Company Reports

Narrow-moat Bank of Montreal reported disappointing fiscal first-quarter earnings. Adjusted net income was CAD 1.9 billion, falling 12% from last year and down 16% from last quarter. Adjusted earnings per share were CAD 2.81, a decrease of 16% year over year and 13% sequentially. The decrease in earnings was primarily driven by credit provisioning and weak capital markets revenue.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat-rated Bank of Montreal reported OK fiscal fourth-quarter earnings. As expected, results were quite messy with multiple one-time charges. Adjusted earnings per share came in at CAD 2.81, a decrease of 8% year over year and 1% sequentially. Management highlighted updated Bank of the West cost synergies of about $800 million from the previous $670 million. However, the fully realized pretax preprovision earnings benefit of $2 billion was unchanged, implying some of the nonexpense benefits had decreased. Management also delayed the fully realized pretax preprovision schedule by one or two quarters, into the first half of 2026. This supports our thesis that it’s more difficult to realize revenue synergies than cost savings.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat-rated Bank of Montreal reported OK fiscal third-quarter earnings. As expected, results remained quite messy with multiple one-time charges, and an impairment charge of CAD 45 million is forecast for next quarter. Excluding the impact of Bank of the West, adjusted preprovision pretax income would have been down 4% year over year. As we have seen with peers, the environment in Canada remains more constructive than in the United States. The U.S. segment's net interest margin was down once again, while Canadian NIM and preprovision pretax income were both up sequentially. We do not expect the pressure in the U.S. to completely abate, although if the Federal Reserve refrains from further interest-rate hikes, the pressure should ease over the next quarter or two.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat Bank of Montreal reported OK fiscal second-quarter earnings. Overall, we see slowing revenue growth in both Canada and the U.S. segments, largely driven by rising funding pressure and slower balance sheet growth. The bank also recorded a one-time provision related to the Bank of the West, or BOTW, portfolio, which lowered earnings. On an adjusted basis, BOTW contributed CAD 317 million to preprovision pretax earnings, or PPPT, in the quarter. If we remove that, on an organic basis the bank would have seen a decline in PPPT of roughly 4% year over year. Results remained quite messy with one-time charges and adjustments, and it appears that they may not fully clean up until 2024.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat Bank of Montreal reported satisfactory fiscal first-quarter earnings. Adjusted earnings per share were CAD 3.22, representing a year-over-year decline of 17%, primarily driven by higher expenses and higher provisioning. Bank of Montreal was able to grow adjusted revenue sequentially once again, and more importantly, adjusted net interest income was also able to grow sequentially. So far (half way through Canadian bank earnings), Bank of Montreal is the only Canadian bank to pull this off. Management stuck to its outlook for positive operating leverage for the year along with slowing expense growth in the second half of 2023. With results generally coming in close to our expectations and no major changes to the expected benefits from the recently closed (Feb. 1) Bank of the West acquisition, we do not expect to make a material change to our fair value estimate of CAD 144/USD 107. The bank seems set to go through a transitionary period of cost savings and one-time charges before reaching its true profitability potential. Cost savings should be finished in around a year, while management expects revenue synergies to be more apparent by the end of 2025.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat Bank of Montreal reported OK fiscal fourth-quarter results. Adjusted earnings per share of CAD 3.04 represented a year-over-year decline of 9% and a sequential decline of 2%, essentially in line with our estimate of CAD 3.05. BMO had a relatively decent quarter as it was able to increase adjusted revenue sequentially—something not all peers have managed to accomplish—with the primary driver of the sequential decrease in EPS being higher provisioning. Overall, management’s outlook for positive operating leverage, some net interest margin expansion, and slowing expense growth in 2023 all fit within our previous expectations. The adjusted preprovision pretax earnings growth forecast of 7% for the full year also met expectations. As a result, we do not expect to make a material change to our CAD 146/$105 fair value estimate.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat Bank of Montreal reported OK fiscal third-quarter results. Adjusted earnings per share came in at CAD 3.09, representing a year-over-year decline of 10% and a sequential decline of 4%. BMO reports mark-to-market adjustments on its swaps in trading income, which can cause wide swings in reported fee income, making the adjusted numbers much easier to interpret. The biggest point of weakness for the Canadian banking sector in this quarter has been fees, particularly in the more market- and activity-sensitive investment banking, trading, and wealth businesses. BMO was no exception, as it saw declines in adjusted trading fees, investment banking fees, and wealth-related fees, leading to a sequential decline in adjusted fees of roughly 12%. As a result, we are lowering our fee outlook.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

Narrow-moat-rated Bank of Montreal reported decent fiscal second-quarter earnings. Adjusted earnings per share were CAD 3.23, essentially in line with the CapIQ consensus and representing year-over-year growth of 3%. Provisioning remained quite low, at a net cost of only CAD 50 million while the PCL ratio was only 4 basis points. We would expect these numbers to start normalizing higher eventually, but predicting the timing of such a normalization in credit remains difficult.

Narrow-moat rated Bank of Montreal reported excellent fiscal first-quarter earnings. Adjusted earnings per share were CAD 3.89, representing year-over-year growth of 27%. The bank was able to record another provisioning benefit, meaning credit costs were a net benefit during the quarter. Adjusted net revenue was up 12%, a strong result, driven by decent loan growth, some positive margin movement within the loan book, and continued strong fee income from investment banking. While revenue was coming in relatively strong, so were expenses. Adjusted expenses were up 7% year over year. This still led to 18% adjusted pre-provision pretax earnings growth. While these initial results are generally ahead of where we expected the bank to be, we do not plan to make any material adjustments to our current fair value estimates of CAD 148/USD 115 just yet, as we wait for at least one more quarter of results in this uncertain environment. We will note that Canadian bank names are generally reacting much less to the current situation than U.S. bank stocks. We’ve highlighted in the past that Canadian banks tend to be more stable names overall, and we believe they have much less rate risk exposure.

Bank of Montreal is the fourth-largest bank in Canada and one of six Canadian banks that collectively hold almost 90% of the nation's banking deposits. The bank derives roughly 60% of its revenue from Canada and 30% from the United States. BMO has a well-established Canadian banking presence, an established U.S. retail operation in the Midwest, and growing commercial and capital markets capabilities. It is also the second-largest asset manager among the Canadian banks as well as the second-largest ETF provider in Canada.

BMO Financial has announced that it will acquire BNP Paribas' Bank of the West in a deal valued at $16.3 billion (CAD 20.95 billion), expected to close by the end of 2022. Bank of the West is primary located in California, with roughly three fourths of its deposits in the state and the majority of these concentrated in the San Francisco and Los Angeles metro areas. The deal is expected to be at 1.5 times tangible book value at close and 10.7 times 2022 synergized earnings, with BMO expecting it can cut 35% of Bank of the West's expense base by the end of 2023.

Narrow-moat rated Bank of Montreal reported solid fiscal fourth-quarter earnings. Adjusted earnings per share were CAD 3.33, coming in slightly above Factset consensus estimates of CAD 3.24. Results were mostly in line with our expectations, as fees and expenses were relatively in line, while net interest income came in slightly ahead of our projections. The net interest margin was relatively stable sequentially while average loans were up 3%, showing some decent momentum heading into 2022. Fees came under a bit of pressure sequentially, as expected, as underwriting and advisory fees normalized slightly after an exceptionally strong third quarter. Momentum remained strong for wealth- and card-related fees, and we anticipate both of these items will be driving forces of revenue growth in 2022. Adjusted expenses were up 2% sequentially, and year-over-year operating leverage was a robust 2.4%. Momentum was strong across all business segments, with adjusted pre-provision pretax earnings up high-single-digit or double-digit percentages across all segments.