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Bank of Montreal (BMO) Down 1.8% Despite Higher Q4 Earnings
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Bank of Montreal’s (BMO - Free Report) fiscal fourth-quarter fiscal 2019 (ended Oct 31) adjusted net income was C$1.61 billion ($1.22 billion), up 5% year over year.
Results were primarily driven by rise in net interest income and higher loan and deposit balances. Further, capital and profitability ratios remained strong.
However, rise in expenses and weak trading performance were the undermining factors. Also, provisions increased substantially during the quarter. Perhaps these concerns weighed on investors’ sentiments and the stock declined 1.8% on the NYSE following the release of the results.
After considering non-recurring items, net income was C$1.19 billion ($0.9 billion), down 30% from the prior-year quarter.
For fiscal 2019, net income on adjusted basis grew 4% to C$6.25 billion ($4.7 billion). After taking into consideration several non-recurring items, net income was C$5.76 billion ($4.33 billion), up 6%.
Revenues & Expenses Up
Total revenues for the reported quarter (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), amounted to C$5.75 billion ($4.34 billion), up 5% year over year.
For fiscal 2019, adjusted total revenues, net of CCPB, increased 6% to C$22.77 billion ($17.13 billion).
Net interest income grew 12% year over year to C$3.36 billion ($2.54 billion). Non-interest income came in at C$2.72 billion ($2.05 billion), down 5%.
Adjusted non-interest expenses increased 1% year over year to C$3.46 billion ($2.61 billion).
Adjusted efficiency ratio, net of CCPB, was 60.0%, down from 62.2% as of Oct 31, 2018. Fall in efficiency ratio indicates improvement in profitability.
Provision for credit losses jumped 45% year over year to C$253 million ($191.1 million).
Loans & Deposits Rise
Total assets increased 2% from the prior quarter to C$852.2 billion ($647.2 billion) as of Oct 31, 2019. Further, total net loans and acceptances were up 2% sequentially to C$449.7 ($341.5 billion) and total deposits grew 3% to C$568.1 billion ($431.4 billion).
Strong Profitability & Capital Ratios
Return on equity, as adjusted, came in at 13.5% in the fiscal fourth quarter compared with 14.5% on Oct 31, 2018.
As of Oct 31, 2019, common equity Tier I ratio was 11.4%, up from 11.3%. Tier I capital ratio was 13.0% compared with 12.9% a year ago.
Our Viewpoint
Bank of Montreal’s focus and efforts remain aligned with its organic and inorganic growth strategies, and are expected to boost revenues, going forward. Nevertheless, mounting expenses continue to strain the company’s profitability.
Performance & Earnings Release Dates of Other Canadian Banks
The Bank of Nova Scotia (BNS - Free Report) reported fourth-quarter fiscal 2019 (ended Oct 31) adjusted net income of C$2.4 billion ($1.8 billion), up 2% year over year. Results exclude acquisition- and divestiture-related costs.
Both Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report) will announce results on Dec 5.
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Bank of Montreal (BMO) Down 1.8% Despite Higher Q4 Earnings
Bank of Montreal’s (BMO - Free Report) fiscal fourth-quarter fiscal 2019 (ended Oct 31) adjusted net income was C$1.61 billion ($1.22 billion), up 5% year over year.
Results were primarily driven by rise in net interest income and higher loan and deposit balances. Further, capital and profitability ratios remained strong.
However, rise in expenses and weak trading performance were the undermining factors. Also, provisions increased substantially during the quarter. Perhaps these concerns weighed on investors’ sentiments and the stock declined 1.8% on the NYSE following the release of the results.
After considering non-recurring items, net income was C$1.19 billion ($0.9 billion), down 30% from the prior-year quarter.
For fiscal 2019, net income on adjusted basis grew 4% to C$6.25 billion ($4.7 billion). After taking into consideration several non-recurring items, net income was C$5.76 billion ($4.33 billion), up 6%.
Revenues & Expenses Up
Total revenues for the reported quarter (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), amounted to C$5.75 billion ($4.34 billion), up 5% year over year.
For fiscal 2019, adjusted total revenues, net of CCPB, increased 6% to C$22.77 billion ($17.13 billion).
Net interest income grew 12% year over year to C$3.36 billion ($2.54 billion). Non-interest income came in at C$2.72 billion ($2.05 billion), down 5%.
Adjusted non-interest expenses increased 1% year over year to C$3.46 billion ($2.61 billion).
Adjusted efficiency ratio, net of CCPB, was 60.0%, down from 62.2% as of Oct 31, 2018. Fall in efficiency ratio indicates improvement in profitability.
Provision for credit losses jumped 45% year over year to C$253 million ($191.1 million).
Loans & Deposits Rise
Total assets increased 2% from the prior quarter to C$852.2 billion ($647.2 billion) as of Oct 31, 2019. Further, total net loans and acceptances were up 2% sequentially to C$449.7 ($341.5 billion) and total deposits grew 3% to C$568.1 billion ($431.4 billion).
Strong Profitability & Capital Ratios
Return on equity, as adjusted, came in at 13.5% in the fiscal fourth quarter compared with 14.5% on Oct 31, 2018.
As of Oct 31, 2019, common equity Tier I ratio was 11.4%, up from 11.3%. Tier I capital ratio was 13.0% compared with 12.9% a year ago.
Our Viewpoint
Bank of Montreal’s focus and efforts remain aligned with its organic and inorganic growth strategies, and are expected to boost revenues, going forward. Nevertheless, mounting expenses continue to strain the company’s profitability.
Bank Of Montreal Price and Consensus
Bank Of Montreal price-consensus-chart | Bank Of Montreal Quote
Bank of Montreal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Release Dates of Other Canadian Banks
The Bank of Nova Scotia (BNS - Free Report) reported fourth-quarter fiscal 2019 (ended Oct 31) adjusted net income of C$2.4 billion ($1.8 billion), up 2% year over year. Results exclude acquisition- and divestiture-related costs.
Both Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report) will announce results on Dec 5.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>