Saturday , January 23 2021

BMO cuts Q4 profit estimates as traders shine, provisions collapse

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Bank of Montreal previously raised analysts’ expectations in its fourth fiscal quarter amid a sharp improvement in credit quality and two-digit profit growth in its capital markets unit.

BMO said on Tuesday it had earned $ 1.6 billion in net income in the three months ended Oct. 31, compared with $ 1.2 billion a year earlier. On an adjusted basis, the bank recorded $ 2.41 in profit per share. Analysts were expecting, on average, $ 1.91.

The bank set aside $ 432 million during the most recent quarter for loans that could eventually go bad. That was down sharply from $ 1.05 billion in the previous quarter.

Compared to the fourth quarter a year earlier, BMO’s capital markets business was the top performer as adjusted profit increased 38 percent to $ 387 million.

Wealth management operations also delivered year-on-year growth, as adjusted profits in that unit rose nine percent to $ 328 million.

In absolute terms, profits from BMO’s Canadian personal and commercial business (P&C) fell those units by $ 647 million in the fourth quarter. While that was down nine percent from the same quarter in 2019, it was more than double profits from the fiscal third quarter.

It was a similar theme in BMO’s US P&C division, where adjusted profit fell 17 percent year-over-year to US $ 253 million – but that also represents a 27 percent jump from the previous quarter.

“We started the year in a strong position with good momentum across our businesses,” BMO CEO Darryl White said in a statement. “Throughout the challenges posed by the pandemic, we have been at the forefront of the economic recovery, supporting our customers, communities and employees through uncertainty and hardship.”

“Our results for the year are testament to the resilience and diversification of our businesses and our ability to adapt quickly to the evolving environment.”

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