Bank of Montreal Earnings: Revenue Growth Still Slow, but Expense Picture Should Gradually Improve

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.