15 average estimate of 13 analysts.

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