BMO, Canada’s fourth-largest bank by assets made $1.11-billion, or $1.63 a share in the quarter. That compared to profit of $825-million, or $1.34 a share, during the same period last year.
Revenue rose 18.7 per cent to $4.12-billion.
The results beat the expectations of analysts, who were predicting profit of $1.36 a share on average. Adjusted for one-time items, BMO made $1.42 a share.
Provisions for credit losses, or the amount of money banks set aside to cover bad loans, fell sharply to $141-million, from $323-million a year ago, as fewer loans were in default.
The $182-million improvement in credit losses compared to last year was primarily responsible for BMO’s first-quarter profit, since several of the bank’s key divisions saw their net income fall.
Profit at BMO’s Canadian personal and commercial banking segment fell 6.7 per cent to $446-million as shrinking margins on loans took their toll in the quarter. The results were also compared to higher earnings last year, when the division benefited from a securities gain, BMO said.
Profit also dropped at BMO’s capital markets business, which includes trading, underwriting and securities income. Net income fell nearly 24 per cent per cent in the quarter, to $198-million, compared to high trading revenues a year ago amid upheaval in Europe that fuelled the bond market. Analysts expect to see capital markets income slump across the banking sector this quarter.
BMO said the results also reflect a $46-million charge for restructuring in the capital markets business during the quarter.
Profit at the bank’s U.S. retail banking division rose to $137-million, from $54-million a year ago, fuelled by the acquisition of Milwaukee-based M&I, the Midwestern bank it purchased last summer.
BMO’s private client group, which includes wealth management and insurance operations, made $105-million, down 28 per cent from the same quarter a year ago, due to lower long-term interest rates, which have hurt the insurance sector.
While the drop in credit loss provisions was the main reason for the bank’s profit increase in the quarter, BMO chief executive officer Bill Downe said the bank’s various operations were performing well.
“Each of our businesses is well-positioned and our balance sheet is strong,” Mr. Downe said in a statement accompanying the results.
The bank left its quarterly dividend unchanged at 70 cents.
Original Article
Source: Globe
Author: grant robertson
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