We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bank of Montreal (BMO) Q3 Earnings Decline Y/Y, Revenues Rise
Read MoreHide Full Article
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2023 (ended Jul 31) adjusted earnings per share of C$2.78 declined 10% year over year.
During the reported quarter, BMO completed the acquisition of the AIR MILES Reward Program business of LoyaltyOne Co. for a cash deal of US$160 million. The company recorded higher revenues and a rise in deposits balance during the quarter. However, an increase in expenses, a decline in loan balance and higher provisions were the undermining factors.
After considering non-recurring items, net income was C$1.45 billion ($1.09 billion), which increased 6.5% from the year-ago quarter.
Revenues Improve, Expenses Rise
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB) were C$8.07 billion ($6.04 billion), up 21.6% year over year.
Net interest income jumped 18% to C$4.91 billion ($3.68 billion). Non-interest income came in at C$3.16 billion ($2.37 billion), surging 9.6%.
Adjusted non-interest expenses increased 33.2% to C$5.01 billion ($3.76 billion).
The adjusted efficiency ratio (net of CCPB) was 62.1%, up from 56.7% as of Jul 31, 2022. A rise in the efficiency ratio indicates a deterioration in profitability.
Provision for credit losses was C$492 million ($368.7 million) in the reported quarter compared with C$136 million in the year-ago quarter.
Loans Decline & Deposits Rise
As of Jul 31, 2023, total assets were C$1,248.6 billion ($945 billion), marginally down from the prior-quarter end.
Bank of Montreal’s total net loans declined marginally to C$630.8 billion ($477.4 billion), while total deposits marginally grew to C$883.6 billion ($668.8 billion) from the prior-quarter end.
Profitability Ratios Decent & Capital Ratios Deteriorate
Bank of Montreal’s return on common equity (as adjusted) was 11.7% in the fiscal third quarter compared with 13.8% on Jul 31, 2022. Adjusted return on tangible common equity was 15.8% compared with 15.1% in the year-ago quarter.
As of Jul 31, 2023, the Common Equity Tier-I ratio was 12.3%, down from 15.8% a year ago. Tier-I capital ratio was 14% compared with the previous year’s 17.3%.
Our Take
Bank of Montreal’s focus and efforts align with its organic and business restructuring strategies and are anticipated to support revenues in the upcoming period. The acquisition of LoyaltyOne’s AIR MILES Reward Program business is likely to aid top-line growth. The acquisition of Bank of the West will improve the company’s presence in the Western and Midwestern parts of the United States. It expects to complete the conversion of the customer accounts and systems by early September 2023.
However, elevated expenses and a deteriorating macroeconomic backdrop are headwinds. Further, weakness in capital markets business will likely weigh on BMO’s financials.
Bank Of Montreal Price, Consensus and EPS Surprise
Toronto-Dominion Bank (TD - Free Report) announced its third-quarter fiscal 2023 (ended Jul 31) results. Quarterly adjusted net income of C$3.73 billion ($2.80 billion) decreased 2.2% from the prior-year quarter.
TD recorded a rise in net interest income on the back of higher interest rates and decent loan demand. Also, the company’s capital ratios were solid during the quarter. However, an increase in expenses and higher provision for credit losses were major headwinds.
Royal Bank of Canada (RY - Free Report) released its third-quarter fiscal 2023 (ended Jul 31) results. Adjusted net income of C$4.02 billion ($3.01 billion) increased 10.9% from the prior-year quarter.
Results were aided by an improvement in revenues. However, higher expenses and provisions were the undermining factors. RY’s capital ratios improved in the reported quarter.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Bank of Montreal (BMO) Q3 Earnings Decline Y/Y, Revenues Rise
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2023 (ended Jul 31) adjusted earnings per share of C$2.78 declined 10% year over year.
During the reported quarter, BMO completed the acquisition of the AIR MILES Reward Program business of LoyaltyOne Co. for a cash deal of US$160 million. The company recorded higher revenues and a rise in deposits balance during the quarter. However, an increase in expenses, a decline in loan balance and higher provisions were the undermining factors.
After considering non-recurring items, net income was C$1.45 billion ($1.09 billion), which increased 6.5% from the year-ago quarter.
Revenues Improve, Expenses Rise
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB) were C$8.07 billion ($6.04 billion), up 21.6% year over year.
Net interest income jumped 18% to C$4.91 billion ($3.68 billion). Non-interest income came in at C$3.16 billion ($2.37 billion), surging 9.6%.
Adjusted non-interest expenses increased 33.2% to C$5.01 billion ($3.76 billion).
The adjusted efficiency ratio (net of CCPB) was 62.1%, up from 56.7% as of Jul 31, 2022. A rise in the efficiency ratio indicates a deterioration in profitability.
Provision for credit losses was C$492 million ($368.7 million) in the reported quarter compared with C$136 million in the year-ago quarter.
Loans Decline & Deposits Rise
As of Jul 31, 2023, total assets were C$1,248.6 billion ($945 billion), marginally down from the prior-quarter end.
Bank of Montreal’s total net loans declined marginally to C$630.8 billion ($477.4 billion), while total deposits marginally grew to C$883.6 billion ($668.8 billion) from the prior-quarter end.
Profitability Ratios Decent & Capital Ratios Deteriorate
Bank of Montreal’s return on common equity (as adjusted) was 11.7% in the fiscal third quarter compared with 13.8% on Jul 31, 2022. Adjusted return on tangible common equity was 15.8% compared with 15.1% in the year-ago quarter.
As of Jul 31, 2023, the Common Equity Tier-I ratio was 12.3%, down from 15.8% a year ago. Tier-I capital ratio was 14% compared with the previous year’s 17.3%.
Our Take
Bank of Montreal’s focus and efforts align with its organic and business restructuring strategies and are anticipated to support revenues in the upcoming period. The acquisition of LoyaltyOne’s AIR MILES Reward Program business is likely to aid top-line growth. The acquisition of Bank of the West will improve the company’s presence in the Western and Midwestern parts of the United States. It expects to complete the conversion of the customer accounts and systems by early September 2023.
However, elevated expenses and a deteriorating macroeconomic backdrop are headwinds. Further, weakness in capital markets business will likely weigh on BMO’s financials.
Bank Of Montreal Price, Consensus and EPS Surprise
Bank Of Montreal price-consensus-eps-surprise-chart | Bank Of Montreal Quote
BMO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
Toronto-Dominion Bank (TD - Free Report) announced its third-quarter fiscal 2023 (ended Jul 31) results. Quarterly adjusted net income of C$3.73 billion ($2.80 billion) decreased 2.2% from the prior-year quarter.
TD recorded a rise in net interest income on the back of higher interest rates and decent loan demand. Also, the company’s capital ratios were solid during the quarter. However, an increase in expenses and higher provision for credit losses were major headwinds.
Royal Bank of Canada (RY - Free Report) released its third-quarter fiscal 2023 (ended Jul 31) results. Adjusted net income of C$4.02 billion ($3.01 billion) increased 10.9% from the prior-year quarter.
Results were aided by an improvement in revenues. However, higher expenses and provisions were the undermining factors. RY’s capital ratios improved in the reported quarter.