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BMO Q4 Earnings Dip, Stock Up on Projection of Fall in 2025 Provision
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Shares of Bank of Montreal (BMO - Free Report) jumped 8.5% on the NYSE since the announcement of fourth-quarter fiscal 2024 (ended Oct. 31) results last week. Management's expectation of provision for credit losses having reached a trough in the reported quarter seems to have turned investors bullish on the stock. The company had reported a substantial rise in provisions throughout the year. For fiscal 2025, the same is projected to moderate.
Fourth-quarter fiscal 2024 adjusted earnings per share of C$1.90 plunged 35.2% year over year on a significant jump in provision for credit losses. Further, net interest income declined. However, an increase in non-interest income, higher loans and deposit balance and lower expenses acted as a tailwind.
After considering non-recurring items, net income was C$2.3 billion ($1.68 billion), which grew 34.7% from the year-ago quarter.
BMO’s Revenues Rise, Expenses Dip
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), were C$8.37 billion ($6.13 billion), up marginally year over year.
NII declined 2.1% year over year to C$4.85 billion ($3.55 billion). On the other hand, non-interest income came in at C$3.52 billion ($2.58 billion), up 4.2%.
Adjusted non-interest expenses decreased 2% to C$4.88 billion ($3.57 billion).
The adjusted efficiency ratio (net of CCPB) was 58.3%, down from 59.7% as of Oct. 31, 2023.
Provision for credit losses (adjusted) was C$1.52 billion ($1.11 billion) in the reported quarter, surging significantly from the year-ago quarter.
Loans & Deposits Rise for Bank of Montreal
As of Oct. 31, 2024, total assets were C$1.41 trillion ($1 trillion), up almost 1% from the prior-quarter end.
Total net loans grew modestly sequentially to C$678.3 billion ($487.3 billion). Total deposits increased 1.8% to C$982.4 billion ($705.8 billion).
BMO’s Profitability Ratios Decline, Capital Ratios Improve
Bank of Montreal’s return on common equity (as adjusted) was 7.4% in the fiscal fourth quarter compared with 12.4% on Oct. 31, 2023. Adjusted return on tangible common equity was 9.7% compared with 17.1% in the year-ago quarter.
As of Oct. 31, 2024, the Common Equity Tier-I ratio was 13.6%, up from 12.5% a year ago. The Tier-I capital ratio was 15.4% compared with the previous year’s 14.1%.
Our Take on Bank of Montreal
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. However, elevated expenses and an uncertain macroeconomic backdrop are headwinds.
Bank Of Montreal Price, Consensus and EPS Surprise
Toronto-Dominion Bank’s (TD - Free Report) fourth-quarter fiscal 2024 (ended Oct. 31) results were disappointing. Quarterly adjusted net income of $3.2 billion ($2.34 billion) fell 8% year over year.
Huge increases in provisions for credit losses and higher expenses acted as undermining factors. On the other hand, growth in net interest income and non-interest income and higher loan balance offered much-needed support to TD’s quarterly performance.
Canadian Imperial Bank of Commerce (CM - Free Report) reported adjusted earnings per share of C$1.91, which increased 21.7% from the prior-year quarter.
CM’s results benefited from an improvement in revenues and lower provisions. Also, loans and deposit balances increased in the quarter. However, higher expenses were an undermining factor.
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BMO Q4 Earnings Dip, Stock Up on Projection of Fall in 2025 Provision
Shares of Bank of Montreal (BMO - Free Report) jumped 8.5% on the NYSE since the announcement of fourth-quarter fiscal 2024 (ended Oct. 31) results last week. Management's expectation of provision for credit losses having reached a trough in the reported quarter seems to have turned investors bullish on the stock. The company had reported a substantial rise in provisions throughout the year. For fiscal 2025, the same is projected to moderate.
Fourth-quarter fiscal 2024 adjusted earnings per share of C$1.90 plunged 35.2% year over year on a significant jump in provision for credit losses. Further, net interest income declined. However, an increase in non-interest income, higher loans and deposit balance and lower expenses acted as a tailwind.
After considering non-recurring items, net income was C$2.3 billion ($1.68 billion), which grew 34.7% from the year-ago quarter.
BMO’s Revenues Rise, Expenses Dip
Total revenues (on an adjusted basis), net of insurance claims, commissions and changes in policy benefit liabilities (CCPB), were C$8.37 billion ($6.13 billion), up marginally year over year.
NII declined 2.1% year over year to C$4.85 billion ($3.55 billion). On the other hand, non-interest income came in at C$3.52 billion ($2.58 billion), up 4.2%.
Adjusted non-interest expenses decreased 2% to C$4.88 billion ($3.57 billion).
The adjusted efficiency ratio (net of CCPB) was 58.3%, down from 59.7% as of Oct. 31, 2023.
Provision for credit losses (adjusted) was C$1.52 billion ($1.11 billion) in the reported quarter, surging significantly from the year-ago quarter.
Loans & Deposits Rise for Bank of Montreal
As of Oct. 31, 2024, total assets were C$1.41 trillion ($1 trillion), up almost 1% from the prior-quarter end.
Total net loans grew modestly sequentially to C$678.3 billion ($487.3 billion). Total deposits increased 1.8% to C$982.4 billion ($705.8 billion).
BMO’s Profitability Ratios Decline, Capital Ratios Improve
Bank of Montreal’s return on common equity (as adjusted) was 7.4% in the fiscal fourth quarter compared with 12.4% on Oct. 31, 2023. Adjusted return on tangible common equity was 9.7% compared with 17.1% in the year-ago quarter.
As of Oct. 31, 2024, the Common Equity Tier-I ratio was 13.6%, up from 12.5% a year ago. The Tier-I capital ratio was 15.4% compared with the previous year’s 14.1%.
Our Take on Bank of Montreal
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. However, elevated expenses and an uncertain macroeconomic backdrop are headwinds.
Bank Of Montreal Price, Consensus and EPS Surprise
Bank Of Montreal price-consensus-eps-surprise-chart | Bank Of Montreal Quote
Currently, BMO carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of BMO’s Peers
Toronto-Dominion Bank’s (TD - Free Report) fourth-quarter fiscal 2024 (ended Oct. 31) results were disappointing. Quarterly adjusted net income of $3.2 billion ($2.34 billion) fell 8% year over year.
Huge increases in provisions for credit losses and higher expenses acted as undermining factors. On the other hand, growth in net interest income and non-interest income and higher loan balance offered much-needed support to TD’s quarterly performance.
Canadian Imperial Bank of Commerce (CM - Free Report) reported adjusted earnings per share of C$1.91, which increased 21.7% from the prior-year quarter.
CM’s results benefited from an improvement in revenues and lower provisions. Also, loans and deposit balances increased in the quarter. However, higher expenses were an undermining factor.