Bank of Montreal Earnings: Revenue Growth Is Slowing

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.